The UK’s Hinkley Point C nuclear power station has brought the struggle of uranium mining contractors and companies to the forefront. The nuclear industry went into a downward spiral after the 2011 Fukushima disaster in Japan, but the market is now showing signs of recovery.
While recovery is imminent, the industry has not managed to regain its footing. Uranium prices are low due to excessive supply, and as a result, mining companies are stopping operations in several uranium mines, making efforts to reduce their costs and capital expenditure, and trying to cut debt with the aim to ride out the slump.
After the Fukushima disaster, Japan shut down its nuclear reactors. Today, just three reactors out of the 400 plus are operational. Several other countries, such as Germany, have come up with plans to close their nuclear reactors. In the last three years, several reactors in the US have closed down as they were finding it difficult to compete with cheaply priced shale gas.
However, uranium mining contractors and companies have something to cheer about, with China and other nations bringing new nuclear reactors into operation. This has given impetus to the uranium mining industry, with trends showing that demand for nuclear energy may go back to what it was prior to the Fukushima disaster in about two to three years.
Paladin Energy CEO Alexander Molyneux said that uranium mining companies are presently feeling the brunt even though the nuclear energy industry is performing well.
Many in the industry are of the opinion that the massive build-up of uranium inventory has made customers go easy on their purchasing. Utilities do not feel the need to boost their stockpiles. While the demand for uranium is governed by the number of nuclear reactors in operation, there is a huge gap between demand and supply. This is primarily because uranium has a lengthy production cycle, and there are ready stocks of uranium already available.
Molyneux stated that customers are not willing to purchase uranium, and the price is dipping by the day. Nothing will change until the uranium inventory starts depleting.