Uranium may heat up on Indian demand

The opening up of the Indian nuclear sector may push up the prices of uranium in the global spot markets.

India will soon be able to fulfil its nuclear fuel requirement in the spot markets with the the US Senate recently approving the Indo-US Civilian Nuclear Cooperation Treaty.

India, with 15 nuclear reactors, currently mines around 230 mt of uranium. Nuclear power plants in the country run at a plant load factor of 65 per cent against an average of 85 per cent worldwide.

With the free market in nuclear fuels becoming accessible, the country is poised to add a demand for 1,300 mt of uranium to a market already facing a tight supply situation, according to a study by the World Nuclear Association (WNA).

"The market expectations are that additional consumption by the Indians, combined with the planned capacity addition by China and South Korea, could push the spot prices of uranium yellow cake up to $100 a pound from the present $62.50 a pound over the next couple of years. But, we expect the prices to settle down by 2015, when the capacity additions in uranium mining are also in place," said Craig Lindsay, president of Magnum Uranium, a Canadian uranium mining company, which is eyeing the Indian market for exports.

He added that initially the Indian demand would be much smaller than the figure projected by the WNA.

Prices of uranium in the spot markets have been rising over the past two years with the resurgence of the nuclear power industry in the US and Europe on the back of rising crude oil prices. From less than $10 a pound, prices are currently ruling at $62.50 a pound.

Sources in the Indian nuclear establishment, however, said the price rise will not affect the fuel cost for Indian power companies. "It will only go up by around 5 to 6 per cent," said a top official of the Nuclear Power Corporation.

Lindsay pointed that by 2015, the number of reactors worldwide is expected to go up to 504 from the present 440. While the global requirement of uranium is around 180 mt, only 105 mt are mined, with the rest coming from the dismantled nuclear warheads of the erstwhile USSR and spent fuel of the existing reactors.

Of 20,000 warheads of the erstwhile USSR that were to be dismantled, 10,000 have already been dismantled and the fuel is sent to the US under a treaty between the US and Russia. Nearly 40 per cent of the US consumption of nuclear fuel comes from this source.

Worldwide investments in uranium exploration and mining are expected to be in the range of $300-500 million. Of this, Canada is investing around $150 million in mining the ore from its deposits at Athabasca basin.

Canada is estimated to have 9 per cent of the world reserves of uranium, while Australia has the largest reserves at 24 per cent, followed by Kazakhstan at 17 per cent.