|Uranium Production & Supply Forecast, graph|
|Global Uranium Production Requirements & Inventories, graph|
|Cumulative World Uranium Production, graph|
In many countries, uranium is a major energy resource, fueling nuclear power plants that collectively generate about 17% of the world's electricity. With global demand for energy, especially electricity, projected to grow rapidly over the coming decades, the price and availability of all energy sources, including uranium, are key components in the process of energy planning and decision-making. Over the past decade, changing political and economic conditions left their marks on the civilian uranium market, as they did throughout the energy industry.
Particularly affecting the uranium market were changing projections about nuclear power's growth and the consequent demand for nuclear fuel; the emergence of a more integrated free market system including former centrally planned economies; and the emergence into the civilian market of uranium released from dismantled nuclear weapons. All these factors contributed to uncertainties in the commercial uranium market that raised questions about future fuel supplies for nuclear power plants.
Signs today indicate that the situation is changing. The world uranium market is moving towards a more balanced relationship between supply and demand. After falling nearly 50% from 1988-94, world uranium production increased in 1995, 1996 and 1997. The estimated 1997 production was up about 20% over 1994. While the uranium spot market price has followed an erratic trend since recovering from its all time low in mid-1994, prices in early 1998 were up by more than 30%.
Important production-related developments have been taking place in some countries, including Australia, Canada, Kazakhstan, Mongolia, the United States, and Uzbekistan. Additional progress was made in 1997 regarding the market introduction of low-enriched uranium (LEU) derived from blending down of 500 tonnes of high-enriched uranium (HEU) purchased by the United States from Russia. The first deliveries under this agreement were made by Russia to the United States in 1996 and 1997.
World uranium production has been below uranium requirements since 1990. Only about 60% of total world requirements for nuclear reactors - about 63,800 tonnes-uranium (tU) - was met by production in 1997. This undersupply situation has caused a cumulative drawdown of world inventories of about 160,000 tU since 1990. (See graphs.) The drawdown is expected to continue at more than 20,000 tU in 1998. The rapid drawdown has depleted the civilian uranium stockpile to a level where some market analysts concluded that there are only limited amounts of excess material available for sale. Although inventories remain substantial, the increase in spot uranium prices during 1995-96 was a sign that inventories are getting much closer to desired levels.
Analysis of the availability of supplemental uranium supplies to meet reactor demand leads to the conclusion that uranium production will continue as the predominant source of nuclear fuel. Therefore, the question arises as to the adequacy of both uranium resources and production capacity to meet demand on a timely basis. To address these questions, the IAEA invited specialists to analyze the available information and prepare a report of projections through the year 2020. This article highlights the principle findings of this report and describes selected IAEA activities related to uranium exploration and production activities. (See box.)
Demand Projections. World uranium demand is reasonably well known up to 2005. After 2005 there is increasing uncertainty in projections resulting from potential nuclear plant closures, variable construction schedules, and a lack of new plant orders. In this analysis, the annual uranium requirements are projected to increase from 61,500 tU in 1997 to 75,000 tU in 2020.
This projection was developed as an approximate "best fit" of the middle of the demand range based on the analysis of several published projections of requirements. In this projection, reactor demand increases by about 600 tU/year over the period through 2020, equivalent to a growth rate of under 1% per year. The total cumulative requirements for the period stand at about 1.638 million tU.
Supply Projections. Sources of uranium supply that are expected to be available to satisfy reactor requirements include:
As reported in the 1997 edition of Uranium Resources, Production and Demand (the Red Book, jointly produced by the IAEA and Nuclear Energy Agency of the Organization for Economic Cooperation and Development), the world annual production capability on 1 January 1997 was 43,000 tU. This is comprised of 8050, 2600 and 32, 350 tU/year, respectively, of the production capability in the CIS, Captive and "All Other" categories.
In 1996, uranium production was 36,195 tU, representing a utilization rate of about 84% of the world's production capability. (Production capability utilization is defined as production divided by available production capacity.) Of the total production, 6275, 2440, and 27,450 tU, respectively, came from the CIS, Captive and "All Other" categories. In terms of production capability utilization, this represented 78%, 93% and 85%, respectively for these three categories.
In 2005, the estimated production is about 52,500 tU, about 44% higher than the 1996 level. To produce this amount, the production capability has to increase between 22% and 26% from the existing level of 43,000 tU. Under this projection, only seven years remain to plan, license, construct and bring uranium projects into production. Additional capacity will be required to produce about 61,500 tU/year by 2020, as well as to replace capacity that closes as resources are depleted.
Based on a projected, modest 1% annual growth rate, world uranium requirements are estimated to grow from 61 500 tU in 1997 to 75 000 tU in 2020. Cumulative demand over the period is 1.638 million tU.
In 1996, production met about 60% of world requirements, with most of the balance coming from inventory. This source, which has been supplying an average of about 23,000 tU per year since 1992, is coming to an end. With the end of excess inventory in sight, uranium supplies from other sources will have to increase to meet requirements. What supply sources are available to meet requirements through 2020?
Uranium mine production will continue to be the primary source of supply, meeting 76% to 78% of cumulative requirements through 2020. Alternative sources supplying the balance, in order of relative importance, are LEU blended from HEU released from weapons programmes (11% to 13%), reprocessing of spent nuclear fuel (6%), and excess inventory (5%). The contribution of US government and other Russian strategic stockpiles is not known at this time.
To meet these projected uranium requirements, all sources of supply will have to increase as planned. Otherwise, shortages could result early in the next century from one or more types of producers.