Categories: Energy / General Market Commentary
Topics: General Energy / General Market Commentary

What are the factors that influence the uranium price?

What are the factors that influence the uranium price?

The uranium spot price has fallen below most of the world’s uranium mine operating cash costs, now standing at US$18.25 a pound. Which factors affect the price and which do not, and what rules are at play in the uranium market?

Today’s price in year 2000 dollars, assuming 28% inflation, would be US$10.60 a pound as opposed to US$8.30 back in 2000.

Uranium traded in the $8-12/lb range in January 1989 through December 1995, and May 1997 through July 2003 with the exception of 2001 when the price fell to the all-time low of $7 /lb. The top of the range would be roughly equivalent to US$15 in 2016 dollars. Privately, uranium producers describe the current state of the market as “horrible, naturally”. However, uranium traded within the same range for over 13 years until the price rose and then skyrocketed.

How well does the 2000 market compare to that of 2016?

As market insiders recollect, the players in these 16 years remained virtually the same. There was Cogema (later merged with Areva), Cameco, Rosatom, Rio Tinto, and WMC Resources (bought out by BHP in 2005). But there was no Kazakhstan with its 40% share in the world’s uranium supply produced at the world’s lowest-cost operations (according to Uranium One’s third quarter 2016 report, the company’s Kazakh operations' ‘aggregate average realization cost is $7 per pound’). The world’s largest underground uranium mine at Cigar Lake was not yet commissioned. Today, according to Cameco’s CEO Tim Gitzel, operating cash costs at Cameco’s Canadian mines are ‘under $20 per pound’ 

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