Source: Mining Weekly                     Date: 08 September, 2011

The supply side of the Uranium market has felt a heavy impact since the Japanese nuclear disaster last spring. In addition to falling demand, the current climate has driven suppliers to scale back on Uranium. The shock waves have reached Mongolia as Cameco, a firm currently operating in Mongolia continues to cope in the current market and expand. Meanwhile Cameco will partner with a firm from Mongolia's neighbor Kazakhstan.

Two of the world's largest uranium producers have diminished their demand by 8 percent, largely because of the decision to discontinue reactors in Germany and Japan. Spot uranium currently rests at USD 49 per pound, while the long-term contract price stood at USD 64.50 pounds at the end of August.

“The juniors are feeling, and will continue to feel, the negative impact of Fukushima, as they struggle to raise money to advance projects,” said Tim Gabruch, administration and marketing strategy vice president of Cameco. “All of these developments impact supply going forward and they also provide an opportunity for Cameco and its business development efforts.”

The executive expressed skepticism as to whether junior uranium companies could continue with their projects and continue to follow plans made during a better market climate. This was one reason for Cameco's hostile CAD 520 million bid for its competitor Hathor last week.

For demand, Gabruch predicted a “slowdown in nuclear power growth in the near term.”

Cameco expects 513 reactors to open by 2020. Currently, 427 are open. If this was the case, demand would rise from 180 million pounds in 2011 to more than 240 million pounds by 2020, Gabruch said. The firm announced last week that it has partnered with the Kazakhstan firm Kazatomprom to increase uranium production at the Inkai mine from 3.9 million pounds to 5.2 million pounds annually.