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Message: Uranium producers ready for rebound
Uranium producers ready for rebound
Uranium producers ready for rebound
White Mesa Mill to scale back production in 2009
Published: Wednesday, May 6, 2009 12:11 PM CDT
D. Dion
The CEO of Energy Fuels, George Glasier, holds up a tiny pellet, smaller than a ping-pong ball, to illustrate his point. This pellet of nuclear fuel, he says, is the equivalent of five gallons of oil, one railroad car, or 100 tons of coal.
Behind this small finished pellet, however, is a long and expensive chain of production, from mining the uranium ore, to milling it into concentrated yellowcake that will travel across the country to be refined again into pellets that are placed into a fuel rod and used in a nuclear reactor. Right now, the price of uranium is too low to support that chain of production, according to Denison Mines President Ron Hochstein.
Hochstein said that Denison’s White Mesa Mill, the nation’s only operating uranium mill, has ceased its regular milling operations for the remainder of 2009.
“We will stop processing conventional ore through 2009, but will be processing alternate feedstock on a reduced scale, and we’ll be laying off some personnel,” said Hochstein. “Our costs are higher than the current spot price.”
Hochstein was upbeat about the future of the uranium market, and his company already has processing contracts in place for 2011, when he expects that the spot price of uranium will again make it profitable to process the radioactive material. Hochstein said that the fluctuations in spot price, which topped out at about $150 per pound in 2007 and now hovers in the $40 range, are not a reflection of the actual demand for uranium. He said that the U.S. is still using much more uranium for nuclear energy than it is producing.
“We’re still consuming so much more than we’re producing, it’s just that the price dropped. Hedge funds drove the price up, but when the economy worsened, the funds had to sell and drove the price down,” said Hochstein. “The wild ride has nothing to do with the uranium market. The fundamentals are still very strong.”
Energy Fuels is banking on that same perspective, as they raise funds to build another uranium mill in Paradox Valley, Colorado. Energy Fuels’ proposed Piñon Ridge Mill would flank the same Uravan mineral belt that provides ore for the White Mesa Mill. The Piñon Ridge project will get its first permit hearing before Montrose County officials on May 19.
Stephen Antony is Energy Fuels’ Chief Operating Officer, and he said that the long-term price of uranium should settle at about $70 per pound, creating a better business equation for the proposed mill. He said that he also sees a future for nuclear power, because it is a “baseload generator,” which unlike solar or wind power can be stored for use on demand. And while there is still the quandary of dealing with nuclear waste, there are no carbon emissions associated with nuclear energy, pointed out Antony. So as the Obama administration seeds the energy industry’s renewable sectors, Antony thinks that the government will also allow the nuclear industry room to grow.
“The administration does, I think, reluctantly recognize that nuclear is part of the energy puzzle,” said Antony.
The CEO of Energy Fuels, George Glasier, holds up a tiny pellet, smaller than a ping-pong ball, to illustrate his point. This pellet of nuclear fuel, he says, is the equivalent of five gallons of oil, one railroad car, or 100 tons of coal.
Behind this small finished pellet, however, is a long and expensive chain of production, from mining the uranium ore, to milling it into concentrated yellowcake that will travel across the country to be refined again into pellets that are placed into a fuel rod and used in a nuclear reactor. Right now, the price of uranium is too low to support that chain of production, according to Denison Mines President Ron Hochstein.
Hochstein said that Denison’s White Mesa Mill, the nation’s only operating uranium mill, has ceased its regular milling operations for the remainder of 2009.
“We will stop processing conventional ore through 2009, but will be processing alternate feedstock on a reduced scale, and we’ll be laying off some personnel,” said Hochstein. “Our costs are higher than the current spot price.”
Hochstein was upbeat about the future of the uranium market, and his company already has processing contracts in place for 2011, when he expects that the spot price of uranium will again make it profitable to process the radioactive material. Hochstein said that the fluctuations in spot price, which topped out at about $150 per pound in 2007 and now hovers in the $40 range, are not a reflection of the actual demand for uranium. He said that the U.S. is still using much more uranium for nuclear energy than it is producing.
“We’re still consuming so much more than we’re producing, it’s just that the price dropped. Hedge funds drove the price up, but when the economy worsened, the funds had to sell and drove the price down,” said Hochstein. “The wild ride has nothing to do with the uranium market. The fundamentals are still very strong.”
Energy Fuels is banking on that same perspective, as they raise funds to build another uranium mill in Paradox Valley, Colorado. Energy Fuels’ proposed Piñon Ridge Mill would flank the same Uravan mineral belt that provides ore for the White Mesa Mill. The Piñon Ridge project will get its first permit hearing before Montrose County officials on May 19.
Stephen Antony is Energy Fuels’ Chief Operating Officer, and he said that the long-term price of uranium should settle at about $70 per pound, creating a better business equation for the proposed mill. He said that he also sees a future for nuclear power, because it is a “baseload generator,” which unlike solar or wind power can be stored for use on demand. And while there is still the quandary of dealing with nuclear waste, there are no carbon emissions associated with nuclear energy, pointed out Antony. So as the Obama administration seeds the energy industry’s renewable sectors, Antony thinks that the government will also allow the nuclear industry room to grow.
“The administration does, I think, reluctantly recognize that nuclear is part of the energy puzzle,” said Antony.
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