uranium

Uranium – the raw material for nuclear power and nuclear weapons – is having a moment in the spotlight. Companies such as Energy Fuels, Inc. have played well-publicized roles¹ in lobbying the Trump administration to reduce federal protection for public lands with uranium deposits.² The Defense Department's Nuclear Posture Review calls for new weapons production to expand the U.S. nuclear arsenal, which could spur new domestic uranium mining.³ And the Interior Department is advocating more domestic uranium production, along with other materials identified as "critical minerals."⁴

What would expanded uranium mining in the U.S. mean at the local level? I have studied the legacies of past uranium mining and milling in Western states for over a decade. My book examines dilemmas faced by uranium communities caught between harmful legacies of previous mining booms and the potential promise of new economic development.

These people and places are invisible to most Americans, but they helped make the United States an economic and military superpower. In my view, we owe it to them to learn from past mistakes and make more informed and sustainable decisions about possibly renewing uranium production than our nation made in the past.

Mining regulations have failed to protect public health

Today most of the uranium that powers U.S. nuclear reactors is imported. But many communities still suffer impacts of uranium mining and milling that occurred for decades to fuel the U.S.-Soviet nuclear arms race.⁵ These include environmental contamination⁶, toxic spills⁷, abandoned mines, under-addressed cancer and disease clusters⁸ and illnesses⁹ that citizens link to uranium exposure despite federal denials.

As World War II phased into the Cold War, U.S. officials rapidly increased uranium production from the 1940s to the 1960s. Regulations were minimal to nonexistent and largely unenforced, even though the U.S. Public Health Service¹⁰ knew that exposure to uranium had caused potentially fatal health effects in Europe¹¹, and was monitoring uranium miners and millers for health problems.

Today the industry is subject to regulations that address worker health and safety, environmental protection, treatment of contaminated sites and other considerations.¹² But these regulations lack uniformity, and enforcement responsibilities are spread across multiple agencies.¹³

This creates significant regulatory gaps, which are worsened by a federalist approach to regulation. In the 1970s the newly created Nuclear Regulatory Commission initiated an Agreement States program, under which states take over regulating many aspects of uranium and nuclear production and waste storage.¹⁴ To qualify, state programs must be "adequate to protect public health and safety and compatible with the NRC's regulatory program."¹⁵

Today 37 states have joined this program and two more are applying.¹⁶ Many Agreement States struggle to enforce regulations because of underfunded budgets, lack of staff and anti-regulatory cultures.⁴ These problems can lead to piecemeal enforcement and reliance on corporate self-regulation.

For example, budget cuts in Colorado have forced the state to rely frequently on energy companies to monitor their own compliance with regulations.¹⁷ In Utah, the White Mesa Mill – our nation's only currently operating uranium mill – has a record of persistent problems related to permitting, water contamination and environmental health, as well as tribal sacred lands and artifacts.¹⁸

Neglected nuclear legacies

Uranium still affects the environment¹⁹ and human health in the West, but its impacts remain woefully under-addressed. Some of the poorest, most isolated and ethnically marginalized communities in the nation are bearing the brunt of these legacies.

There are approximately 4,000 abandoned uranium mines in Western states.²⁰ At least 500 are located on land controlled by the Navajo Nation.²¹ Diné (Navajo) people have suffered some of the worst consequences of U.S. uranium production, including cancer clusters and water contamination.²²

A 2015 study found that about 85 percent of Diné homes are still contaminated with uranium, and that tribe members living near uranium mines have more uranium in their bones than 95 percent of the U.S. population.²³ Unsurprisingly, President Donald Trump's decision to reduce the Bears Ears National Monument²⁴ has reinvigorated discussion over ongoing impacts of uranium contamination across tribal and public land.²⁵

Despite legislation such as the Radiation Exposure Compensation Act²⁶ of 1990, people who lived near uranium production or contamination sites often became forgotten casualties of the Cold War. For instance, Monticello, Utah, hosted a federally owned uranium mill from 1942 to 1960.²⁷ Portions of the town were even built from tailings left over from uranium milling, which we now know were radioactive.²⁸ This created two Superfund sites that were not fully remediated until the late 1990s.²⁹

Monticello residents have dealt with cancer clusters, increased rates of birth defects and other health abnormalities for decades.³⁰ Although the community has sought federal recognition and compensation since 1993, its requests have been largely ignored.³¹

Today tensions over water access and its use for uranium mining are creating conflict between regional tribes and corporate water users around the North Rim of the Grand Canyon.³² Native residents, such as the Havasupai, have had to defend their water rights³³ and fear losing access to this vital resource.

Uranium production is a boom-and-bust industry

Like any economic activity based on commodities, uranium production is volatile and unstable.³⁴ The industry has a history of boom-bust cycles. Communities that depend on it can be whipsawed by rapid growth followed by destabilizing population losses.³⁵

The first U.S. uranium boom occurred during the early Cold War and ended in the 1960s due to oversupply, triggering a bust.³⁶ A second boom began later in the decade when the federal government authorized private commercial investment in nuclear power. But the Three Mile Island (1979) and Chernobyl (1985) disasters ended this second boom.

Uranium prices soared once again from 2007 to 2010. But the 2011 tsunami and meltdown at Japan's Fukushima Dai-ichi nuclear plant sent prices plummeting once again as nations looked for alternatives to nuclear power.

Companies like Energy Fuels maintain – especially in public meetings with uranium communities³⁷ – that new production will lead to sustained economic growth.³⁸ This message is powerful stuff. It boosts support, sometimes in the very communities that have suffered most from past practices.

But I have interviewed Westerners who worry that as production methods become more technologically advanced and mechanized, energy companies may increasingly rely on bringing in out-of-town workers with technical and engineering degrees rather than hiring locals – as has happened in the coal industry.³⁹ And the core tensions of boom-bust economic volatility and instability persist.

Uranium production advocates contend that new "environmentally friendly" mills⁴⁰ and current federal regulations will adequately protect public health and the environment.⁴¹ Yet they offer little evidence to counter White Mesa Mill's poor record.

In my view, there is little evidence that new uranium production would be more reliably regulated or economically stable today than in the past. Instead, I expect that the industry will continue to privatize profits as the public absorbs and subsidizes its risks.

Stephanie Malin is the author of the 2015 book, 'The Price of Nuclear Power: Uranium Communities and Environmental Justice', published by Rutgers University Press, www.rutgersuniversitypress.org/the-price-of-nuclear-power/9780813569789

Reprinted from The Conversation, 22 Feb 2018, https://theconversation.com/before-the-us-approves-new-uranium-mining-co...

References:

1. www.cpr.org/news/story/why-a-colorado-uranium-company-lobbied-to-shrink-...

2. www.denverpost.com/2017/12/13/energy-fuels-was-one-voice-among-many-in-b...

3. www.washingtonpost.com/world/national-security/pentagon-unveils-new-nucl...

4. www.rutgersuniversitypress.org/the-price-of-nuclear-power/9780813569789

5. www.npr.org/sections/health-shots/2016/04/10/473547227/for-the-navajo-na...

6. http://dx.doi.org/10.1021/acs.est.5b01408

7. www.ncbi.nlm.nih.gov/pmc/articles/PMC1963288/

8. www.ncbi.nlm.nih.gov/pmc/articles/PMC3222290/

9. www.tandfonline.com/doi/abs/10.1080/08941920903005795

10. https://bioethicsarchive.georgetown.edu/achre/final/chap12_2.html

11. https://upcolorado.com/utah-state-university-press/item/2171-uranium-frenzy

12. http://ajph.aphapublications.org/doi/full/10.2105/AJPH.92.9.1410

13. www.nap.edu/read/13266/chapter/10#225

14. www.nrc.gov/about-nrc/state-tribal/agreement-states.html

15. www.nrc.gov/about-nrc/state-tribal/agreement-states/wyoming-faq.html

16. www.nrc.gov/images/reading-rm/doc-collections/maps/agreement-states.png

17. www.rutgersuniversitypress.org/the-price-of-nuclear-power/9780813569789

18. www.hcn.org/articles/opinion-pollution-a-uranium-mill-in-utah-threatens-...

19. www.hcn.org/articles/pollution-a-26-000-ton-pile-of-radioactive-waste-li...

20. www.abqjournal.com/1129580/researchers-to-measure-mixed-metals-mining-co...

21. www.npr.org/sections/health-shots/2016/04/10/473547227/for-the-navajo-na...

22. www.sric.org/

23. https://pubs.acs.org/doi/pdf/10.1021/acs.est.5b01408

24. www.aljazeera.com/news/2017/12/native-tribes-sue-trump-bears-ears-monume...

25. www.hcn.org/articles/tribal-affairs-trumps-message-for-tribes-let-them-e...

26. www.justice.gov/civil/common/reca

27. https://doi.org/10.1080/08941920903005795

28. https://cumulis.epa.gov/supercpad/cursites/csitinfo.cfm?id=0800679

29. https://cumulis.epa.gov/supercpad/cursites/csitinfo.cfm?id=0800867

30. www.atsdr.cdc.gov/HAC/pha/MonticelloMillTailings/MonticelloMillTailingsP...

31. https://aeon.co/ideas/rural-communities-can-t-afford-the-cost-of-nuclear...

32. www.indianz.com/News/2017/12/13/havasupai-tribe-sees-mixed-victory-in-li...

33. www.theguardian.com/environment/2017/jul/17/grand-canyon-uranium-mining-...

34. www.hcn.org/articles/boom-bust

35. www.nasdaq.com/article/uranium-boom-uranium-bust-cm258599

36. www.csis.org/analysis/governing-uranium-united-states

37. www.newyorker.com/magazine/2010/09/13/the-uranium-widows

38. www.degruyter.com/downloadpdf/j/auk.2014.36.issue-2/auk-2014-0205/auk-20...

39. www.brookings.edu/blog/the-avenue/2017/01/25/automation-guarantees-a-ble...

40. www.telluridenews.com/the_watch/news/article_a2195dcf-fe4f-5039-bc80-cd5...

41. www.csis.org/analysis/governing-uranium-united-states

Slowly but surely, uranium market soothsayers are waking up to the fact that nuclear power and the uranium industry face a bleak future. Writing in Motley Fool last December, Maxx Chatsko wrote:¹

"I've done a complete 180 on nuclear energy in the last year. ... The enormous headwinds facing the global nuclear power industry represent a significant long-term obstacle for Cameco shareholders. The threat of reactor shutdowns, even spread out over the next two decades, creates a cloud of uncertainty that will continue to hang over uranium prices. Although they could rebound from their current historic lows, there doesn't seem to be any catalyst on the horizon for sustained demand growth. Simply put, nuclear power is on its way out, with new construction likely to be significantly offset by retirements. That's bad news for uranium miners everywhere."

Cameco is responsible for about 17% of global uranium production, or at least that was the figure before the late-2017 announcement to reduce production. The company has been downsizing in recent years:

• In December 2012, Cameco booked a C$168 million (US$133m) write-down on the value of its Kintyre uranium deposit in Western Australia.²
• In 2014, Cameco cut its growth plans and uranium exploration expenses, warning that the "stagnant, over supplied short-term market" was not going to improve any time soon.³
• In 2014, Cameco put its Millennium uranium project in northern Saskatchewan on hold ‒ where it remains today ‒ and asked the Canadian Nuclear Safety Commission to cease the mine approval process.⁴
• In April 2016, Cameco announced that it was suspending uranium production at Rabbit Lake in Canada, reducing production at McArthur River / Key Lake in Canada, and slowing production at its two US uranium mines, both in-situ leach mines ‒ Crow Butte in Nebraska and Smith Ranch-Highland in Wyoming. About 500 jobs were lost at Rabbit Lake, 85 at the US mines, and corporate headquarters was downsized.⁵
• In early 2017, Cameco announced that another 120 workers would be sacked by May 2017 at three Canadian uranium mines and mills ‒ McArthur River, Key Lake and Cigar Lake ‒ and production at McArthur River, already reduced, would be suspended for six weeks in mid-2017.^6,7

And in late-2017, Cameco announced that production at McArthur River, the world's largest producing uranium mine, would be suspended from January 2018 for around 10 months. The Key Lake mill will also be put into care-and-maintenance.^8,9 Cameco is 70% owner of McArthur River and 83% owner of Key Lake; Areva (now called Orano) owns the remainder.

The workforce at McArthur River and Key Lake will be reduced by about 845 workers (including contractors), with about 210 workers retained to maintain the two sites in care-and-maintenance.⁹

A Cameco statement said:⁹

"Cameco plans to meet its commitments to customers from inventory and other supply sources during the suspension, which will be reviewed on an ongoing basis until inventory is sufficiently drawn down or market conditions improve. The duration of the suspension and temporary layoff is expected to last 10 months.

"Uranium prices have fallen by more than 70% since the Fukushima accident in March 2011 and remain at unsustainably low levels. Cameco has been partially sheltered from the full impact of weak prices by its portfolio of long-term contracts, but those contracts are running out and it is necessary to position the company today to generate cash flow if prices do not improve. ...

"We have reduced supply, avoided selling into a weak spot market, resisted locking-in long-term sales commitments at low prices, and significantly reduced costs. To decrease costs, we suspended production at the Rabbit Lake operation, stopped development and curtailed production at our US operations, reduced workforce across all our sites including head office, changed air commuter services for operations in Saskatchewan, changed shift schedules at two Saskatchewan sites, and downsized corporate office functions including a consolidation of our global marketing activities."

The "other supply sources" mentioned above including buying uranium on the spot market ‒ Cameco's uranium is more valuable left in the ground at current prices.

Cameco CEO Tim Gitzel said in November that further cutting production is an option despite the repeated cut-backs in recent years and the suspension of production at McArthur River and Key Lake.¹⁰

Gitzel said last year that "obviously we're very far from requiring any new greenfield uranium projects."¹¹

From being the top uranium stock in 2016, Cameco made a complete turn-around to become the worst-performing uranium stock in 2017, shedding 12% during the year.¹²

The Northern Miner reported in November 2017 on Cameco's latest cut-backs ‒ and the uranium industry's broader malaise:¹³

"The bottom line is that Cameco is suspending 40–45% of its mine output and laying off 20% of its workforce. Cameco is also slashing its annual dividend by 80% next year from 40¢ to 8¢ per common share ...

"In the post-Fukushima years, Cameco had always reassured stakeholders it was sheltered from the impact of weak uranium prices by its portfolio of long-term contracts, but the company now admits 'those contracts are running out, and it is necessary to position the company today to generate cash flow if prices do not improve.

"Cameco emphasizes that company-wide, it has already lowered supply, cut planned capital expenses, avoided selling into a weak spot market, resisted locking in long-term sale commitments at low prices and significantly reduced costs.

"Across mining, no one has had a harder past seven years than uranium miners, developers and explorers, and the year ahead shows little sign of improvement. If the subsector's leader Cameco is having these kinds of grave troubles, we can only imagine what the rest of the uranium pack is going through in closed-door meetings."

Kazatomprom

In January 2017, Kazatomprom announced that it planned to cut production by 10% in 2017 in response to ongoing oversupply in the uranium market.¹⁴

In December 2017, Kazatomprom announced a 20% reduction of uranium production from 2018‒2020. That reduction equates to about 7.5% of estimated global production for 2018 (Kazakhstan has accounted for about 39% of world production in recent years).^8,14-16

"Given the challenging market conditions, and in light of continued oversupply in the uranium market, we have taken the strategic decision to reduce production in order to better align our production levels with market demand," Kazatomprom chairperson Galymzhan Pirmatov said.¹⁶

China has been a major buyer of uranium from Kazakhstan. That supply may be slowing as the Chinese nuclear power program slows, and China may have stockpiled as much uranium as it plans to.¹⁷ Former World Nuclear Association executive Steve Kidd estimates that China has accumulated at least 100,000 tonnes of uranium¹⁷ ‒ about 12 times its estimated 2017 requirements.¹⁸ China's stockpile may be higher ‒ Ux Consulting estimated it at about 300 million pounds U3O8 (115 tonnes of uranium) in mid-2016.¹⁹

References:

1. Maxx Chatsko, 12 Dec 2017, 'The Simple Reason I Won't Buy Cameco Corporation Stock', www.fool.com/investing/2017/12/12/the-simple-reason-i-wont-buy-cameco-co...

2. Nick Sas, 13 Feb 2013, 'Cameco puts Kintyre on ice', https://thewest.com.au/news/wa/cameco-puts-kintyre-on-ice-ng-ya-344802

3. Cameco, 7 Feb 2014, 'Cameco Reports Fourth Quarter and 2013 Financial Results', www.cameco.com/media/news/cameco-reports-fourth-quarter-and-2013-financi...

4. Cameco, 'Millenium', www.cameco.com/businesses/uranium-projects/millennium

5. World Nuclear News, 22 April 2016, 'Cameco scales back uranium production', www.world-nuclear-news.org/UF-Cameco-scales-back-uranium-production-2204...

6. Cameco, 17 Jan 2017, 'Cameco Announces Preliminary 2016 Earnings Expectations and Operational Changes Planned for 2017', www.cameco.com/media/news/cameco-announces-preliminary-2016-earnings-exp...

7. Greg Peel, 14 March 2017, 'Uranium Week: See You In Court', www.fnarena.com/index.php/2017/03/14/uranium-week-see-you-in-court/

8. MINING.com, 23 Dec 2017, 'Are Higher Uranium Prices Around The Corner?', https://oilprice.com/Alternative-Energy/Nuclear-Power/Are-Higher-Uranium...

9. Cameco, 8 Nov 2017, 'Cameco to suspend production from McArthur River and Key Lake operations and reduce its dividend', www.cameco.com/media/news/cameco-to-suspend-production-from-mcarthur-riv...

10. Rod Nickel / CNBC, 9 Nov 2017, 'UPDATE 2-Uranium miner Cameco not planning more output cuts 'right now'-CEO', www.cnbc.com/2017/11/09/reuters-america-update-2-uranium-miner-cameco-no...

11. Cameco, 9 Feb 2017, 'Cameco's (CCJ) CEO Tim Gitzel on Q4 2016 Results ‒ Earnings Call Transcript', https://seekingalpha.com/article/4044994-camecos-ccj-ceo-tim-gitzel-q4-2...

12. Neha Chamaria, 31 Dec 2017, 'Here's Where Things Went Wrong for Cameco Corporation in 2017', www.fool.com/investing/2017/12/31/heres-where-things-went-wrong-for-came...

13. Northern Miner, 22 Nov 2017, 'Editorial: Cameco suspends 40% of production in face of oversupply' www.northernminer.com/news/editorial-cameco-suspends-40-production-face-...

14. World Nuclear Association, 10 Jan 2017, 'Oversupply prompts Kazakh uranium production cut', www.world-nuclear-news.org/UF-Oversupply-prompts-Kazakh-uranium-producti...

15. Kazatomprom, 4 December 2017, 'Kazatomprom announces further production cuts', www.kazatomprom.kz/en/news/kazatomprom-announces-further-production-cuts

16. World Nuclear Association, 4 Dec 2017, 'Kazakhstan to cut uranium production', www.world-nuclear-news.org/UF-Kazakhstan-to-cut-uranium-production-04121...

17. Steve Kidd, 13 Sept 2017, 'Uranium – what are the dynamics between China and Kazakhstan?', www.neimagazine.com/opinion/opinionuranium-what-are-the-dynamics-between...

18. World Nuclear Association, February 2018, 'World Nuclear Power Reactors & Uranium Requirements', www.world-nuclear.org/information-library/facts-and-figures/world-nuclea...

19. Rhiannon Hoyle and Mayumi Negishi, 31 July 2016, 'Japan Nuclear-Power Jitters Weigh on Global Uranium Market', www.wsj.com/articles/japan-nuclear-power-jitters-weigh-on-global-uranium...

"It is a misunderstanding that uranium mining can cause radioactivity. It is not true because uranium gets radioactive only when it is enriched. Otherwise, uranium is just like any other soil as it has got no radiation. But there is a popular belief that if uranium is there, radiation will also be there."
‒ T.P. Sreenivasan, former Representative of India to the International Atomic Energy Agency.

The Shillong Times, September 2017.¹

The uranium market is a curious beast at the best of times ‒ keen to spot a bargain, investors get more and more excited the further the uranium price and company stock prices fall. They've had plenty to get excited about in recent years. These days, the market exhibits multiple levels of weirdness, all stemming from the growing acknowledgment that nuclear power and the uranium industry face a bleak future.

The uranium market has a "subdued outlook" and Cameco's uranium is now "more valuable in the ground" according to Warwick Grigor from Far East Capital, because the cost of production is higher than the prices currently being offered.² Cameco CEO Tim Gitzel agrees, saying in January 2018 that at current prices "our supply is better left in the ground."³ So uranium industry executives and market analysts are finally coming around to rallying cry of the anti-uranium movement: Leave it in the ground!

We've also had the odd situation over the past year of nuclear lobbyists arguing repeatedly that the nuclear power industry is in "crisis"⁴ and wondering what if anything can be salvaged from "the ashes of today's dying industry".⁵ Usually such claims come from the anti-nuclear movement ‒ sometimes more in hope that expectation.

And we've had the odd situation of industry bodies (such as the US Nuclear Energy Institute) and supporters (such as former US energy secretary Ernest Moniz) openly acknowledging the connections between nuclear power and weapons ‒ connections they have strenuously denied for decades.⁶ Such arguments are now being used in an effort to secure preferential treatment for uranium mining companies in the US. In January 2018, Ur-Energy and Energy Fuels lodged a petition with the Department of Commerce under the Trade Expansion Act of 1962, the purpose of which is to protect national security industries that are under threat from imports.⁷ The companies want a mandated requirement for US utilities purchase a minimum 25% of their requirements from US mines.

Ur-Energy and Energy Fuels argue that over-reliance on uranium from Russia, Kazakhstan, Uzbekistan and China "threaten national security". Domestic production accounts for less than 5% of national demand, they state, and a "healthy uranium mining industry is vital to U.S. national security, because it supplies fuel for nuclear power plants that are a key component of the nation's critical energy infrastructure and essential defense needs." Uranium is "the backbone of the U.S. nuclear deterrent and fuels ships and submarines in the U.S. Navy", the companies state.

The arguments mounted by Ur-Energy and Energy Fuels might appeal to President Trump and they would dovetail neatly with his silly conspiracy theory about Hillary Clinton threatening national security by allowing the sale of a uranium mining company with US interests to Russia's Rosatom.⁸

But the arguments are likely to collapse under the weight of their own stupidity. They don't appear to enjoy any support ‒ none that we're aware of, at least ‒ from the US nuclear weapons complex despite a requirement for uranium used in weapons programs to be domestically sourced. It makes no difference to the nuclear weapons complex whether 5% or 25% of uranium is domestically sourced.

According to market analysts FNArena, the petition lodged by Ur-Energy and Energy Fuels has "brought the uranium market to a screaming halt" and US power utilities have warned that such a quota would force the early shutdown of some nuclear plants.⁹

Another miserable year for the uranium industry

Uranium mine production increased by 50% from 2007 to 2016.¹⁰ The increase was driven, initially at least, by expectations of the nuclear renaissance that didn't eventuate. Mine production plus secondary sources¹¹ have consistently exceeded demand ‒ 2017 was the eleventh consecutive year of surplus according to the CEO of uranium company Bannerman Resources.¹²

Stockpiles (inventories) have grown steadily over the past decade to reach enormous levels ‒ more than 1.4 billion pounds U3O8 according to Ux Consulting¹³ or 1.2 billion pounds according to the OECD's 2016 Red Book.¹⁴ Thus stockpiles alone would suffice to keep the entire global reactor fleet operating for around eight years. Supply from mines and secondary sources in recent years has exceeded demand by about 30 million pounds U3O8 per year or 18%.¹³

Those dynamics have put downward pressure on prices. Uranium prices were flat in 2017. The spot price as of 1 December 2017 was less than one-third of the pre-Fukushima price (and less than one-sixth of the 2007 peak-bubble price), and the long-term contract price less than half the pre-Fukushima price.¹⁵

Uranium Prices (US$ / pound uranium oxide)

Source: Cameco: www.cameco.com/invest/markets/uranium-price

Countless would-be uranium mining companies have given up. Some mines have closed, others have been put into care-and-maintenance, and others have reduced output. But mine production plus secondary sources have continued to exceed demand ‒ and to exert downward pressure on prices.

Very few mines could operate at a profit at current prices (US$21.88 spot price and $30 long-term contract prices as of 31 January 2018).¹⁵ Some mines are profitable because earlier contracts stipulated higher prices, while many mines are operating at a loss. Current prices would need to more than double to encourage new mines ‒ a long-term contract price of about US$70–$80 is typically cited as being required to encourage the development of new mines.¹⁶ Companies considering new mines also need to factor in competition from mines that have been producing at reduced output or put into care-and-maintenance.

Many companies have been loathe to close operating mines, or to put them into care-and-maintenance, even if the only other option is operating at a loss. They have been playing chicken, hoping that other companies and mines will fold first and that the resultant loss of production will drive up prices.¹⁷ "We have to recognise that we over-produce, and we are responsible for this fall in the price," said Areva executive Jacques Peythieu in April 2017.¹⁸

The patterns outlined above were repeated in 2017. It was another miserable year for the uranium industry. A great year for those of us living in uranium producing countries who don't want to see new mines open and who look forward to the closure of existing mines. And a great year for the nuclear power industry ‒ in the narrow sense that the plentiful availability of cheap uranium allows the industry to focus on other problems.

Cut-backs announced by Cameco and Kazatomprom

The patterns that have prevailed over the past five years or so might be changed by decisions taken by Cameco (Canada) and Kazatomprom (Kazakhstan) in late 2017 to significantly reduce production. Previous cut-backs in Canada and Kazakhstan have had little or no effect, and so far the late-2017 announcements have only resulted in a small, short-lived upswing in uranium prices. But the cut-backs are significant and their impact might yet be felt.

As a result of the decisions by Cameco and Kazatomprom (detailed in the following article), global production in 2018 will probably be reduced by 10‒15%.^3,19,20 After years of oversupply (including secondary sources), production and demand will be more-or-less equivalent in 2018.

A late-2017 report by Cantor Fitzgerald equity research argued that the decisions by Cameco and Kazatomprom could result in a "step change" for uranium prices.¹⁹ Rob Chang from Cantor Fitzgerald said he believes that a "violent" increase in the price of uranium is coming.³

But Chang's analysis was more circumspect than his choice of adjectives: "We expect these events to ultimately push spot uranium prices to the mid-high US$20/lb range and perhaps into US$30/lb. However, as seen so far, the degree of movement may be muted at first due to fact that there are a limited number of qualified purchasers of uranium – making it a less efficient market. Inventory levels are also a concern as we estimate that there are 800-1,200M lbs of total above ground inventory of which about 700-800M lbs are held by utilities. We do not believe that all of it is available for sale as significant portions are held for strategic purposes and necessary utility needs. Moreover there is the possibility of sales from distressed utilities and by utilities with reactors that are being decommissioned."¹⁹

TEPCO ‒ operator of the Fukushima plant in Japan ‒ is perhaps the most distressed of all utilities and is currently locked in a legal dispute with Cameco after declaring force majeure and breaking its uranium purchase agreement.²¹ Cameco is seeking US$681.9 million in damages from TEPCO.²¹

Warwick Grigor from Far East Capital was downbeat about Cameco's announcement. "I don't see this as a turnaround for the uranium price; at best they will stay where they are, but it doesn't signal a boom in price," he said in November 2017.²

BHP marketing vice-president Vicky Binns said in December 2017 that uranium markets would remain oversupplied for close to a decade, with "downward pressure" remaining on uranium prices despite Cameco's production cuts. She said that demand for uranium could outstrip supply by the late 2020s as consumption rises but that could change if developed nations close their nuclear reactors earlier than expected, or if renewables take a larger than expected market share.²⁰ BHP owns the Olympic Dam (Roxby Downs) mine in South Australia, easily the world's biggest uranium deposit.

Equally downbeat comments have been made by other industry insiders and analysts in recent years. Former Paladin Energy chief executive John Borshoff said in 2013 that the uranium industry "is definitely in crisis" and "is showing all the symptoms of a mid-term paralysis".²² Former World Nuclear Association executive Steve Kidd in May 2014 predicted "a long period of relatively low prices".²³ Nick Carter from Ux Consulting said in April 2016 that he did not see a supply deficit in the market until "the late 2020s".²⁴

Perhaps a price increase is on the way due to some combination of production cut-backs, the nuclear power micro-renaissance (discussed in the last issue of Nuclear Monitor²⁵), and long-term contracts needing to be renegotiated. But in all likelihood, any uptick won't be soon and it won't be violent (or if the bubble that peaked in 2007 is a guide, a violent upswing will be followed by a violent downswing).

Moreover the market is imperfect and increasingly fragmented. Arguments advanced by Steve Kidd in 2014 still hold.²³ He argued that "the case made by the uranium bulls is in reality full of holes" and that a new era is emerging with the uranium market split into three:

• The Chinese will favor investing directly in mines to satisfy their requirements; they are not going to 'play ball' with the established uranium market.
• The Russians will continue to be significant nuclear fuel exporters but their own market will remain essentially closed to outsiders. They still have secondary supplies to tap into (plenty of surplus highly-enriched uranium remains to be down-blended) and they will follow the Chinese and invest directly in uranium assets if their own domestic production remains constrained.
• The established uranium producers will have the remainder of the market to satisfy and that will likely be declining in magnitude.

References:

1. The Shillong Times, 25 Sept 2017, 'IAEA Allays Fears Over Uranium Mining Effects', www.theshillongtimes.com/2017/09/25/iaea-allays-fears-over-uranium-minin...

2. Cole Latimer, 9 Nov 2017, 'Uranium shares spike as Canadian giant Cameco suspends production', www.theage.com.au/business/mining-and-resources/uranium-shares-spike-as-...

3. Micah Lance, 10 Jan 2018, 'Cameco Corporation: Short-Term Pain For Long-Term Gain', https://seekingalpha.com/article/4136580-cameco-corporation-short-term-p...

4. Nuclear Monitor #839, 'Is nuclear power in crisis, or is it merely the END?', www.wiseinternational.org/nuclear-monitor/839/nuclear-power-crisis-or-it...

5. Ted Nordhaus, 27 March 2017, 'The End of the Nuclear Industry as We Know It', https://thebreakthrough.org/index.php/voices/ted-nordhaus/the-end-of-the...

6. Nuclear Monitor #850, 7 Sept 2017, 'Nuclear power, weapons and 'national security'', www.wiseinternational.org/nuclear-monitor/850/nuclear-power-weapons-and-...

7. Energy Fuels, 16 Jan 2018, 'Energy Fuels and Ur-Energy Jointly File Section 232 Petition with U.S. Commerce Department to Investigate Effects of Uranium Imports on U.S. National Security', www.energyfuels.com/news-pr/energy-fuels-ur-energy-jointly-file-section-...

8. Dan Friedman, 31 Oct 2017, 'The Clinton-Uranium "Scandal" Is Right-Wing Nonsense. Here's Everything You Need to Know', www.motherjones.com/politics/2017/10/the-clinton-uranium-scandal-is-righ...
9. Greg Peel, 30 Jan 2018, 'Uranium Week: Ground To A Halt', www.fnarena.com/index.php/2018/01/30/uranium-week-ground-to-a-halt/

10. World Nuclear Association, 'World Uranium Mining Production, Updated July 2017, www.world-nuclear.org/information-library/nuclear-fuel-cycle/mining-of-u...

11. Secondary sources include government and commercial inventories, reprocessed uranium, underfeeding at enrichment plants (extracting more U-235 per given volume of feedstock), uranium produced by the re-enrichment of depleted uranium tails, and low-enriched uranium produced by blending down highly enriched uranium (typically from military sources).
12. World Nuclear Association, 7 Dec 2017, 'Uranium suppliers respond to production cuts', www.world-nuclear-news.org/UF-Uranium-suppliers-respond-to-production-cu...

13. Rhiannon Hoyle and Mayumi Negishi, 31 July 2016, 'Japan Nuclear-Power Jitters Weigh on Global Uranium Market', http://www.wsj.com/articles/japan-nuclear-power-jitters-weigh-on-global-...

14. OECD's Nuclear Energy Agency and International Atomic Energy Agency, 2016, 'Uranium 2016: Resources, Production and Demand', www.oecd-nea.org/ndd/pubs/2016/7301-uranium-2016.pdf

15. Cameco, 'Uranium Price', www.cameco.com/invest/markets/uranium-price

16. Andrew Topf, 12 Jan 2016, 'Nuclear Renaissance Has Analysts Bullish On Uranium', http://oilprice.com/Alternative-Energy/Nuclear-Power/Nuclear-Renaissance...

17. Nuclear Monitor #792, 2 Oct 2014, 'Uranium's dead cat bounce as miners play chicken', www.wiseinternational.org/nuclear-monitor/792/uraniums-dead-cat-bounce-m...

18. World Nuclear Association, 2 May 2017, 'Uranium producers prepare for market recovery', www.world-nuclear-news.org/UF-Uranium-producers-prepare-for-market-recov...

19. MINING.com, 23 Dec 2017, 'Are Higher Uranium Prices Around The Corner?', https://oilprice.com/Alternative-Energy/Nuclear-Power/Are-Higher-Uranium...

20. Peter Ker, 5 Dec 2017, 'Kazakhstan puts a rocket under uranium markets', www.afr.com/business/energy/kazakhstan-puts-a-rocket-under-uranium-marke...

21. Mining Weekly, 19 Dec 2017, 'Tokyo Electric says Canada's Cameco seeks $682m in damages', www.miningweekly.com/article/tokyo-electric-says-canadas-cameco-seeks-68...

22. Nick Sas, 18 July 2013, 'Uranium industry in crisis: Borshoff', The West Australian, http://web.archive.org/web/20130725060831/http://au.news.yahoo.com/thewe...

23. Steve Kidd, 6 May 2014, 'The future of uranium – higher prices to come?', www.neimagazine.com/opinion/opinionthe-future-of-uranium-higher-prices-t...

24. Bejamin Leveau, 29 April 2016, 'Uranium industry focuses on costs as supply glut continues', http://blogs.platts.com/2016/04/29/uranium-cost-supply-glut/

25. Nuclear Monitor #856, 26 Jan 2018, '2017 in Review: Nuclear Power', www.wiseinternational.org/nuclear-monitor/856/nuclear-monitor-856-29-jan...

Seeking Alpha, a publication for stock investors, has published an article on 'the death spiral of nuclear energy and the demise of uranium miners', written by 'independent professional value investor' Caiman Valores.¹ It's rare for such publications to carry such an analysis. Typically, in the upside-down, glass-half-full universe that stock investors live in, bad news is good news: the further the uranium market slumps, the further a particular company slumps, the closer the turn-around and the upwards swing.

Valores points to data showing that uranium production increased by 50% from 2007 to 2016² despite the failure of the nuclear 'renaissance' to materialize and generally stagnant demand. Hence the large and growing stockpiles of yellowcake and further downward pressure on already very low prices. "Despite claims of a looming supply cliff and higher demand which will support higher prices," he writes, "demand for uranium is set to weaken in an environment where supplies are growing."

Valores is much more bullish about renewables: "The desire to limit global warming as well as the dangers posed by nuclear energy in the wake of Fukushima sparked a significant uptick in investment and research into cleaner more sustainable and less dangerous sources of energy. That culminated in renewables receiving a record level of investment totaling $349 billion in 2015. While investment declined in 2016 by 18% compared to 2015 it was still a very respectable $287 billion.

Valores concludes: "Despite claims that uranium prices will receive a leg up from greater demand and constrained supplies, it is clear that the tide has turned against nuclear power and the radioactive metal. Not only has sentiment turned against nuclear energy after Fukushima but cleaner safer renewable forms of energy are increasingly becoming cheaper and more efficient. The surge in investment in renewables now sees the vast majority being competitive with or even cheaper than nuclear power as well as fossil fuels. For those reasons alone it is difficult to see the substantial demand growth required to lift uranium prices significantly higher, particularly when global uranium supplies will keep growing weighing further on prices. That means primary uranium miners remain value traps despite their attractive valuations."

Credit Suisse's Robert Reynolds and Anita Soni estimate that some 40% of operating reactors will be decommissioned by 2035, with fewer new units brought online to replace them.³ They write: "We estimate an average of ~9 reactors per year will need to be constructed from 2017-2035 just to keep uranium demand steady at 2016 levels. In 2016, 11 new reactors were brought on-line. However, this includes seven reactors in China where we see nuclear capacity growth slowing due to power market oversupply and a decline in the relative economic competitiveness of nuclear."

If the uranium market recovers, it will be a long time coming

Then Paladin Energy chief executive John Borshoff said in 2013 that the uranium industry "is definitely in crisis ... and is showing all the symptoms of a mid-term paralysis".⁴ His prediction was accurate. Long-term contract prices and spot prices are much lower in 2017 than they were in 2013.⁵

Former World Nuclear Association executive Steve Kidd said in May 2014 that "the case made by the uranium bulls is in reality full of holes" and he predicted "a long period of relatively low prices, in which uranium producers will find it hard to make a living".⁶ So far, Kidd's prediction has proven to be accurate. Long-term contract prices and spot prices are much lower in 2017 than they were in 2014.⁵

An October 2015 report in Nuclear Engineering International noted that "there may not be much upward pressure on market prices until the next decade" as "excess supply is expected to persist."⁷

Nick Carter from Ux Consulting said in April 2016 that the spot uranium price could stay in the low $30s/lb "for quite some time" because supply is expected to exceed demand by 25‒30 million pounds U3O8 each year from 2016 to 2019.⁸ Carter said he did not see a supply deficit in the market until "the late 2020s".⁸

UBS analysts noted in July 2016 that a turnaround in the market could be years off due to the slow reactor restart process in Japan and the slow pace of global nuclear expansion.⁹

The Wall Street Journal reported in September 2016: "There is too much of nearly every commodity in the world today. Then there is uranium. The outlook for the element that powers nuclear reactors may be worse than for any other, and there is almost no prospect for improvement soon. Unlike other commodities, low prices won't stimulate demand. No commodity faces the unique pressure that uranium and nuclear fuel do and there is little prospect of a near-term recovery."¹⁰

Expectations that the uranium price would rise have repeatedly been foiled:

• Reactor restarts in Japan were meant to stimulate the uranium industry ‒ but only five reactors are operating as of August 2017.
• The December 2013 end of the US‒Russia 'Megatons to Megawatts' program (converting highly enriched uranium from weapons into fuel for power reactors) was meant to stimulate the industry ‒ but it had no effect.
• The global nuclear power 'renaissance' was meant to stimulate the uranium industry ‒ but it didn't materialize.
• The industry hoped that the drawing down of inventories would lead to increased prices ‒ but inventories are massive and still growing (as discussed below).

The industry is getting increasingly desperate, looking for a bounce from political conflicts upsetting existing production and supply networks (e.g. the Russia / Ukraine conflict) or from further mine failures and closures. According to an April 2015 Mineweb.com article: "What could bring a major price surge forward though remains major supply interruptions – either for geopolitical reasons, or for debilitating technical problems at one or more of the key producers."¹¹ Yet long-term contract prices and spot prices have fallen since April 2015 ‒ indeed they have fallen sharply.⁵

Explaining the uranium market's malaise

There are numerous reasons why the uranium market is likely to remain depressed for the foreseeable future. The most important are as follows:

1. Nuclear power is unlikely to expand. Stagnation or slow decline are the most likely scenarios over the next 20 years, and if there is any growth it will be slight.

2. Uranium is plentiful. At the 2016 level of uranium requirements (63,404 tonnes of uranium¹²), identified resources¹³ are sufficient for 121 years of supply of the global nuclear power fleet (at its current capacity of 392 gigawatts). From 2012 to 2014, uranium was produced in no less than 21 countries.¹³

3. Stockpiles (inventories) are massive and still growing. Global stockpiles have grown sharply since the Fukushima disaster and now amount to more than 1.4 billion pounds U3O8 according to Ux Consulting¹⁴ or 1.2 billion pounds according to the OECD's 2016 Red Book.¹³ Thus stockpiles alone would suffice to keep the entire global reactor fleet operating for around eight years. And stockpiles continue to grow ‒ supply from mines and secondary sources currently exceeds demand by about 30 million pounds U3O8 per year or 18%.^14,15

4. Secondary sources ‒ i.e. sources other than newly-mined uranium ‒ continue to contribute significantly to oversupply. Secondary sources include government and commercial inventories, reprocessed uranium, underfeeding at enrichment plants (extracting more U-235 per given volume of feedstock), uranium produced by the re-enrichment of depleted uranium tails, and low-enriched uranium produced by blending down highly enriched uranium (typically from military sources).

5. Enrichment oversupply. The overcapacity and low cost of uranium enrichment services has emerged as a significant factor undermining the uranium industry. Cheap, abundant enrichment capacity can substitute for newly mined uranium, either by extracting more uranium-235 during uranium enrichment, or re-enriching tails. This has and will continue to keep uranium prices down.^6,16 Platts noted in April 2016 that enrichment companies are using their excess enrichment capacity to bring an estimated 15 million lb U3O8 equivalent to the market annually⁸ ‒ that equates to almost 10% of annual demand.

References:

1. Caiman Valores, 28 July 2017, 'The Death Spiral Of Nuclear Energy And The Demise Of Uranium Miners', https://seekingalpha.com/article/4091999-death-spiral-nuclear-energy-dem...

2. www.world-nuclear.org/information-library/nuclear-fuel-cycle/mining-of-u...

3. Teresa Rivas, 1 Aug 2017, 'High Costs Of Nuclear Projects Could Be Bad News For Uranium', www.barrons.com/articles/high-costs-of-nuclear-projects-could-be-bad-new...

4. Nick Sas, 18 July 2013, 'Uranium industry in crisis: Borshoff', The West Australian, http://web.archive.org/web/20130725060831/http://au.news.yahoo.com/thewe...

5. www.cameco.com/invest/markets/uranium-price

6. Steve Kidd, 6 May 2014, 'The future of uranium – higher prices to come?', www.neimagazine.com/opinion/opinionthe-future-of-uranium-higher-prices-t...

7. Thomas Meade and Julian Steyn, 2 Oct 2015, 'Treading water in the uranium market', www.neimagazine.com/features/featuretreading-water-in-the-uranium-market...

8. Bejamin Leveau, 29 April 2016, 'Uranium industry focuses on costs as supply glut continues', http://blogs.platts.com/2016/04/29/uranium-cost-supply-glut/

9. Donald Levit, 27 July 2016, 'Uranium Prices Remain Below Cost of Production, Recovery is Years Away', www.economiccalendar.com/2016/07/27/uranium-prices-remain-below-cost-of-...

10. Spencer Jakab, 18 Sept. 2016, 'Uranium Investments Grow Radioactive', Wall Street Journal, www.wsj.com/articles/why-uranium-investments-will-remain-radioactive-147...

11. Lawrence Williams, 22 April 2015, 'Uranium outlook positive but perhaps not outstanding unless … ', www.mineweb.com/news/energy/uranium-outlook-positive-but-perhaps-not-out...

12. www.world-nuclear.org/information-library/facts-and-figures/world-nuclea...

13. OECD's Nuclear Energy Agency and International Atomic Energy Agency, 2016, 'Uranium 2016: Resources, Production and Demand', www.oecd-nea.org/ndd/pubs/2016/7301-uranium-2016.pdf

14. 9 Aug 2016, 'Uranium: the world's worst commodity', Nuclear Monitor #828, www.wiseinternational.org/nuclear-monitor/828/uranium-worlds-worst-mined...

15. Rhiannon Hoyle and Mayumi Negishi, 31 July 2016, 'Japan Nuclear-Power Jitters Weigh on Global Uranium Market', www.wsj.com/articles/japan-nuclear-power-jitters-weigh-on-global-uranium...

16. Steve Kidd, 8 Dec 2016, 'Uranium enrichment – why are prices now much lower and what is the impact?', www.neimagazine.com/opinion/opinionuranium-enrichment-why-are-prices-now...

"It has never been a worse time for uranium miners." ‒ Alexander Molyneux, CEO of Paladin Energy, October 2016.¹

Paladin Energy Ltd appointed administrators on July 3 after Electricité de France (EDF) called in a US$277 million debt that Paladin was unable to pay.² Paladin is a uranium mining company based in Perth, Western Australia. The company is 75% owner of the Langer Heinrich uranium mine in Namibia, 85% owner of the Kayelekera uranium mine in Malawi (in care and maintenance since 2014), and it owns sundry 'nonproducing assets' in Australia, Canada and Niger.

The administrators, from KPMG, will continue to operate Paladin on a business-as-usual basis until further notice. Paladin said its management and directors "remain committed" to working with the administrators to restructure and recapitalise the company.²

Paladin "was formerly a multi-billion-dollar company and was once the best-­performed stock in the world" according to The Australian newspaper.³ The company's share price went from one Australian cent in 2003 to A$10.80 in 2007, but has fallen more than 200-fold and traded at 4.7 cents before trading was suspended in early June 2017.⁴ Paladin had just US$21.8 million in cash at the end of March 2017.⁴ The company's losses totalled US$1.9 billion between 1994 and 2014.⁵

Later this year, China National Nuclear Corporation (CNNC), which already owns 25% of the Langer Heinrich mine, may purchase Paladin's 75% stake. The move comes as a result of CNNC seeking to exercise a debt-default option to acquire the 75% stake. Paladin wanted to challenge CNNC in court, but after consulting with debt holders agreed not to do so due to prohibitive cost.⁶ Paladin could gain US$500 million from the sale but will still be in debt. In addition to the US$277 million it owes EDF, Paladin owes bondholders US$372 million.³

Assuming the Langer Heinrich sale goes ahead, Paladin will have nothing other than 'nonproducing assets' and the Kayelekera mine – which also a nonproducing asset since it is in care and maintenance. So the administrators have very little to work with. Just keeping Kayelekera in care and maintenance costs about US$10 million per year.⁷

Paladin said in 2014 that its decision to place Kayelekera on care and maintenance "is the latest in a sequence of closures, production suspensions and deferrals of major planned greenfield and brownfield expansions in the uranium sector, including Paladin's decision in 2012 to suspend evaluation of a major Stage 4 expansion of the Langer Heinrich Mine in Namibia."⁸

Paladin said in 2015 that a price of about US$75 per pound would be required for Kayelekera to become economically viable⁹ ‒ but that price hasn't been seen since 2011 and it is more than three times the current spot price and more than double the long-term contract price.¹⁰ Paladin also said that the availability of grid power supply would be necessary to restart Kayelekera, to replace the existing diesel generators.⁹

Selling nonproducing assets

Late last year, Paladin was reduced to selling nonproducing assets for a song. Paladin sold a number of Australian uranium exploration projects to Uranium Africa for A$2.5 million, including Oobagooma in Western Australia and the Angela/Pamela and Bigrlyi projects in the Northern Territory.¹¹ Paladin told shareholders that the assets were 'noncore' and it was unlikely the company would be in a position to conduct any meaningful work developing the projects over the next decade.¹¹ The A$2.5 million did little to improve Paladin's financial situation, but the company is also spared from further spending on rates, rents and statutory commitments payable to keep the tenements in good standing.¹¹

Last year, Paladin also sold its 257.5 million shares in uranium exploration company Deep Yellow for A$2.6 million, with shares priced at one Australian cent a share.¹¹ Deep Yellow, like Paladin, is an Australian-based company whose main interests are in Africa. Deep Yellow is now headed by John Borshoff, who founded Paladin in 1993 and agreed to step down as managing director and chief executive in August 2015.

Some 'nonproducing assets' can't be sold, not even for a song. Paladin hoped to sell a 30% stake in the Manyingee uranium project in Western Australia to Avira Energy for A$10 million, but Avira did not raise the required capital by the 31 March 2017 deadline.¹² Avira said in April 2017 that investors who had previously committed to support its capital increase had withdrawn as a consequence of a "challenging" environment for new uranium projects in Western Australia.¹² Development of Manyingee (and all other non-approved deposits) is prohibited under the policy of the current Western Australian government.

Happier days

The Australian Financial Review reflected on happier days for Paladin: "John Borshoff was once one of Western Australia's wealthiest businessmen. The founder of Perth-based Paladin Energy developed an enviable portfolio of African uranium mines supposed to satiate booming global demand for yellowcake. When the company's Langer Heinrich mine began shipments in March 2007, as the spot price for uranium eclipsed $US100 per pound, Paladin was worth more than $4 billion."¹³

Borshoff, described as the grandfather of Australian uranium, made his debut on the Business Review Weekly's 'Rich 200' list in 2007 with estimated wealth of A$205 million.¹³ Reuters describes Paladin as the world's second largest independent pure-play uranium miner after Cameco and the seventh or eighth largest globally.¹ When the company's two mines in Africa were operating, annual production capacity was about eight million pounds of uranium oxide ‒ about 5% of world demand.

Paladin gambled and lost

Paladin gambled and lost, relying heavily on debt financing to quickly develop the Langer Heinrich and Kayelekera mines in Africa.¹³ Another failed gamble was to sell primarily on the spot market, thus missing the opportunity to lock in long-term contracts when the price was relatively high¹³ ‒ the long-term contract price has halved since the Fukushima disaster.

Another failed gamble was Paladin's A$1.2 billion hostile takeover bid for Summit Resources in 2007.¹³ Paladin owns 82% of Summit, which is sitting on uneconomic uranium deposits in Queensland ‒ an Australian state which bans uranium mining. In 2015, Paladin booked a A$323.6 million write-down on its exploration assets in Queensland.¹⁴

A July 2013 mining.com article said that "to put things lightly, management is overpaid", and suggested that management's focus may be "on its own best interests rather than the interests of all shareholders".¹⁵

Dave Sweeney, nuclear free campaigner with the Australian Conservation Foundation, told Nuclear Monitor:

"Paladin's ambition and appetite has always exceeded its capacity and competence and now the gap between its inflated promises and its profound under-performance is absolute. This company has always been a uranium bull. It's former CEO John Borshoff promised unrealistic wealth for Africa while dismissing Fukushima as a 'sideshow'. When the market was buoyant they paraded their portfolio and were market darlings, now they are desperate, dateless and on administrative life-support.

"A real concern here is the impact on the environment and communities in which Paladin operate. The risk is that more corners will be cut in African operations in relation to rehabilitation, worker entitlements and environmental protection. Paladin's boom to bust case study is a further clear example of the lack of independent scrutiny of the uranium sector and also reflects poorly on the activities of Australian miners operating in nations with limited governance and regulatory capacity."

References:

1. Geert De Clercq, 3 Oct 2016, 'Desperate uranium miners switch to survival mode despite nuclear rebound', www.reuters.com/article/us-uranium-nuclearpower-idUSKCN1230EF

2. World Nuclear News, 3 July 2017, 'Paladin Energy enters administration', http://world-nuclear-news.org/UF-Paladin-Energy-enters-administration-03...

3. Paul Garvey, 4 July 2017, 'French debt forces uranium miner Paladin into administration', www.theaustralian.com.au/business/companies/french-debt-forces-uranium-m...

4. Nick Evans, 11 Aug 2015, 'Borshoff cedes control of debt-laden Paladin', West Australian.

5. Mike King, 19 Jan 2015, 'Paladin Energy Ltd revenues soar 79% but shares sink', www.fool.com.au/2015/01/19/paladin-energy-ltd-revenues-soar-79-but-share...

6. Greg Peel, 11 July 2017, 'Uranium Week: Taking Its Toll', www.fnarena.com/index.php/2017/07/11/uranium-week-taking-its-toll/

7. Rachel Etter-Phoya and Grain Malunga / OpenOil, Oct 2016, 'Kayelekera Model & Narrative Report', http://openoil.net/kayelekera-model-narrative-report/

8. Paladin Energy, 7 Feb 2014, 'Suspension of Production at Kayelekera Mine, Malawi', www.marketwired.com/press-release/paladin-energy-ltd-suspension-of-produ...

9. Sarah-Jane Tasker, 8 Jan 2015, 'Paladin Energy alerts ASX to spill at Malawi uranium mine', www.theaustralian.com.au/business/mining-energy/paladin-energy-alerts-as...

10. https://www.cameco.com/invest/markets/uranium-price

11. Esmarie Swanepoel, 15 Dec 2016, 'Paladin holds a fire sale', www.miningweekly.com/article/paladin-holds-a-fire-sale-2016-12-15

12. World Nuclear News, 3 April 2017, http://us1.campaign-archive1.com/?u=140c559a3b34d23ff7c6b48b9&id=4499e9a...

13. Tess Ingram, 7 July 2017, 'Paladin Energy: from market hero to administration', www.afr.com/business/mining/uranium/paladin-energy-from-market-hero-to-a...

14. Henry Lazenby, 14 May 2015, 'Paladin Energy narrows nine-month net loss', www.miningweekly.com/article/paladin-energy-narrows-nine-month-net-loss-...
15. Tommy Humphreys, 10 July 2013, 'Uranium outlook and Paladin Energy risk profile', www.mining.com/web/uranium-outlook-and-paladin-energy-risk-profile/

This is a longer version of an article published in Nulclear Monitor #847.

Paladin Energy's operations in Africa have been marked by regular accidents and controversies. The WISE-Uranium website has a 'Hall of Infamy' page dedicated to the company.

WISE-Uranium, 'Paladin Energy Ltd Hall of Infamy', www.wise-uranium.org/ucpalhi.html

15 September 2005: Members of the National Society for Human Rights (NSHR) protested at the groundbreaking ceremony of Paladin's Langer Heinrich uranium mine in Namibia. The Namibian Branch of Earthlife Africa criticized the environmental and health hazards of the project. According to a report prepared by German Öko-Institut for the Namibian branch of Earthlife Africa, Paladin's Environmental Assessment underestimated the radiation doses fourfold. Moreover, the proposed tailings management concept would have serious flaws.

Allgemeine Zeitung Sep. 16, 2005; www.wise-uranium.org/upna.html#LANGERH

April 2006: Paladin CEO John Borshoff told ABC television: "Australia and Canada have become overly sophisticated. They measure progress in other aspects than economic development, and rightly so, but I think there has been a sort of overcompensation in terms of thinking about environmental issues, social issues, way beyond what is necessary to achieve good practice."

http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%...

November 2006: NGOs groundWork and the Centre for Civil Society gave out the 'Southern African Corpse Awards' ‒ an annual mock ceremony for big business ‒ in Durban. Paladin was awarded the 'Pick the Public Pocketprize' thanks to a nomination from Malawian NGOs.

Patrick Bond, 24 Dec 2006, ZNet.

http://slackbastard.anarchobase.com/?p=554

2007: Criticisms of operations at Kayelekera outlined by the Catholic Church and other Malawian community and environmental organisations included the following issues of concern: inadequacy of the Environmental Impact Assessment; flaws in community consultation; government deferring its role in safeguarding community interests to the company; destruction of cultural and historic sites; increased social disorder; unfair compensation for those forcibly relocated; and undue interference with makeup of community based organisations.

Background on Recent Developments at the Kayelekera Uranium Mine, 2007, www.minesandcommunities.org/article.php?a=1429

4 January 2007: Two Malawian NGO members allege that they were ordered to go to the Karonga Police Station by the Chief of Police and threatened with arrest for taking an Australian photojournalist sponsored by the two Australian unions (MUA and CFMEU) to photograph and interview community members at the Kayelekera mine. According to Reinford Mwangonde from Citizens For Justice, a police van carrying around 10 police officers went to Foundation for Community Support Services (FOCUS) and ordered that he and Kossam Jomo Munthali attend the Karonga Police Station. Mwangonde alleges that at the police station Sale, the Chief of Police told them that Paladin had called them 'from a long way away' and complained that the NGO members had taken an Australian photojournalist to the mine site. According to Mwangonde "it's unfortunate that Paladin is harassing us by using the Malawian police to promote its own agenda and protect its own interests at the expense of Malawians". Mwangonde said they were told that in the future any meeting that the NGOs hold in regard to uranium should be reported to the police.

MUA News, 15 Jan 2007, 'Australian Company Uses Malawian Police Against Critics', http://mua.org.au/news/general/malawi.html

March 2007: Paladin's Kayelekera project would not be approved in Australia due to the major flaws in the assessment and design proposals, independent reviewers concluded. Their report covered baseline environmental studies, tailings management, water management, rehabilitation, failure to commit to respecting domestic laws, use of intimidation and threatening tactics against local civil society, improper community consultation and payments to local leaders, and destruction of cultural heritage.

Mineral Policy Institute, March 2007, 'Paladin Resources Kayelekera Uranium Project in Malawi, Africa would not be approved in Australia, concludes independent reviewers', http://web.archive.org/web/20080719214944/http://www.mpi.org.au/campaign...

May 2007: Paladin and the Government of Malawi were named as defendants in two legal actions commenced by a group of NGOs in Malawi including the Centre for Human Rights and Rehabilitation. The two actions sought to delay the Kayelekera project until the government and Paladin, amongst other things: rectified alleged deficiencies in the process associated with the grant of approval under the Malawi Environment Management Act; and put in place additional protective measures affecting both the local community and the country.

Paladin, 28 May 2007, 'Paladin Resources Ltd.: Kayelekera Project, Malawi', www.marketwired.com/press-release/paladin-resources-ltd-kayelekera-proje...

On 15 November 2007, Paladin announced "that all six Malawian Civil Society Organisations that commenced legal proceedings against Paladin Africa Ltd and the Government of Malawi have now settled their action on a positive and amicable basis". However, Malawian NGOs questioned the legitimacy of the settlement of the court case. NGOs coalition members unhappy with the settlement agreement indicated they will "continue with legal action to protect the Malawian people's constitutional rights, unless and until the company is willing to enter negotiations to change its proposal in a way that addresses the flaws, gaps and problems in the project that pose serious public health and environmental risks".

www.uranium-network.org/Mali%20Konferenz/start_htm_files/start_htm_files...

3 July 2007: Civil society groups in Malawi ‒ Centre for Human Rights and Rehabilitation, Citizen for Justice, Foundation for Community Services, Catholic Commission for Justice and Peace, and the Livingstonia Synod Uraha Foundation ‒ issued a statement regarding Paladin's Kayelekera mine. It states in part: "In this regard we note that the issues covered by the Developmental Plan (Agreement) and the agreements on Fiscal are secret and have not been disclosed by the signatories to Malawians. This is totally incompatible with the transparency and accountability which should prevail in the democratic era when the government in office proclaims its commitment to zero tolerance on corruption and causes one to see shadows of corruption in the handing of the secret agreements and the activities of Paladin. We therefore wish to state and for Paladin to know quite categorically that in addition to pursuing the matter in Court, the Civic Society Organisations now intend to address our concerns to the financial institutions who are funding Paladin's project at Kayelekera and also to the institutional shareholders holding equity in Paladin Resources Australia."

Joint Press Statement, 3 July 2007, 'Civil Society Organisations Concerns on the Statement by Mr. John Borshoff', www.minesandcommunities.org/article.php?a=1429

July 2007: The claim by Paladin and the government of Malawi that the IAEA had approved the Environmental Impact Assessment for the Kayelekera mine "was a fallacy and misleading" according to a media statement issued by a group of NGOs.
www.uranium-network.org/Mali%20Konferenz/start_htm_files/start_htm_files...

Nyasa Times, 25 July 2007.

27 March 2008: The open pit at Paladin's Langer Heinrich mine was flooded with run-off water from a rainstorm and was out of use for about one month.

Allgemeine Zeitung, 31 March 2008; www.wise-uranium.org/umopafr.html#LANGERH

April 2008: A spill of a large quantity of sulphuric acid at the Langer Heinrich mine raised questions about safety procedures at the mine. The Namibian newspaper was informed that a mine employee lost grip on the hose transferring the acid from a truck to a storage facility. The employee apparently fled to call for help, after which a forklift dumped a large quantity of caustic soda on the spill to neutralise the acid. The result was explosive ‒ a series of loud bangs could be heard from a distance, but nobody was injured.

Namibian, 25 April 2008; www.wise-uranium.org/umopafr.html#LANGERH

16 March 2009: A fire / explosion killed two workers and badly injured another at the Kayelekera mine. The International Consortium of Investigative Journalists (ICIJ) reported: "In 2009, Caldwell Sichinga, then in his early thirties, was cleaning the bottom of a seven-meter steel tank at Kayelekera, a remote open-pit uranium mine in Northern Malawi. It had rained during the night and Sichinga was reapplying a coat of MEK, a combustible chemical that smells slightly of mint. Sichinga was with two colleagues inside when the tank suddenly blew. In order to ignite, an expert told ICIJ, the concentration of MEK must have been at least 70 times the level considered safe within the U.S. "It was like a bomb," remembers Sichinga. Through the fireball, Sichinga climbed his way up the rungs inside the tank, searing the soles of his feet with every step, before falling to the ground outside. The explosion fused the fingers of Sichinga's right hand into one immobile mitt and appears to have melted the pattern of his socks into his ankle. Four meters from the tank, others had been "busy grinding and welding," according to the preliminary incident report issued by the principal contractors and obtained by ICIJ. As the MEK evaporated, its heavy fumes coursed through the tank's drainpipe to the welding outside. The fumes ignited when they reached the heat source, according to the report, sending flames back through the drainpipe towards the three contractors. ... Over the next two days, the "fire accident" prompted 200 contract workers to strike over pay and working conditions, reported the same official in another document seen by ICIJ."

The International Consortium of Investigative Journalists noted in its 2015 report that three more workers, including a contractor, died in other incidents at Kayelekera in the years after the fireball.

Will Fitzgibbon, Martha M. Hamilton and Cécile Schilis-Gallego / International Consortium of Investigative Journalists, 10 July 2015, 'Australian Mining Companies Digging A Deadly Footprint in Africa', www.icij.org/project/fatal-extraction/australian-mining-companies-diggin...

18 March 2009: Malawian police fired tear-gas at workers at the Kayelekera mine construction site. The workers, mostly casual laborers, were on a sit-in since the previous day to pressure management for better working conditions. The strike forced Paladin management to temporarily shut down the mine and evacuate its senior managers to Lilongwe.

Nyasa Times, 18 March 2009; The Nation, 19 March 2009.

April 2009. Malawi's Catholic Commission for Justice and Peace accused Paladin of back-tracking on pledges to the people of the Karonga region where it operates the Kayelekera mine. The commission, a human rights arm of the Catholic Church, called for a meeting with the miners and traditional chiefs after accusing the energy company of not doing enough to protect water sources from uranium deposits. The group fears the deposits could pollute Lake Malawi, one of Africa's fresh water areas and the third largest lake on the continent. The Centre for Human Rights and Rehabilitation called for a review of all mining agreements including the tax arrangements.

Nyasa Times, 22 April 2009.

http://www.uranium-network.org/Mali%20Konferenz/start_htm_files/start_ht...

August 2009: Neville Huxham from Paladin Energy Africa said: "We're taking the uranium out of the ground, we're exporting it to be used for productive purposes, so we should be getting a medal for cleaning up the environment."

IPS, 24 August 2009.

September 2009: Australia's Fairfax press reported on the Kayelekera mine: "The company's approach has caused friction with local non-government groups, which took legal action to impose tougher controls on the project in 2007. The case was settled out of court. Since then it has been accused of lax safety standards (three workers have died in accidents this year) and failing to bring promised benefits to local communities ..." Australian-based scientific consultant Howard Smith said regulations were ''essentially a self-regulation system, which will ultimately result in releases [of contaminated water] that are under-reported, uncontrolled and hidden from the affected public.''

Tom Hyland, 20 Sept 2009, 'Miner accused on slack safety', www.smh.com.au/world/miner-accused-on-slack-safety-20090919-fw3q.html

October 2009: Fourth death in 2009 at Kayelekera: The company said that an employee had died at the mine as a result of a mini-bus rollover on October 7. Paladin said 19 people including the driver were injured, with 15 admitted to hospital. Paladin advised on August 25 that a construction contractor had died at the mine, also as a result of a motor vehicle incident. The company reported on April 5 that two sub-contractors had died in a flash fire at the mine construction site on March 16.

Sydney Morning Herald, 8 Oct 2009; www.wise-uranium.org/umopafr.html#MW; www.wise-uranium.org/umopafr.html#KAYELEKERA

September 2010: Paladin orders miners to work at Kayelekera in spite of a shortage of dust masks. A Nyasa Times undercover journalist who visited the mine on 23 September 2010 found that most miners did not wear masks, and their hands and face were caked with uranium ore. The workers protested to management about the development. The geology superintendent of the mine, Johan De Bruin, confirmed the lack of dust masks. In a September 23 email sent to mine workers, he ordered staff to continue working despite the shortage of dust masks. "Mining is a 24 hour operation and cannot be stopped as a result of a shortage of available dust masks," said De Bruin in his September 23 email.

Nyasa Times, 25 Sep 2010; www.wise-uranium.org/umopafr.html#MW

November 2010: Paladin Energy refuses disclosure of carbon footprint. Paladin rejected listing the Climate Advocacy Fund's proposed resolution that the miner disclose its carbon footprint at its AGM. The fund owns a small stake in Paladin and had the support of the required 100 shareholders under the Corporations Act to put forward a resolution. "We say Paladin has acted against the provisions of the Act and we could take legal action over it," fund executive director James Their said. Thier said carbon footprint database Trucost estimated Paladin was the third-most carbon intensive ASX 200 company, with emissions estimated at more than 2,500 tonnes of carbon dioxide per A$1 million of revenue.

Herald Sun, 3 Nov 2010; www.wise-uranium.org/umopafr.html#LANGERH

June 2011: Dedza North West MP Alekeni Menyani advised the Malawi Government to find an alternative source of energy for the Kayelekera mine. The MP said the use of diesel fuel to power the mine site was exerting pressure on the country's already low supplies of fuel. Menyani said the government should seriously consider building a dedicated coal-fired plant to power the mine.

In February 2011, production at Kayelekera was suspended for one week due to a diesel fuel shortage which Paladin attributed to "foreign exchange constraints".

The Nation, 22 June 2011

www.wise-uranium.org/umopafr.html#MW

June 2011: A truck driver died in an accident at the Kayelekera mine ‒ the Tanzanian national died after the truck he was driving struck a water tank.

Nyasa Times, 19 June 2011; www.wise-uranium.org/umopafr.html#MW

15 August 2011: Progress on Expansion Phase Three of the Langer Heinrich mine came to a standstill after employees of the main contractor, Grinaker LTA, downed tools due to grievances related to impending layoffs. According to a workers committee representative, more than 600 employees stopped work at noon on August 15 and continued to strike the following day.

The Namibian, 17 Aug 2011; www.wise-uranium.org/umopafr.html#LANGERH

2012: CRIIRAD, a French NGO specialising in independent radiation monitoring, conducted radiation monitoring activities around the Kayelekera mine. Its report stated: "CRIIRAD discovered hot spots in the environment of the mine and a high uranium concentration in the water flowing from a stream located below the open pit and entering the Sere river. Results that relate to the radiological monitoring of the environment performed by the company are kept secret. The company should publish on its web site all environmental reports. No property right can be invoked to prevent public access to Paladin environmental reports (especially as Malawi State holds 15 % of the shares of the uranium mine). It is shocking to discover that million tonnes of radioactive and chemically polluting wastes (especially tailings) are disposed of on a plateau with very negative geological and hydrogeological characteristics."

Bruno Chareyron, 2015, 'Impact of the Kayelekera uranium mine, Malawi'. EJOLT Report No. 21, www.ejolt.org/wordpress/wp-content/uploads/2015/02/150222_Report-21.pdf

11 May 2012: Workers at Kayelekera went on strike over labor conditions: The local workers told Nyasa Times that they were demanding a pay increase from Paladin. Workers downed tools on May 11, halting production at the site. On May 16, Paladin announced than an agreement in principle was achieved for a return to work by the striking employees.

Nyasa Times, 11 May 2012; www.wise-uranium.org/umopafr.html#MW; www.miningweekly.com/article/kayelekera-production-back-on-track-2012-05-16

December 2012: Paladin threatened 75-year old Australian pensioner Noel Wauchope with legal action for posting on her antinuclear.net website an article critical about Paladin's operations in Malawi. The threat backfired when it was publicised in the widely-read Fairfax press in Australia. Fairfax business columnist Michael West wrote: "The price of Noel Wauchope's concern for the people Karonga was a long and intimidating letter of demand from Ashurst on behalf of the uranium company Paladin ... "

http://antinuclear.net/2013/09/02/ashurst-paladin-attack-this-website-wi...

2013: A detailed report by the African Forum and Network on Debt and Development states:

"Consistent with what many analysts and commentators have said, this research study unequivocally established that the benefits that Malawi, as a country, is gaining from the deal made with Kayelekera are tangential and dismal. Among the reasons why benefits are skewed more favourably towards the mining company are that the negotiations were done hastily under an atmosphere that was not transparent. Furthermore, the government officials involved were not experienced and were no match for the skilled negotiators for Paladin.

"Above and beyond this, the major problem that contributed to the disproportionate sharing of benefits are the country's archaic laws that fail to hold the Multinational Corporation (MNCs) more accountable to pay taxes and remit profits to Malawi. The laws that govern FDI in the extractive industry are weak and in disharmony. Taxation laws fail to adequately address issues of capital flight, tax avoidance or evasion, which the study findings have revealed are being perpetrated by MNCs. To this extent the MNCs in the extractive industry have evolved to use more rigorous and complicated accounting systems that evade the detection radar of the local tax and revenue authorities.

"The investment incentives offered to Paladin have revenue implications to the Malawi government. These include; (1) 15% carried equity in project company to be transferred to the Republic of Malawi, (2) Corporate tax rate reduced from 30% to an effective 27.5%, (3) 10% resource rent reduced to zero, (4) Reduced Royalty rate from 5% to 1.5% (years 1 to 3) and 3% (thereafter), (5) removal of 17 % import VAT or import duty during the stability period, (6) immediate 100% capital write off for tax purposes, The capitalisation (debt: equity) ratio of 4:1 for the project, and (7) stability period of 10 years where there will be no increase to tax and royalty regime and commitment to provide the benefit of any tax and royalty decrease during the period. This clause in the agreement statement implies amortization of profits. This means that there shall be a reduction or cancellation of taxes to be paid during future years of subsequent profits as a means to compensate the debt accrued by the company during years of registering losses.

"As a result of this concessionary agreement, the government of Malawi lost billions of Malawi Kwacha from royalties, resource rent and value added tax against a meager MK5.35 billion which it has received in taxes and royalties within the three years that Kayelekera has been operating commercially."

African Forum and Network on Debt and Development, 2013, 'The Revenue Costs and Benefits of Foreign Direct Investment in the Extractive Industry in Malawi: The Case of Kayelekera Uranium Mine', www.afrodad.org/index.php/en/resource-centre/publications/category/22-ec...

27 June 2013: About 300 workers, including mine staff and contractor employees, picketed at the Langer Heinrich mine, protesting the way they were being treated and paid. The protesting workers and media were barred from the mine site where the demonstration was supposed to take place.

The Namibian, 2 July 2013; www.wise-uranium.org/umopafr.html#LANGERH

July 2013: UN Special Rapporteur on the Right to Food, Olivier De Schutter, rubbished the Kayelekera uranium mine deal between Malawi and Paladin, saying Malawi had a raw deal that is robbing the poor. He said that over the lifespan of the mine, Malawi is expected to lose almost US$281 million. "Mining companies are exempt from customs duty, excise duty, value added taxes on mining machinery, plant and equipment. They can also sign special deals on the rate of royalty owed to the government," he said.

22 July 2013, 'End of mission statement by the Special Rapporteur on the right to food', www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=13567&LangID=E

30 July 2013: An employee died in an accident in the Kayelekera mine's engineering workshop, after being struck in the chest by a light vehicle wheel he was inflating.

Paladin Energy Ltd July 31, 2013; Esmarie Swanepoel, 31 July 2013, 'Fatality at Paladin mine', www.miningweekly.com/article/fatality-at-paladin-mine-2013-07-31

September 2013: Colin Arthur, a Geology Superintendent at the Kayelekera mine, gives a detailed 'Geological Summary' of the high wall pit failure, identified on 21 September 2013.

September 2013: Malawi government unable to verify allegations of radiation-induced diseases among Kayelekera uranium mine workers. Members of Malawi's Parliamentary Committee on Health on September 24 took senior government officials to task over reports of radiation-related health concerns at Kayelekera. The committee summoned officials from the Ministry of Mining and the Ministry of Environment and Climate Change Management for an explanation on the reports. The officials insisted that there has been no proof of the claims, that the government does not have equipment or the experts to investigate the kind of allegations reported in the local media, and that they are relying on the assessments of Paladin. "Due to uncertainties on radiation exposure and time of exposure was absorbed and the background of the persons' medical records, it is hard to establish whether the man for example who lost sight, did so due to radiation. We don't have the specialized equipment," said an official.

BNL Times Sep. 26, 2013; www.wise-uranium.org/umopafr.html#MW

October 2013: The Opposition People's Transformation Party (PETRA) appealed to government authorities to renegotiate what it called the "stinking development agreement" between Malawi and Paladin regarding the Kayelekera mine.

Nyasa Times, 5 March 2013.

3 October 2013: Three miners were injured at Langer Heinrich following a "serious electrical incident". Paladin said two of the workers received significant burns while a third worker suffered smoke inhalation. One of the workers was flown to South Africa for treatment. On October 30, Paladin announced that the injured worker flown to South Africa had died in hospital.

Esmarie Swanepoel, 3 Oct 2013, 'Electrical accident injures three at Langer Heinrich', www.miningweekly.com/article/accident-injures-3-at-langer-heinrich-2013-...

www.wise-uranium.org/umopafr.html#LANGERH

February 2014: Paladin reported that a truck carrying a container of uranium from Kayelekera overturned. The container fell loose and was punctured by a tree stump, and a "small quantity" of uranium oxide concentrate spilled out. Paladin said the uranium and the soil it came in touch with were removed and taken back to the tailings dam at the mine.

17 Feb 2014, 'Product Shipment Incident near Kayelekera Mine, Malawi', https://finance.yahoo.com/news/paladin-energy-ltd-product-shipment-12000...

2 October 2014: About 50 employees staged a protest at Langer Heinrich Uranium (LHU) mine's head office in Swakopmund before handing over a petition listing their complaints. Workers employed by companies sub-contracted to LHU claim they had been mistreated at work. The workers from Sure Cast, Gecko Drilling, LBS, Quick Investment, RVH and NEC Stahl claimed they were made to work without benefits, such as medical aid, transport allowances and pension.

Namib Times, 7 Oct 2014; www.wise-uranium.org/umopafr.html#LANGERH

November 2014: Paladin came under fire from a coalition of 33 Malawian civil society groups and chiefs over its proposal to discharge mining sludge into the Sere and North Rukuru rivers. The toxic substances that would flow from the tailings pond at the Kayelekera mine into Lake Malawi 50 kms downstream include waste uranium rock, acids, arsenic and other chemicals used in processing the uranium ore, the coalition said. The lake provides water for drinking and domestic use to millions of Malawians. Part of the lake is protected as a national park.

Environmental News Service, 25 Nov 2014, 'Uranium Mine Sludge Discharge Permit Threatens Lake Malawi', http://ens-newswire.com/2014/11/25/uranium-mine-sludge-discharge-permit-...

29 November 2014: Paramount Chief Kyungu in Malawi's northern district of Karonga vowed to lead the people in lobbying for developmental projects from mining investors, claiming that since the coming of the mining companies in the district people had not benefited. Kyungu said mining investors in Malawi steal the country's natural resources as well as spoiling the environment yet they leave the people poor.

Nyasa Times, 1 Dec 2014; www.wise-uranium.org/umopafr.html#MW

2015: A report by the office of Namibia's Prime Minister said there is a lack of safety at the Langer Heinrich mine and that workers are not aware of policies, rules and procedures as outlined in the radiation management plan.

The Namibian, 10 July 2015; www.opm.gov.na; www.wise-uranium.org/umopafr.html#LANGERH

January 2015: At the Kayelekera mine, heavy rain caused a liner in the plant run-off tank to rupture, releasing some 500 cubic metres (500,000 litres) of material to the bunded areas of the site. Up to 50 litres may have overtopped one of the containment bunds.

Esmarie Swanepoel, 10 Feb 2015, 'Kayelekera no threat to environment – Paladin', www.miningweekly.com/article/kayelekera-no-threat-to-environment---palad...

Esmarie Swanepoel, 7 Jan 2015, 'Paladin reports spill at Malawi mine after minor storm', www.miningweekly.com/article/paladin-reports-spill-at-malawi-mine-after-...

Sarah-Jane Tasker, 8 Jan 2015, 'Paladin Energy alerts ASX to spill at Malawi uranium mine', www.theaustralian.com.au/business/mining-energy/paladin-energy-alerts-as...

February 2015: About 60 permanent employees of the Langer Heinrich mine participated in a demonstration to hand over a petition to mine management. Employees sought the removal of the manager for human resources on allegations of victimising employees as well as disregarding employees' safety. They also accused him of implementing a new salary structure without union agreement. The workers, through the Mineworkers' Union of Namibia (MUN), also demanded the removal of the mine's managing director, saying he had total disregard for the union. Workers also said the mine never implemented recommendations made after a 2013 accident that claimed the life of a miner. The workers' petition said: "Our members are exposed to safety hazards. The company does not properly investigate incidents at the mine." The workers also alleged that the removal of contract workers from the mine resulted in a lack of rest and increase in fatigue.

New Era, 20 Feb 2015; www.wise-uranium.org/umopafr.html#LANGERH

April 2015: Despite opposition from a group of 33 civil society organizations, Paladin began discharging treated waste water from the Kayelekera mine into the Sere River. The discharge of contaminated water was expected to take place for three months. Paladin decided to discharge the waste because the dam at the Kayelekera mine was full, raising the possibility of unplanned and uncontrolled discharges after heavy rains.

www.wise-uranium.org/umopafr.html#MW

Sarah-Jane Tasker, 8 Jan 2015, 'Paladin Energy alerts ASX to spill at Malawi uranium mine', www.theaustralian.com.au/business/mining-energy/paladin-energy-alerts-as...

June 2015: A report by ActionAid stated that Malawi ‒ the world's poorest country ‒ lost out on US$43 million revenue from the Kayelekera mine over the previous six years due to "harmful exemptions from royalty payments from the Malawi government, and tax planning using treaty shopping by Paladin."

ActionAid, 17 June 2015, 'An Extractive Affair: How one Australian mining company's tax dealings are costing the world's poorest country millions', www.actionaid.org/sites/files/actionaid/malawi_tax_report_updated_table_...

Australia's Fairfax press reported: "Between 2009 and 2014, Paladin Energy moved $US183 million out of Malawi to a holding company in the Netherlands and then on to Australia. A 15-page report by London-based ActionAid has found the Dutch transfers and a special royalties deal – in which Malawi's mining minister agreed to drop the initial tax rate applied to the uranium mine from 5 per cent to 1.5 per cent – have cost the Malawi public $US43 million. In Africa's poorest nation, where per capita GDP is just $US226 a year and life expectancy 55, that money could provide the equivalent of 39,000 new teachers or 17,000 nurses, according to the aid group."

Heath Aston, 11 July 2015, 'Australian miner accused of dodging tax in world's poorest country', www.theage.com.au/federal-politics/political-news/australian-miner-accus...

December 2015: Matildah Mkandawire from Citizens for Justice wrote: "In August this year, Citizens for Justice and Action Aid Malawi, with support from the Tilitonse Fund, organized an interface meeting with the local communities, government representatives at district level and Paladin representatives. The aim of this meeting was to discuss the concerns of the community regarding the failure of Paladin to stick to the agreements in the MOU. Paladin cancelled with us at the 11th hour claiming they needed a formal letter of invitation and not the one they got from the community. The meeting had to go ahead without them although this left the community furious as the issues they wanted to raise were key to their health and sanitation, environmental health and social well-being. The lack of clean water, and the delay in providing educational and health facilities as agreed, spoke volumes of the company's lack of responsibility for the community it operates in."

Matildah M. Mkandawire, 17 Dec 2015, 'Uranium mining in Malawi: the case of Kayelekera', Nuclear Monitor #816, www.wiseinternational.org/nuclear-monitor/816/uranium-mining-malawi-case...

2016: A human rights body in Malawi sued Paladin Africa Ltd for alleged damage the Kayelekera mine has caused to some miners and the surrounding communities in Karonga district. The Centre for Human Rights and Rehabilitation accused Paladin of not prioritising the welfare of its employees and the community.

Norbert Mzembe, 22 June 2016, 'Malawi: Paladin Africa Sued for 'Gross Damage'', www.minesandcommunities.org/article.php?a=13429

Capital Radio Malawi, 22 June 2016, www.capitalradiomalawi.com/news/item/6349-paladin-africa-sued-for-gross-...
www.wise-uranium.org/umopafr.html#MW

16 June 2016: Security guards at the mothballed Kayelekera mine downed tools over poor working conditions.

Nyasa Times, 17 June 2016; www.wise-uranium.org/umopafr.html#MW

September 2016: Human Rights Watch released a detailed report on mines in the Karonga region of Malawi, including the Kayelekera uranium mine: "Using Karonga district in northern Malawi as a case study, the report documents how Malawi currently lacks adequate legal standards and safeguards to ensure the necessary balance between developing the mining industry and protecting the rights of local communities. It examines how weak government oversight and lack of information leave local communities unprotected and uninformed about the risks and opportunities associated with mining."

Human Rights Watch, 27 Sept 2016, '"They Destroyed Everything": Mining and Human Rights in Malawi', www.hrw.org/report/2016/09/27/they-destroyed-everything/mining-and-human... or www.hrw.org/sites/default/files/accessible_document/malawi0916_etr_web_1...

October 2016: The Malawi Immigration department at Songwe border in Karonga barred 26 Tanzanian students of Moravian University of Theology based in Tukuyu from visiting the Kayelekera mine. The students' planned to investigate the social and economic impacts of the mine. Secretary General of the Moravian Church, Rev Leman Jere, who led the group, said: "We already agreed with the Kayelekera officials before the day but we were flabbergasted to see that the Malawi Immigration department blocked the students saying it was because of security issues."

Maravi Post, 12 Oct 2016.

20 December 2016: Eight Tanzanians were arrested while travelling to participate in a fact-finding mission of the Kayelekera mine. They are from the area where the Mkuju River uranium mine is planned in Tanzania. They were accused of trespassing, spying and working as foreign agents. They were denied bail and held in sub-standard conditions; their legal access was impeded and their legal team harassed with death threats and the mysterious disappearance of their laptops; their legal defence team was prevented from fully cross-questioning witnesses; and the trial was postponed on six occasions, each time disrupting the defence team that travelled from Lilongwe and Dar-es-Salaam. In April 2017, after almost five months in detention, the eight people were convicted of Criminal Trespassing and carrying out a reconnaissance operation without a permit, and given suspended four-month sentences.

David Fig, 2 April 2017, 'Why Malawi's case against the Tanzanian eight is a travesty of justice', https://theconversation.com/why-malawis-case-against-the-tanzanian-eight...

Menschenrechte 3000 e.V., 28 Feb 2017, 'Report on 8 Tanzanian Environmental and Human Rights Defenders arbitrarily detained in Malawi since 22. Dec. 2017', www.uranium-network.org/images/pics/REPORT-MR3000-TUAM-update-1.pdf

Front Line Defenders, www.frontlinedefenders.org/en/case/8-tanzanian-environmental-defenders-c...

www.wise-uranium.org/umopafr.html#KAYELEKERAVT

Malawi Times, 12 April 2017.

Bright Phiri & Nicely Msowoya, 'REPORT on the continuation of court case against 8 Tanzanians detained in Malawi, on 13. and 14. February 2017', www.wise-uranium.org/pdf/PhiriMsowoya17214.pdf

January 2017: Paladin and the Malawi government rejected requests to disclose the results of water monitoring performed in the surroundings of the Kayelekera mine.

BBC, 25 Jan 2017, 'Fears of river poisoning in Malawi', www.bbc.com/news/world-africa-38751257

www.wise-uranium.org/umopafr.html#MW

(Click here to view a table documenting many of the accidents, incidents and scandals that Cameco has been involved in from 1981‒2017.)

Where the nuclear power industry goes, the uranium industry follows. A decade ago, the hype about a nuclear power renaissance drove a uranium price bubble: the spot price in May 2007 was six times greater than the current price. The bubble collapsed, the nuclear power renaissance never materialized, and the uranium industry's prospects were further dimmed by the Fukushima disaster.

With the current nuclear power crisis jeopardizing the existence of industry giants like Toshiba and Westinghouse, the question arises: will the crisis create similar carnage in the uranium industry? Might it bring down a uranium industry giant like Cameco, which provides about 17% of the world's production from mines in Canada, the US and Kazakhstan?¹

The short answer is that Cameco will likely survive, but the company has been downsizing continuously for the past five years. Other established uranium companies ‒ such as Paladin Resources² and Energy Resources of Australia ‒ may not survive, and an endless stream of uranium exploration companies have gone bust or diversified into such things as medicinal marijuana production³ or property development.⁴

Cameco's downsizing began soon after the Fukushima disaster:

• In December 2012, Cameco booked a C$168 million (US$124m) write-down on the value of its Kintyre uranium deposit in Western Australia.⁵
• In 2014, Cameco cut its growth plans and uranium exploration expenses, warning that the "stagnant, over supplied short-term market" was not going to improve any time soon.⁶
• In 2014, Cameco put its Millennium uranium project in northern Saskatchewan on hold ‒ where it remains today ‒ and asked the Canadian Nuclear Safety Commission to cease the mine approval process.⁷

Cameco announced in April 2016 that it was suspending uranium production at Rabbit Lake in Canada, reducing production at McArthur River / Key Lake in Canada, and slowing production at its two US uranium mines, both in-situ leach mines ‒ Crow Butte in Nebraska and Smith Ranch-Highland in Wyoming. About 500 jobs were lost at Rabbit Lake, 85 at the US mines, and corporate headquarters was downsized.⁸

Another 120 workers are to be sacked by May 2017 at three Canadian uranium mines ‒ McArthur River, Key Lake and Cigar Lake ‒ and production at McArthur River, already reduced, will be suspended for six weeks in mid-2017.^9,10

"We regret the impact of these decisions on affected employees and other stakeholders," Cameco president and CEO Tim Gitzel said. "These are necessary actions to take in a uranium market that has remained weak and oversupplied for more than five years. While it is positive that we are starting to see other producers announce their intent to reduce supply, we have not yet seen an actual reduction in supply. Ultimately, it will be the return of both term demand and term contracting in a significant way that will signal that market fundamentals have turned more positive."¹¹

Cameco's revenue dropped C$323 million (US$238m) in 2016 and the company posted a C$62 million (US$46m) loss for the year. The loss was largely the result of C$362 million (US$267m) in impairment charges, including C$124 million (US$91m) related to the Rabbit Lake mine and a write-off of the full C$238 million (US$176m) value of the Kintyre uranium project in Western Australia.¹²

"I think it's fair to say that no one, including me, by the way, expected the market would go this low and for this long," Gitzel said.¹³ He said "market conditions in 2016 were as tough as I have seen them in 30 years."¹⁴

Cameco's 'tier-1' mines ‒ McArthur River and Cigar Lake in Canada and the Inkai ISL mine in Kazakhstan ‒ have been largely unaffected by the cutbacks except for the slowdown at McArthur River. But the tier-1 mines aren't safe, Cameco plans to reduce production by 7% in 2017, and new mines are off the table. Gitzel said: "In fact we're far from declaring that even tier-1 production is free from the pressure of further reductions. And obviously we're very far from requiring any new greenfield uranium projects."¹⁴

Cameco is considering selling its two US uranium mines ‒ Crow Butte in Nebraska and Smith Ranch-Highland in Wyoming. Company spokesperson Gord Struthers said the company was at an "early stage" in the process and there was no target date for a decision. "Together, our US facilities have capacity to produce up to 7.5 million pounds a year and hold 93 million pounds of reserves and resources. In a different uranium market, it would be very attractive," he said.¹⁵

Analyst David Talbot said Cameco has probably been open to selling the US mines for some time.¹⁶ The mines are potentially attractive, two US producers told Reuters, but liabilities related to reclaiming groundwater and future decommissioning of the mines may limit interest. Those costs might amount to C$257 million (US$190m), Cameco said.¹⁶

TEPCO cancels billion-dollar contract

Cameco faces a new problem with notorious Japanese company TEPCO announcing on January 24 that it had issued a contract termination notice, sparking a 15% drop in Cameco's share price over the next two days.^17,18,19 The termination affects about 9.3 million pounds of uranium oxide due to be delivered until 2028, worth approximately C$1.3bn (US$959m).

TEPCO argues that a "force majeure" event occurred because it has been unable to operate its nuclear plants in Japan ‒ four reactors at Fukushima Daini and seven reactors at Kashiwazaki Kariwa ‒ for some years due to government regulations relating to reactor restarts in the aftermath of the March 2011 Fukushima disaster.

Cameco plans to fight the contract termination and will pursue "all its legal rights and remedies". Tim Gitzel said: "They've taken delivery under this contract in 2014, 2015 and 2016, so we're a bit perplexed as to why now all of a sudden they think there's a case of, as they say, 'force majeure.'"¹⁷ TEPCO has received and paid for 2.2 million pounds of uranium oxide from Cameco since 2014.

Gitzel also noted that other Japanese utilities have successfully restarted their plants ‒ three reactors are operating and seven have been approved to restart. "It is our opinion that TEPCO doesn't like the terms it committed to, particularly the price, and they want to escape the agreement," Gitzel said.¹⁹

Financial analysts told Reuters that Cameco has a winning record in previous contract disputes with customers.¹⁸ A negotiated settlement may be the outcome. Cameco reported cash receipts of C$46.7 million and C$12.3 million last year to allow two customers to cancel long-term uranium contracts.¹⁸

Japan is "swimming – some would say drowning – in uranium", the senior editor of Platts Nuclear Publications said in early 2016.²⁰ According to Forbes writer James Conca, Japan's existing uranium inventory will suffice to fuel the country's power reactors "for the next decade".²⁰

Nick Carter from Ux Consulting said he believes TEPCO is the first Japanese utility to terminate a long-term contract, while many others have tried to renegotiate contracts to reduce volumes or prices or delay shipments. Gitzel acknowledged that "there is concern over the risk of contagion from the TEPCO announcement" ‒ more customers might try to cancel contracts if TEPCO succeeds.¹⁴

Tax dispute

A long-running tax dispute is starting to heat up with the October 2016 commencement of a court case brought against Cameco by the Canada Revenue Agency (CRA). The dispute has been slowly winding its way through appeals and legal motions since 2009 when Cameco first challenged the CRA's findings. The court case is likely to conclude in the coming months but the court's decision may not be finalized until late-2017 or 2018.

Cameco is accused of setting up a subsidiary in Switzerland and selling it uranium at a low price to avoid tax.²¹ Thus Cameco was paying the Swiss tax rate of about 10% compared to almost 30% in Canada.²² Cameco set up the subsidiary in 1999 and established a 17-year deal selling uranium at approximately US$10 a pound, far less than the average price over the 17-years period.²³ Another subsidiary was established in Barbados ‒ possibly to repatriate offshore profits.²²

If Cameco loses the case in the Tax Court of Canada, it could be liable for back-taxes of C$2.2 billion (US$1.62bn).²³ Last year, the company spent approximately C$120 million (US$89m) on legal costs related to the tax dispute.¹¹

Canadians for Tax Fairness²⁴ have been arguing the case for legislative change to stop profit-shifting schemes, and for Cameco to pay up. Last year, the NGO teamed up with Saskatchewan Citizens for Tax Fairness and the international corporate watchdog, SumOfUs, to deliver a petition with 35,000 signatures to the Prime Minister's office and to Cameco's executive offices.²⁵

Don Kossick from Canadians for Tax Fairness said: "Cameco has a corporate responsibility to pay the $2.2 billion. They use Canadian-developed technology to dig Canadian uranium out of the Canadian ground and rely on the Canadian transportation system to bring their product to market. Cameco employs Canadian workers who developed their knowledge and skills in Canadian schools, rely on Canadian hospitals if / when they get sick and rely on the stability and legal protection that Canadian democracy provides. Canadians are exasperated with this shell game."²⁶

Kossick noted that the C$2.2 billion could easily cover the budgetary deficit in Saskatchewan that has resulted in major cuts to health, education and human services.

References:

1. www.cameco.com/about

2. Paul Garvey, 16 Feb 2017, 'Paladin risks falling prey to Chinese nuclear firm CNNC', www.theaustralian.com.au/business/mining-energy/paladin-risks-falling-pr...

3. ABC, 17 April 2015, 'Capital Mining makes bid to be first to grow medicinal cannabis', www.abc.net.au/news/2015-04-17/capital-mining-in-bid-to-be-first-to-grow...

See also: www.wise-uranium.org/upaussa.html

4. Vicky Validakis, 6 June 2014, 'Price collapse sees junior miner ditch uranium to focus on property development', www.miningaustralia.com.au/news/price-collapse-sees-junior-miner-ditch-u...

5. Nick Sas, 13 Feb 2013, 'Cameco puts Kintyre on ice', https://thewest.com.au/news/wa/cameco-puts-kintyre-on-ice-ng-ya-344802

6. Cameco, 7 Feb 2014, 'Cameco Reports Fourth Quarter and 2013 Financial Results', www.cameco.com/media/news/cameco-reports-fourth-quarter-and-2013-financi...

7. www.cameco.com/businesses/uranium-projects/millennium

8. World Nuclear News, 22 April 2016, 'Cameco scales back uranium production', www.world-nuclear-news.org/UF-Cameco-scales-back-uranium-production-2204...

9. Cameco, 17 Jan 2017, 'Cameco Announces Preliminary 2016 Earnings Expectations and Operational Changes Planned for 2017', www.cameco.com/media/news/cameco-announces-preliminary-2016-earnings-exp...

10. Greg Peel, 14 March 2017, 'Uranium Week: See You In Court', www.fnarena.com/index.php/2017/03/14/uranium-week-see-you-in-court/

11. World Nuclear News, 18 Jan 2017, ''Cameco responds to 'discrepancy' in analyst expectations', www.world-nuclear-news.org/C-Cameco-responds-to-discrepancy-in-analyst-e...

12. The Canadian Press, 9 Feb 2017, 'Cameco swings to $62M loss on write-downs as uranium market drags', http://globalnews.ca/news/3240104/cameco-swings-to-62-million-loss-on-wr...

13. Alex MacPherson, 10 Feb 2017, ''No one…expected the market would go this low and for this long': Cameco records $62-million net loss for 2016', http://thestarphoenix.com/business/mining/cameco-records-62-million-net-...

14. Cameco, 9 Feb 2017, 'Cameco's (CCJ) CEO Tim Gitzel on Q4 2016 Results ‒ Earnings Call Transcript', https://seekingalpha.com/article/4044994-camecos-ccj-ceo-tim-gitzel-q4-2...

15. World Nuclear News, 9 March 2017, 'Cameco considers future of US operations', http://world-nuclear-news.org/C-Cameco-considers-future-of-US-operations...

16. Rod Nickel, 6 March 2017, 'Exclusive: Cameco explores U.S. mines sale as uranium slump drags on – CEO', www.reuters.com/article/us-cameco-uranium-idUSKBN16D28I

17. 6 Feb 2017, 'Cameco and Tepco in dispute over uranium contract', www.neimagazine.com/news/newscameco-and-tepco-in-dispute-over-uranium-co...

18. Dan Healing / Reuters, 1 Feb 2017, 'Cameco 'surprised' after Tepco cancels $1.3-billion uranium-supply contract', www.theglobeandmail.com/report-on-business/industry-news/energy-and-reso...

19. David Shield / CBC News, 1 Feb 2017, 'Cameco threatening legal action after Japanese company cancels major uranium contract', www.cbc.ca/news/canada/saskatoon/cameco-threatening-legal-action-after-j...

20. James Conca, 4 Jan 2016, 'As The World Warms To Nuclear Power, The Outlook For Uranium Is Up', www.forbes.com/sites/jamesconca/2016/01/04/the-2016-uranium-market-refle...

21. WISE Uranium, www.wise-uranium.org/umopcdn.html

22. Bruce Livesey, 25 April 2016, 'Did this company engineer the largest tax dodge in Canadian history?', www.nationalobserver.com/2016/04/25/news/did-company-engineer-largest-ta...

23. Ian Bickis, 3 Oct 2016, 'Cameco and the CRA head to court over potential $2.2-billion tax dispute', The Canadian Press, http://business.financialpost.com/news/cameco-and-the-cra-head-to-court-...

24. www.taxfairness.ca/en/search/node/cameco

25. Emma Paling, 23 June 2016, 'Cameco Tax Dispute: All The Things Canada Could Buy With $2.1 Billion', www.huffingtonpost.ca/2016/06/23/cameco-tax-evasion_n_10550884.html

26. 'Tax Court Battle: The People vs Cameco', www.taxfairness.ca/en/news/tax-court-battle-people-vs-cameco

Cameco's uranium deposits in Western Australia

Kintyre (70% Cameco / 30% Mitsubishi)

The Martu Aboriginal people have fought against this proposed uranium mine since the 1980s. The deposit sits between two branches of a creek called Yantikutji which is connected to a complex network of surface and groundwater systems. It is also in an area that was cut out of the Karlamilyi National Park, WA's biggest National Park. Kintyre is home to 28 rare, endangered and threatened species. The project would include an open pit 1.5 km long, 1.5 km wide, it would use 3.5 million litres of water a day and leave behind 7.2 million tonnes of radioactive mine waste over the life of the project.

In June 2016, Martu Traditional Owners led a 140 km, week-long walk to protest against Cameco's proposed uranium mine at Kintyre. Aboriginal Traditional Owners are concerned the project will affect their water supplies as well as 28 threatened species in the Karlamilyi National Park.

Joining the protest walk was Anohni, the Academy Award-nominated musician from Antony and the Johnsons. She said: "It's a huge landscape – it's a really majestic place. It's really hard to put a finger on it but there's a sense of presence and integrity and patience, dignity and perseverance and intense intuitive wisdom that this particular community of people have. There is almost an unbroken connection to the land – they haven't been radically disrupted. They are very impressive people – it's humbling to be around these women. In many regards, I think the guys who run Cameco are desolate souls, desolate souls with no home, with no connection to land, with no connection to country."

www.ccwa.org.au/kintyre

Yeelirrie (100% Cameco)

Yeelirrie in the local Wongutha Aboriginal language means 'place of death'. The local community has fought against mining at Yeelirrie for over 40 years. There was a trial mine in the 1970s which was poorly managed: the site was abandoned, unfenced and unsigned with a shallow open pit and tailings left behind. The project would include a 9 km long, 1 km wide open pit, it would use 8.7 million litres of water a day and leave behind 36 million tonnes of radioactive mine waste over the life of the mine. There are many cultural heritage sites under threat from this proposal. The project was rejected by the Western Australian Environmental Protection Agency in 2016 because of the threat that 11 species of underground microfauna would become extinct. The WA Environment Minister ignored the EPA advice and approved the project anyway.

www.ccwa.org.au/yeelirrie

"About two-thirds of the uranium in the United States is on indigenous lands. On a worldwide scale, about 70 percent of the uranium is either in Aboriginal lands in Australia or up in the Subarctic of Canada, where native people are still fighting uranium mining."

‒ Winona LaDuke.¹

"The Government would not listen and forced the Ranger uranium mine on us, but the old people were right and today we are dealing with everything they were worried about."

‒ Yvonne Margarula, Mirarr Senior Traditional Owner, Northern Territory, Australia.

"I believe this uranium business will give the Anglo-Saxons such tremendous power that Europe will become a bloc under Anglo-Saxon domination. If that is the case, it will be a very good thing. I wonder whether Stalin will be able to stand up to the others as he has done in the past."

‒ German nuclear physicist Werner Heisenberg, August 1945.²

"The brutal truth is that no one has yet managed to work out a way of getting nuclear reactors to burn uranium as effectively as they burn money."
‒ Tom Burke, 2005.³

"Uranium is the raw material of a power-elite who has taken Mother Earth's every living creature hostage."

‒ The late Petra Kelly, German Green Party.

"We extract ... uranium from the formation and send it to atomic reactors, so we are actually purifying the subsoil from heavy metals."

‒ Kazatomprom manager Kalilallo Baytasov, 2013.⁴

"This is like a water clean up project, and we are going to sell the by-product on."

‒ Powertech manager Mark Hollenbeck on the Dewey-Burdock ISL uranium project in South Dakota.⁵

"We're taking the uranium out of the ground, we're exporting it to be used for productive purposes, so we should be getting a medal for cleaning up the environment."

‒ Neville Huxham, Paladin Energy Africa, operator of the Kayelekera uranium mine, 2009.⁶

"Mining is a 24 hour operation and cannot be stopped as a result of a shortage of available dust masks."

‒ Johan De Bruin, geology superintendent at Paladin's Kayelekera uranium mine in Malawi, 2010.⁷

"The beauty of the uranium product and nuclear waste is that you can put your hands around it, you can control it and you can manage it."

‒ Brian Reilly, Minerals Council of Australia, November 2016.⁸

Weapons and War

"Again and again it has been demonstrated here and overseas that when problems over safeguards prove difficult, commercial considerations will come first."

– Former South Australian Premier Mike Rann, 1982.⁹

"You can guarantee that mining uranium will lead to nuclear waste. You can't guarantee that uranium mining will not lead to nuclear weapons."

– Anthony Albanese, Australian Labor Party MP, 2006.¹⁰

"For eight years in the White House, every weapons-proliferation problem we dealt with was connected to a civilian reactor program. And if we ever got to the point where we wanted to use nuclear reactors to back out a lot of coal ... then we'd have to put them in so many places we'd run that proliferation risk right off the reasonability scale. And we'd run short of uranium, unless they went to a breeder cycle or something like it, which would increase the risk of weapons-grade material being available."

‒ Former US Vice President Al Gore, 2006.¹¹

"The splitting of the atom has changed everything save our mode of thinking, and therefore we drift toward unparalleled catastrophe. The solution to this problem lies in the heart of mankind. If only I had known, I should have become a watchmaker."

– Albert Einstein, 1946.¹²

Diversification!

"A minerals exploration company is trying to position itself to become Australia's first legal medicinal marijuana grower."

‒ ABC, April 2015. The share price of uranium explorer Capital Mining doubled following the announcement.¹³

"In Western Australia, United Uranium, which holds several uranium exploration licences, has decided to get out of uranium exploration and instead focus on property development. The company said its strategic review "underlined a consistent theme, that junior resource companies and in particular uranium focussed companies, are currently 'unloved' by the investment community"."

‒ Mining Australia, 2014.¹⁴

"As investors try to predict what will happen next, analysts at RBC Capital Markets are advising clients to go overweight on fertilizer equities and underweight on uranium and precious metals equities in the fourth quarter."

‒ Financial Post, 2014.¹⁵

"Until now inveterate fraudsters, even convicted heroin traffickers, have happily promoted their floats on the [Australian Stock Exchange]. ... Until now, the same promoters have beaten a path back to the market − decade in, decade out − pouncing on every fad, boom and bubble. That they haven't been required to disclose their myriad failures − before "backdoor listing" the likes of a "uranium" asset into a nickel explorer's shell, itself born from a dotcom play, having emerged from the ruins of a biotechnology float − has played nicely into the hands of the promoters, brokers, lawyers, accountants and other capital markets fee-takers."

‒ Journalist Michael West, 2011.¹⁶

Uranium industry downturn

"[L]ess clued-up people continue to buy uranium penny dreadfuls rather than do something sensible, like bet the house (the wife and the kids) on the horse carrying the jockey wearing pink polka dots in the fourth at Ascot next Saturday."

‒ The West Australian, October 2005.¹⁷

"[T]he uranium industry is definitely in crisis, I believe, and is showing all the symptoms of a mid-term paralysis if this situation does not demonstrably change."

‒ [Then] Paladin Energy chief executive John Borshoff, November 2013.¹⁸

"[Uranium] is the worst-performing mined commodity this year."

‒ Wall Street Journal, July 2016.¹⁹

"Uranium executives radiate sunny optimism at the start of each year when pitching their new project. This then disappears by the summer ... This time even that optimism has gone. All the executives I spoke to looked about as miserable as England football fans in the second week of a major tournament. What's to be done? Can this ever change? There is so much potential, but we never perform, why can't we be put out of our misery? Is it Wayne Rooney's fault?"

‒ RFC Ambrian, September 2016.²⁰

"[U]ranium bulls know how Moses felt when he was destined to wander forty years in the desert and never get to see the Promised Land."

‒ Christopher Ecclestone, March 2016.²¹

"There is too much of nearly every commodity in the world today. Then there is uranium. The outlook for the element that powers nuclear reactors may be worse than for any other, and there is almost no prospect for improvement soon. Unlike other commodities, low prices won't stimulate demand. No commodity faces the unique pressure that uranium and nuclear fuel do and there is little prospect of a near-term recovery."

‒ Wall Street Journal, September 2016.²²

"It has never been a worse time for uranium miners."

‒ Alexander Molyneux, CEO of Paladin Energy.²³

"The days of nuclear power based upon uranium-based fission are coming to a close because the fear of nuclear proliferation, the reality of nuclear waste and the difficulty of managing it have proven too difficult over time."

‒ Former Shell executive John Hofmeister.²⁴

"There has indeed been a nuclear winter verging on an Ice Age over the last few years with bad news heaped upon bad news within the context of a pretty dismal financing situation for mining all around. ... The yellow mineral had made fools and liars of many in recent years, including ourselves."

‒ Christopher Ecclestone / Hallgarten & Company, 2014.²⁵

"What gets us excited and what gets us out of bed in the morning are the long-term fundamentals of the uranium market."

‒ Brian Reilly, Minerals Council of Australia, November 2016.⁸

(Compiled by Nuclear Monitor.)

References:

1. www.thequietamerican.org/quotes

2. http://germanhistorydocs.ghi-dc.org/docpage.cfm?docpage_id=3064
www.brainyquote.com/quotes/keywords/uranium.html

3. www.guardian.co.uk/society/2005/mar/02/environment.environment

4. Christian Science Monitor, 28 Aug 2013, www.wise-uranium.org/new.html

5. 5. Mark Hollenbeck / Powertech, South Dakota Public Broadcasting, 5 Apr. 2010. www.wise-uranium.org/new.html

6. IPS, 24 Aug 2009. www.wise-uranium.org/new.html

7. Nyasa Times, 25 Sept. 2010. www.wise-uranium.org/new.html

8. http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%...

9. Mike Rann, 1982, 'Uranium: Play It Safe'.

10. Quoted in the New York Times, 2 Aug 2006, page A9.

11. David Roberts, 10 May 2006, 'An interview with accidental movie star Al Gore', www.grist.org/article/roberts2

12. https://en.wikiquote.org/wiki/Albert_Einstein_and_politics

13. www.abc.net.au/news/2015-04-17/capital-mining-in-bid-to-be-first-to-grow...

www.wise-uranium.org/upaussa.html

14. Vicky Validakis, 6 June, 2014, 'Price collapse sees junior miner ditch uranium to focus on property development', www.miningaustralia.com.au/news/price-collapse-sees-junior-miner-ditch-u...

15. Peter Koven, 1 Oct 2014, 'Buy fertilizer stocks, don't buy uranium and precious metals: RBC', http://business.financialpost.com/2014/10/01/buy-fertilizers-dont-buy-ur...

16. Michael West, 16 April 2011, 'Not just another crackdown', www.theage.com.au/business/not-just-another-crackdown-20110415-1dhpk.html

17. Tim Treadgold, 20 Oct 2005, 'Briefcase - Smart money takes leave of uranium', The West Australian, www.reocities.com/jimgreen3/nnn2.html

18. 2 Nov 2013, http://au.news.yahoo.com/thewest/a/-/breaking/18043640/uranium-industry-...

19. Rhiannon Hoyle and Mayumi Negishi, 31 July 2016, 'Japan Nuclear-Power Jitters Weigh on Global Uranium Market', www.wsj.com/articles/japan-nuclear-power-jitters-weigh-on-global-uranium...

20. RFC Ambrian, 16 Sep 2016, 'In the news: The Nuclear Industry', www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-o...

21. Christopher Ecclestone, 22 March 2016, 'Uranium ‒ Waiting for Godot or Forging Ahead?', http://investorintel.com/uranium-energy-intel/uranium-waiting-godot-forg...

22. Spencer Jakab, 18 Sept. 2016, 'Uranium Investments Grow Radioactive', Wall Street Journal, www.wsj.com/articles/why-uranium-investments-will-remain-radioactive-147...

23. Geert De Clercq, 3 Oct 2016, 'Desperate uranium miners switch to survival mode despite nuclear rebound', www.reuters.com/article/us-uranium-nuclearpower-idUSKCN1230EF

24. Pia Akerman, 7 Oct 2013, 'Ex-Shell boss issues nuclear call', The Australian, www.theaustralian.com.au/national-affairs/policy/ex-shell-boss-issues-nu...

25. Christopher Ecclestone, 10 Nov 2014, 'Ecclestone on NexGen Energy – A Survivor of the Nuclear Winter', http://investorintel.com/nuclear-energy-intel/nexgen-energy-nxe-v-surviv...

The OECD's Nuclear Energy Agency and the International Atomic Energy Agency have released the 2016 version of their biennial 'Red Book'.¹ The 550-page document contains vast amounts of information on uranium exploration, production and demand, including sections on 49 countries.

The Red Book is a highly sanitized report that contains scarcely any of the critical information compiled by, for example, the WISE Uranium project² or the EJOLT environmental justice project.³ Nonetheless it is a useful source of facts and figures on uranium mining.

Uranium resources

Uranium resources are classified by a scheme based on geological certainty and costs of
production:

• Identified resources include reasonably assured resources (RAR) and inferred resources (not defined with such a high degree of confidence).
• Undiscovered resources (prognosticated and speculative) refer to resources that are expected to exist based on geological knowledge of previously discovered deposits and regional geological mapping.

The 2016 Red Book, which takes a snapshot of the uranium sector as of 1 January 2015, finds that total identified uranium resources have increased by only 0.1% since 1 January 2013. The resource base has changed very little "due to lower levels of investment and associated exploration efforts reflecting current, depressed uranium market conditions", the 2016 Red Book states.

Total identified resources (RAR and inferred) as of 1 January 2015 amounted to:

• 7,641,600 tonnes of uranium metal (tU) in the highest cost category (<US$260/kgU or <US$100/lb U3O8), a 0.1% increase compared to the total reported for 2013.
• 5,718,400 tU in the <US$130/kgU (<US$50/lb U3O8) category, a decrease of 3.1%.
• 2,124,700 tU in the <US$80/kgU category, an 8.6% increase.
• 646,900 tU in the lowest cost category (<US$40/kgU), a 5.3% decrease.

Total undiscovered uranium resources (prognosticated and speculative) as of 1 January 2015 amounted to an estimated 7,422,700 tU, a slight decrease from the estimate two years earlier.

At the 2016 level of uranium requirements (63,404 tU)⁴, identified resources in the highest cost category are sufficient for 121 years of supply for the global nuclear power fleet.

In addition to as-yet unmined deposits, there are large and growing uranium stockpiles, secondary sources, and the potential to develop unconventional uranium resources (e.g. phosphate, seawater).

Global stockpiles have grown sharply since the Fukushima disaster⁵ and now amount to more than 1.4 billion pounds U3O8 according to Ux Consulting⁶ or 1.2 billion pounds according to the 2016 Red Book. Thus stockpiles alone would suffice to keep the entire global reactor fleet operating for around eight years. And stockpiles continue to grow ‒ supply from mines and secondary sources currently exceeds demand by about 30 million pounds U3O8 per year or 18%.⁶

As of 1 January 2015, uranium production provided about 99% of reactor requirements with the remainder supplied by previously-mined uranium (secondary sources) including government and commercial inventories, reprocessed uranium, underfeeding at enrichment plants (extracting more U-235 per given volume of feedstock), uranium produced by the re-enrichment of depleted uranium tails, and low-enriched uranium produced by blending down highly enriched uranium (typically from military sources).

The Red Book states: "Although information on secondary sources is incomplete, the availability of these sources is generally expected to decline somewhat after 2015. However, available information indicates that there remains a significant amount of previously mined uranium (including material held by the military), some of which could feasibly be brought to the market in the coming years. With the successful transition from gas diffusion to centrifuge enrichment now complete and capacity at least temporarily in excess of requirements following the Fukushima Daiichi accident, enrichment providers are well-positioned to reduce tails assays below contractual requirements and in this way create additional uranium supply."

Exploration

Uranium exploration expenditures continued to decrease in 2013‒14 and no significant resources were added to the resource base during this reporting period.

The 2016 Red Book states: "From 2012 to 2014, domestic exploration and mine development expenditures decreased in many countries, mainly as a result of the declining uranium price which slowed down many exploration and mine development projects, particularly in the junior uranium mining sector. Significant decreases are reported for Argentina, Australia,
Canada, Finland, Kazakhstan, Russia, South Africa, Spain and the United States. In
contrast, Brazil, China, the Czech Republic, Jordan, Mexico and Turkey reported increases
in expenditures during this period. "

For the 2013‒14 reporting period, China accounted for the highest non-domestic and domestic exploration and development expenditures.

Production

Global uranium mine production decreased by 4% from 58,411 tU in 2012 to 55,975 tU in 2014. The small drop in production was largely the result of decreased production in Australia, Brazil, the Czech Republic, Malawi, Namibia and Niger.

From 2012 to 2014, uranium was produced in 21 different countries; the same number as in the last reporting period.

Kazakhstan's growth in production continued, but at a much slower pace, and it remains the world's largest producer, reporting production of 22,781 tU in 2014 and 23,800 tU in 2015. Production in Kazakhstan in 2014 totalled more than the combined production in Canada and Australia, the second and third largest producers of uranium, respectively.

In-situ leaching (ISL) uranium mining accounted for 51% of world production as of 1 January 2015, largely as a result of continued ISL production increases from Kazakhstan
and other ISL projects in Australia, China, Russia, the US and Uzbekistan.

The breakdown for all uranium mining methods in 2014 was:

• ISL 51%
• underground mining 27%
• open-pit mining 14%
• co-product and by-product recovery from copper and gold mining 7%
• heap leaching <1%
• other methods <1%

The future of nuclear power

The Red Book presents low and high scenarios for nuclear power growth or decline to 2035. As discussed previously in Nuclear Monitor⁷, the IAEA's high scenarios are always proven to be too high (often absurdly so), and even the low projections are usually too high. Nonetheless, the low projections are a reasonable guide.

According to the 2016 Red Book, nuclear power capacity is estimated to expand from 377 gigawatts (GW) in January 2015 to 418‒683 GW by 2035, representing growth of 11‒81%.

In the low scenario (418 GW by 2035), global nuclear capacity increases by 41 GW, with China accounting for 74 GW of growth and a 33 GW (9%) decline in the rest of the world.

The estimates presented in the 2016 Red Book for nuclear capacity in 2035 (418‒683 GW) are substantially lower than those presented in the 2011 Red Book for 2035 (540‒746 GW). The low estimate is down 23%, and the high estimate is down 8%.

Regional and national projections

The Red Book anticipates "significant" growth of nuclear power (and thus uranium demand) in East Asia (48‒166 GW new nuclear capacity by 2035) and non-EU European countries (21‒45 GW). There will also be "significant" nuclear capacity growth include the Middle East, Central and Southern Asia and South-East Asia according to the Red Book. However there is no likelihood of significant growth in any of those regions except South Asia (and then only if India manages to overcomes the obstacles holding back its ambitious nuclear expansion plans).

For North America, the low-case projection sees nuclear generating capacity remaining about the same by 2035 and increasing by 11% in the high case.

In the European Union, nuclear capacity in 2035 is projected to decrease by 48% in the low case scenario or increase by 2% in the high case.

The Red Book states: "These projections are subject to even greater uncertainty than usual following the Fukushima Daiichi accident, since the role that nuclear power will play in the future generation mix in some countries has not yet been determined and China did not report official targets for nuclear power capacity beyond 2020 for this edition."

Some country projections of interest:

• China: current capacity of 16 GW is estimated to increase to 91.3‒158.4 GW in 2035.
• France: current capacity is 63.2 GW and capacity in 2035 is estimated to be 37‒63.2 GW.
• India: current capacity of 4.8 GW is estimated to increase 4‒8-fold to 18.2‒36.7 GW.
• Japan: The estimates for nuclear capacity in 2035 range from 6.7 GW to 41.3 GW.
• Russia: current capacity of 25.2 GW is estimated to increase to 32‒42.7 GW.
• South Korea: current capacity of 20.7 GW is estimated to increase to 37.6‒43.2 GW.
• Ukraine: current capacity of 13.8 GW is estimated to increase to 26‒30.5 GW.
• UK: current capacity is 9.4 GW and capacity in 2035 is estimated to be 0‒12.2 GW.
• USA: current capacity of 99.2 GW is estimated to increase to 101.4‒110.4 GW.

All of the projections are uncertain, as the Red Book freely acknowledges. Some of the projections are implausible; for example there is no likelihood of a doubling of nuclear capacity in Ukraine. The projection for growth in the US is heroic; decline is much more likely. For China, the low estimate of 91.3 GW in 2035 stretches credulity and the high estimate of 158.4 GW is ridiculous.

The Red Book notes that the uranium market "is currently well-supplied and projected primary uranium production capabilities including existing, committed, planned and prospective production centres would satisfy projected low and high case requirements through 2035 if developments proceed as planned."

The expansion of already-large stockpiles is one of the reasons that getting new mines into production is proving to be increasingly difficult. The Red Book states: "Challenges remain in the global uranium market with high levels of oversupply and inventories, resulting in continuing pricing pressures. ... Producers will have to overcome a number of significant and, at times, unpredictable issues in bringing new production facilities on stream, including geopolitical factors, technical challenges and risks at some facilities, the potential development of ever more stringent regulatory requirements, and the heightened expectations of governments hosting uranium mining."

The report further notes that "the Fukushima Daiichi accident has eroded public confidence in nuclear power in some countries, and prospects for growth in nuclear generating capacity are thus being reduced and are subject to even greater uncertainty than usual."

References:

1. OECD's Nuclear Energy Agency and International Atomic Energy Agency, 2016, 'Uranium 2016: Resources, Production and Demand', www.oecd-nea.org/ndd/pubs/2016/7301-uranium-2016.pdf

2. www.wise-uranium.org/

3. www.ejolt.org/tag/uranium-mining/

4. www.world-nuclear.org/information-library/facts-and-figures/world-nuclea...

5. 26 Feb 2016, 'Yellowcake blues', Nuclear Monitor #819, www.wiseinternational.org/nuclear-monitor/819/nuclear-monitor-819-26-feb...

6. 9 Aug 2016, 'Uranium: the world's worst commodity', Nuclear Monitor #828, www.wiseinternational.org/nuclear-monitor/828/uranium-worlds-worst-mined...

7. 23 Sept 2015, 'Fanciful growth projections from the World Nuclear Association and the IAEA', Nuclear Monitor #811, www.wiseinternational.org/nuclear-monitor/811/fanciful-growth-projection...

In a unanimously adopted resolution, the Cree Nation state they are “determined to protect our way of life against the unique and grave threat posed by uranium mining and waste, today and for thousands of years to come”.

The James Bay Cree Nation has declared a Permanent Moratorium on uranium exploration, uranium mining and uranium waste emplacement in Eeyou Istchee, the James Bay Cree territory. The permanent moratorium was enacted unanimously by the Annual Cree Nation General Assembly in Was-kaganish on August 8.
“The risks inherent in uranium explo-ration, mining, milling, refining and transport, and in radioactive and toxic uranium mining waste, are incompatible with our stewardship responsibilities in Eeyou Istchee,” the Resolution declares.

“The Cree Nation is determined to protect our economies and way of life against the unique and grave threat posed by uranium mining and uranium waste, today and for thousands of years to come,” said Grand Chief Dr. Matthew Coon Come. “We are not opposed to sustainable and equitable mining and other industrial and resource development activities in Eeyou Istchee – but the toxic and radiation risks created by uranium mining and uranium waste are unique in scale and duration.”

“Uranium moratoriums have been enacted by the governments of British Columbia and Nova Scotia, as well as other foreign jurisdictions, without affecting other mining and resource development activities,” Grand Chief Coon Come told the Cree Assembly. “We anticipate that all Québécoises and Québécois, once they know the facts, will join us in this minimal stand of prudent stewardship.”

Recent global increases in uranium prices have spurred significant uranium exploration activities in Eeyou Istchee. The most advanced uranium project to date in Eeyou Istchee is at the Matoush uranium ore body site near the Cree community of Mistissini. Strateco Resources Inc. has requested regulatory approval to conduct an advanced exploration project at Matoush, with the stated intention of determining the feasibility of a uranium mine and mill at this site.

“The Crees of Mistissini have declared our strong opposition to uranium mining in Eeyou Istchee,” said Chief Richard Shecapio, Chief of the Cree Nation of Mistissini. “We never doubted that the Cree Nation as a whole would stand with us in unity and strength.”

The Grand Council of the Crees (Eeyou Istchee) is the political body that represents the Eeyouch, the James Bay Cree people.

Source: news release; 9 August  2012 available at: www.gcc.ca/newsarticle. php?id=281
Contact: Grand Chief, Mathew Coon Come, Office of the Grand Chief / Chairman, 2 Lakeshore Road, Nemaska, QC J0Y 3B0, Canada
Tel: +1 819 673-2600
Email: eagrandchief[at]gcc.ca

Amidst all the fuss about Hinkley C and other planned nuclear power plants in the EU and US, does anyone knows where the stuff that keeps these reactors buzzing comes from? Here's a fun fact: no other country supplies so much uranium to the EU than ... Russia. Putin has more than the gas valve if he wants to play games with Europe. And the degree to which the US has become dependent on non-stable foreign sources of uranium is also unprecedented.

Let's churn on a couple of numbers first. The US now depends on imports of uranium for 94% of their total demand.¹ For the EU it's 97%.² More than a quarter of all uranium used in the EU comes from Russia, up from 10% in 2005 ‒ when more befriended countries like Australia and Canada used to supply 46% of all uranium to the EU. Their combined share of exports to the EU has dropped to under 30%. These trends have geopolitical implications.

One issue is security. Reciprocal sanctions between Russia and the EU are now in place for over two years. If some recent polls³ in the US become reality and Trump becomes the new US president, things will get worse for the EU. Trump already hinted⁴ that a grim scenario (or much worse⁵) could play out in Latvia or Estonia, EU countries with a Russian minority of over a quarter of the whole population.⁶ How hard can the EU bite the hand that feeds it with the gas and uranium it so desperately needs? Putin will answer: not that hard.

Another issue is the future supply risk. Any power plant envisaged today will need uranium in 40 years from now. But both Russia and Kazakhstan, the two biggest uranium exporters to the EU have plans to build new nuclear power plants for themselves. Kazakhstan has gone from zero to hero: in 20 years it went from no production to supplying 40% of the world's uranium. But aside from their own future needs, and those of nearby befriended Russia, analysts fear that mismanagement is likely to lead to a collapse in exports.¹

The great outsourcing to the "underpolluted" countries

But the bigger issue should be that uranium mining is a very dirty business that we didn't clean up but source out. France used to have 200+ uranium mines but thanks to better care for environment and workers the last one closed in 2001. Instead, new ones were opened in places like Niger⁷, Namibia⁸ and Malawi. In short: places where we can shift the real costs from uranium mining to the people and environment. As a matter of fact, CEOs in the business are quite frank about that. The former CEO of Paladin, John Borshoff, an Australian uranium producer who opened mines in Namibia, said that Canadian and Australian environmental norms are "over-sophisticated".⁹ What he actually means is that in African countries you don't need to pay much or anything at all to "protect" either your workers or the people living in the vicinity from dying from cancer due to exposure to uranium.

He's just implementing the Lawrence Summers Principle.¹⁰ This 'principle' originates from a 1991 memo written or dictated by Summers whilst he was the World Bank's chief economist. In this memo, he promoted dumping toxic waste in the Third World for economic reasons: "Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs [Least Developed Countries]? ... A given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that."

The uranium sector squared up to that. But for how much longer will it get away with that?

Last time rebels in Mali came too close to the AREVA mines in Niger for comfort, France suddenly sent in their army. Under some humanitarian pretext. And if rebels don't succeed in capturing these remote mines, the global environmental justice movement might just succeed in closing a couple of them down.

The legacy from uranium mining

Being part of that movement, I've had the 'pleasure' of making a toxic tour around a now closed uranium mine in Bulgaria.¹¹ Massive amounts of toxic sludge were stored behind a weak dam that showed signs of distress after heavy rains caused a spill in 2009. Old EU money was still keeping the dam up but as we're talking about radioactive waste, money will need to keep flowing to dam repairs for millennia to come.

Since 1992, when the mines closed, and for time immemorial, that will be public money. And that's how it goes with uranium mines in places with weak or no legislation: short-term private profits followed by perpetual public losses. In Bulgaria the people are still lucky enough to be in the EU with at least some environmental regulations and EU money for environmental protections. The same goes for other EU countries like France, which has dozens of zombie mines: dead but still active.¹² The US also has plenty more zombie mines. The lands of the Navajo Nation include over 500 abandoned uranium mines as well as homes and drinking water sources with elevated levels of radiation.¹³ Despite the fact that they stopped operating in 1986, new and related lung cancers, bone cancers and impaired kidney functions keep appearing.

But while EU and US now have enough safeguards to keep their own uranium safe under the ground, there's nothing of that in Niger⁷ or Namibia⁸. These two countries are rising players on the uranium market, both exporting their uranium to the EU. Niger has now produced more uranium than France ever did in its whole history. It's here that UK-Australian and French companies are doing the dirty digging that destroys local environment and populace.

Three reports from the EU-funded EJOLT project deal with the environmental and social issues related to uranium mining. One deals with the impacts¹⁴, one concentrates on a mine in Malawi¹⁵ and the third dwells on the examples of successful resistance to big mining in general.¹⁶

Bruno Chareyron, a French nuclear engineer who authored most of these reports, has been carrying out toxic tours along uranium mines for the past two decades. That's not always an easy job, with for example the police confiscating most of your measuring equipment upon arrival in Niger. Nevertheless, Bruno was able to measure that radioactive scrap metal from the mines and mills is sold on the market. Waste rocks from the mines were used to pave roads, build homes and even at the local hospital where the radiation was 100 times above normal. Piles of radioactive waste were left in open air, unprotected, next to two cities with a total population of 120,000.

The missing piece of the puzzle

Where is uranium in the whole debate about nuclear energy? It's usually only mentioned when the industry says: uranium is only a tiny part of the total cost of our energy model, unlike the situation in the gas and oil industry.

Well, there's a reason why it's only a tiny part of the total cost and it's called cost shifting.

Ecological economists have given names to processes witnessed in the uranium sector: accumulation by contamination¹⁷, ecologically unequal exchange¹⁸ and ecological debt.¹⁹ More and more, people all over the world are coming together to resist against environmental justice.²⁰

Our EU and US based nuclear power is currently coming at the cost of poisoning people in Africa. But it begs the question: are we ready to face that reality?

Nick Meynen writes blogs and books on topics like environmental justice, globalization and human-nature relationships.

www.epo.be/uitgeverij/boekinfo_auteur.php?isbn=9789064455803.

www.facebook.com/nick.meynen, @nickmeynen

Reprinted from The Ecologist, 4 August 2016, www.theecologist.org/News/news_analysis/2987988/uranium_from_russia_with...

References:

1. https://katusaresearch.com/future-of-uranium/

2. http://ec.europa.eu/euratom/docs/5-Purchases_Nat_U.xls

3. www.reuters.com/article/us-usa-election-poll-idUSKCN1062MC

4. www.nytimes.com/2016/07/22/world/europe/donald-trump-nato-baltics-interp...

5. www.theecologist.org/#baltics

6. https://en.wikipedia.org/wiki/Russian_language_in_Latvia

7. http://ejatlas.org/conflict/areva-uranium-mining-in-imouraren-niger

8. http://ejatlas.org/conflict/rio-tintos-rossing-uranium-mine-namibia

9. www.smh.com.au/world/miner-accused-on-slack-safety-20090919-fw3q.html

10. www.ejolt.org/2013/02/lawrence-summers%D5-principle/

11. http://ejatlas.org/conflict/life-after-the-uranium-mines-in-buhovo-bulgaria

12. www.ejolt.org/wordpress/wp-content/uploads/2014/11/Uranium-final.pdf

13. http://ejatlas.org/conflict/uranium-mining-in-the-southwest-navajo-natio...

14. www.ejolt.org/2014/11/uranium-mining-unveiling-impacts-nuclear-industry/

15. www.ejolt.org/2015/02/impact-kayelekera-uranium-mine-malawi/

16. www.ejolt.org/2015/04/towards-environmental-justice-success-mining-confl...

17. www.ejolt.org/2015/02/accumulation-contamination/

18. www.ejolt.org/2015/02/ecologically-unequal-exchange/

19. www.ejolt.org/2014/11/ecological-debt-history-meaning-relevance-environm...

20. www.ejolt.org/2016/05/global-environmental-justice-movement-2/

We noted in Nuclear Monitor in May 2016 that the uranium price had fallen to an 11-year low, just under US$26/lb U3O8.¹ Since then, the price has fallen further, to $25 in late July.

Uranium was the best performing mined commodity of 2015 according to Macquarie Bank² ‒ the uranium price held firm, albeit at a low level, while other commodity prices tumbled. But that was then and this is now. On June 8, Bloomberg reported that of the 80 commodities it tracked, only one ‒ carbon credits ‒ has fared worse than uranium this year.³ The spot uranium price has fallen by more than 20% since the start of 2016.⁴

A 31 July 2016 article in the Wall Street Journal summed up the situation:⁵

"The price of uranium has slumped to $25 a pound, its lowest level since April 2005, according to the Ux Consulting Co., a nuclear-fuel research firm​ that publishes weekly market prices. The fuel's value is down 27% since the start of this year and is a fraction of the $136 a pound it traded for at its 2007 peak. It is the worst-performing mined commodity this year. Other natural resources such as copper, coal and iron ore have gained year to date.

"There is plenty to fret about. In the U.S., a market awash with cheap natural gas, nuclear reactors have been closing. A few years ago, France said it would start reducing its reliance on atomic energy. China, while rolling out a broad expansion of its nuclear fleet, has built up inventories of uranium that could last more than a decade.

"In Japan, a long-awaited revival hasn't happened. The Fukushima Daiichi meltdowns in 2011 sparked protests and the shutdown of its fleet of 50-plus nuclear plants, and tarnished uranium's image globally. The government had planned to restart more than 30 reactors by 2030, and analysts had expected as many as 10 back online by 2017. Now, it isn't certain the two reactors that are operating will remain running and that the dozens of other reactors not slated for decommissioning will ever be restarted."

Nick Carter from Ux Consulting said in April that the spot uranium price could stay in the low $30s/lb "for quite some time" because supply is expected to exceed demand by 25‒30 million lb U3O8 each year from 2016 to 2019. Carter does not see a supply deficit in the market until "the late 2020s".⁶

Likewise, Jonathan Hinze from Ux Consulting told the Wall Street Journal that the global uranium glut is deepening with annual supply of about 200 million pounds of uranium oxide exceeding annual demand of 170 million pounds.⁵

Stockpiles have climbed from virtually nothing before the Fukushima disaster to more than 1.4 billion pounds now, according to Hinze.⁵ Thus stockpiles alone would suffice to keep the entire global reactor fleet operating for 8.3 years. China's stockpile of about 300 million pounds⁵ would suffice to operate its existing reactor fleet for around 20 years.

Macquarie said on July 26 that it "is increasingly difficult to see what drives uranium materially higher from here."⁵ According to UBS analysts, a turnaround in the market could be years off due to the slow reactor restart process in Japan and the slow pace of global nuclear expansion.⁷ UBS recently revised its spot uranium price forecasts, and all the revisions were downward. For 2016 the forecast is now $30/lb, down from $37/lb; for 2017, the new $32 forecast is down from $55; for 2018, the new $42 forecast is down from $60; and for 2019, the new $55 forecast is down from $60.

Seller's remorse

Commodities analyst Donald Levit notes that the average marginal cost of production is around $30/lb, higher than the current spot price, and thus "many uranium miners are currently underwater".⁷

Uranium producers typically sell most of their output through long-term contracts rather than the spot market, which only makes up about 20% of the whole market. However Patersons Securities analyst Simon Tonkin says he believes a number of producers have been forced to sell into the spot market recently to improve dwindling cash positions.⁴

This is 'seller's remorse' according to analyst and investor Marin Katusa: "I've spoken to many producers who wish they weren't depleting their resources but they aren't in a position to do otherwise. It may be because they signed contracts to finance their projects into production and had no alternatives, or they may have conventional mines where it's not feasible to decrease the labor force. ... They know they are depleting their best resources in a low-price environment. They don't like it, but can't help it. This is what I call seller's remorse."⁸

Enrichment underfeeding

Just as the uranium mining sector is oversupplied, so too is the enrichment sector. Platts noted in April 2016:⁶

"Further complicating the supply picture, uranium enrichment companies are using their extra enrichment capacity to bring an estimated 15 million lb U3O8 equivalent to the market annually by driving down their operational tails assay, according to Ruthanne Neely, UxC senior vice president of enrichment and general counsel.

"When enrichers are in overcapacity, they can "underfeed" ‒ that is, use less uranium for the same resulting enriched uranium product [EUP] ‒ and sell the excess uranium back into the market. Neely estimated that there is "over 60 million SWU in excess inventories" in the form of EUP that can be sold on the market. There is so much EUP material that finding storage space is difficult, she said. Given current requirements, she said the inventory would only be drawn down by 2028."

Kazakhstan ‒ the elephant in the room?

Reactor restarts in Japan were meant to stimulate the uranium industry ... but didn't. The end of the US‒Russia 'megatons to megawatts' program was meant to stimulate the industry ... but didn't. The global 'nuclear renaissance' was meant to stimulate the uranium industry ... but it didn't materialize. Now, some are anticipating (or hoping) that uranium production in Kazakhstan will collapse and stimulate investment and production elsewhere. Marin Katusa writes:⁸

"It's all about Kazakhstan, which went from virtually no uranium production 15 years ago to becoming the world's largest producer, contributing 40% of global primary uranium production. Zero to hero in less than 20 years. ...

"But what nobody is asking is this: What happens to a nation's resource production when reinvestments into the sector ‒ such as replacing wells and past production ‒ never come about because the state uses the cash proceeds to fund social programs instead? ...

"I've been writing about this phenomenon for years, and I call it the pinch point of national resource production. ... The pinch point is coming to Kazakhstan, and it will happen faster than most expect. Uranium prices have been low, and the government has been using the funds from production to subsidize its political agenda. Once again, reinvestment has been sacrificed as a result. ...

"One American executive ... stated to me he spent years in Kazakhstan working in the uranium mines, and he couldn't emphasize enough how bad the coming decline to their production will be. I like to remind people that it also happened in the US. In the 1960's, the US was the world's largest producer of uranium, and produced over 35 million pounds of uranium annually. Last year, the US produced less than 5 million pounds. That is more than an 85% decrease in production."

References:

1. 4 May 2016, 'Uranium on the rocks; nuclear power PR blunders', Nuclear Monitor # 823, https://www.wiseinternational.org/nuclear-monitor/823/uranium-rocks-nucl...

2. Andrew Topf, 12 Jan 2016, 'Nuclear Renaissance Has Analysts Bullish On Uranium', http://oilprice.com/Alternative-Energy/Nuclear-Power/Nuclear-Renaissance...

3. Sonja Elmquist, 8 June 2016, 'World's Worst Commodity Forecast to Rally as Uranium Miners Cut', www.bloomberg.com/news/articles/2016-06-07/world-s-worst-commodity-forec...

4. Tess Ingram, 5 July 2016, 'Uranium spot prices descend beyond decade low', www.afr.com/business/mining/uranium/uranium-spot-prices-descend-beyond-d...

5. Rhiannon Hoyle and Mayumi Negishi, 31 July 2016, 'Japan Nuclear-Power Jitters Weigh on Global Uranium Market', www.wsj.com/articles/japan-nuclear-power-jitters-weigh-on-global-uranium...

6. Bejamin Leveau, 29 April 2016, 'Uranium industry focuses on costs as supply glut continues', http://blogs.platts.com/2016/04/29/uranium-cost-supply-glut/

7. Donald Levit, 27 July 27, 2016, 'Uranium Prices Remain Below Cost of Production, Recovery is Years Away', www.economiccalendar.com/2016/07/27/uranium-prices-remain-below-cost-of-...

8. Marin Katusa, 26 June 2015, 'The Future of Uranium: Three Major Takeaways from the 2015 World Nuclear Fuel Market Conference', https://katusaresearch.com/future-of-uranium/

('No to uranium mining' in Swahili) On July 2, at a meeting in St Petersburg in the Russian Federation, the Unesco World Heritage Committee unanimously approved Tanzania’s request to allow uranium mining in the Selous game reserve. The reserve was designated a World Heritage Site in 1982 and is one of the largest remaining wildernesses in Africa.

After months of intense lobbying by nuclear industry and government the July 2, de-cision comes as a great relief to the go-vernment, whose plan to alter the boun-daries of Selous met strong opposition from environmentalists on the grounds that mining in the World Heritage Site would have disastrous consequences. They argued that mining of uranium had caused devastating environmental and health damage wherever it had been done.

But, at the meeting in St Petersburg from June 24 to 6 July 2012, the com-mittee unanimously approved Tanza-nia’s request to modify the boundary of the game reserve. The decision means that some 19,793 hectares (nearly 200 square kilometers) to the south of the Selous, where uranium deposits are found, will also excluded. Tanzania ap-plied for permission to alter the bounda-ries of Selous in January 2011, arguing that extracting uranium in the area was critical for funding development pro-grams and driving the economy. 

The Selous was designated a Unesco World Heritage Site in 1982 due to the diversity of its wildlife and undisturbed nature. Within the reserve no permanent human habitation or permanent struc-tures are permitted. All entries and exits are carefully controlled by the Wildlife Division of the Ministry of Natural Re-sources and Tourism. The five million-hectare game reserve is home to the largest population of elephants on the continent and also has large numbers of black rhinos, cheetahs, giraffes, hippos and crocodiles -along with grasslands and miombo forests. Its diverse lands-cape retains undisturbed biological and ecological processes. 

The project will be carried out by an Australian uranium mining firm called Mantra Resources at a cost of US$400million. Some environmentalists and politicians, including a handful of MPs, have consistently voiced strong criticism to the mining plan. They main-tain that the project will have devasta-ting consequences on the economic and social fronts and deal a major blow to the ecology.

According to IUCN more than a quarter of natural World Heritage sites are under pressure by existing or future mineral extraction. For this reason, IUCN is calling on the private sector, state-run companies and governments them-selves to adopt and enforce the “no go” principle, meaning that no mining and/or mineral and oil exploration and production can be carried out in World Heritage sites. 

Sources: The Citizen (Tanzania), 3 July 2012 /  Tanzania Daily News, 5 July 2012 / UICN website, visited 10 July 2012.

Uranium mining company Cameco announced on April 21 that is suspending production at Rabbit Lake and reducing production at McArthur River / Key Lake in Canada. Cameco is also curtailing production at its two U.S. uranium mines, both in-situ leach mines ‒ Crow Butte in Nebraska and Smith Ranch-Highland in Wyoming. About 500 jobs will be lost at Rabbit Lake and 85 at the U.S. mines. Cameco now expects its total production in 2016 will be 25.7 million pounds of U3O8 (about 15% of global demand), down from its earlier forecast of 30 million pounds.¹

"Unfortunately, continued depressed market conditions do not support the operating and capital costs needed to sustain production at Rabbit Lake and the US operations," Cameco CEO Tim Gitzel said. A Cameco statement said that "with today's oversupplied market and uncertainty as to how long these market conditions will persist, we need to focus our resources on our lowest cost assets and maintain a strong balance sheet."

With Cameco's recent announcement, U.S. uranium production in 2016 will likely be the lowest in more than a decade. On April 25, the Uranium Producers of America (UPA) called on the U.S. Department of Energy to stop selling from the federal excess uranium inventory until the market recovers. The Department has been selling more than five million pounds of uranium per year – more than twice what the domestic industry is likely to produce this year according to UPA – to fund the cleanup of contaminated legacy nuclear sites.²

The Department's actions "continue to have a negative impact on the uranium market and the domestic uranium industry" according to UPA, but in fact sales of around five million pounds amounts to just 3% of current annual global demand of 170 million pounds and about 10% of U.S. demand. UPA President Harry Anthony said cleaning up legacy nuclear sites is important but should be funded through the regular appropriations process. He noted that the U.S. imports almost 95% of uranium requirements for power reactors.²

Christopher Ecclestone, mining strategist at Hallgarten & Company, offers this glum assessment of the uranium market: "The long-held theory during the prolonged mining sector slump was that Uranium as an energy metal could potentially break away irrespective of the rest of the metals space. How true they were, but not in the way they intended, for just as the mining space has broken out of its swoon the Uranium price has not only been left behind but has gone into reverse. This is truly dismaying for the trigger for a uranium rebound was supposed to be the Japanese nuclear restart and yet it has had zero effect and indeed maybe has somehow (though the logic escapes us) resulted in a lower price."³

Ecclestone adds that uranium has "made fools and liars of many in recent years, including ourselves" and that "uranium bulls know how Moses felt when he was destined to wander forty years in the desert and never get to see the Promised Land." He states that uranium exploration "is for the birds" because "the market won't fund it and investors won't give credit for whatever you find".

Pro-uranium social media campaign's #epicfail

The Minerals Council of Australia launched a pro-uranium social media campaign on April 20. By that afternoon the twitter hashtag #untappedpotential was trending but ‒ as a mainstream media article noted⁴ ‒ contributors were overwhelmingly critical.

Nearly all contributors offered thoughts such as these:

"A week away from the #Chernobyl 30-year anniversary and Minerals Council begins propaganda trip on the #untappedpotential of uranium. Huh?!" said Twitter user Jemila Rushton.

"We need to better harness the #untappedpotential of solar power", tweeted Upulie Divisekera.

"#untappedpotential to put more communities at risk of nuclear waste dumps," Ace Collective said.

"We concur that uranium has much #untappedpotential ... for disaster, cost and time blowouts and proliferation," Anglesea After Coal said.

No doubt the Minerals Council of Australia anticipated the negative publicity and is working on the basis that all publicity is good publicity. But what the Minerals Council didn't anticipate is the uranium price has recently fallen to an 11-year low. Mining.com noted in an April 20 article that the current low price hasn't been seen since May 2005.⁵ The current price, under US$26/lb U3O8, is well under half the price just before the 2011 Fukushima disaster, and under one-fifth of the 2007 peak of a bubble.

Mining.com quotes a Haywood Securities research note which points out that the spot uranium price "saw three years of back-to-back double-digit percentage losses from 2011-13, but none worse than what we've seen thus far in 2016, and at no point since Fukushima, did the average weekly spot price dip below $28 a pound." Haywood Securities notes that an over-supplied market continues to inflate global inventories.

Mining.com notes that five years after the Fukushima disaster only two of Japan's nuclear reactors are back online, and that in other developed markets nuclear power is also in retreat. The last reactor start-up in the U.S. was 20 years ago. The French Parliament legislated last year to reduce the country's reliance on nuclear power by one-third. Germany is phasing out nuclear power. As discussed in Nuclear Monitor #822, the European Commission recently released a report predicting that the EU's nuclear power retreat ‒ down 14% over the past decade ‒ will continue. Even if all of Japan's 43 reactors are included in the count, the number of power reactors operating worldwide is the same now as it was a decade ago.

China is a growth market but has amassed a "staggering" stockpile of yellowcake according to Macquarie Bank. India's nuclear power program is in a "deep freeze" according to the Hindustan Times (unfortunately the same cannot be said about its nuclear weapons program), while India's energy minister Piyush Goyal said on April 20 that India is not in a "tearing hurry" to expand nuclear power since there are unresolved questions about cost, safety and liability waivers sought by foreign companies.⁶

Nuclear power propaganda

There is no reason to believe that the nuclear industry will break out of its 20-year pattern of stagnation in the foreseeable future. Yet the latest propaganda piece from the Breakthrough Institute claims that "in 2015 the global nuclear sector quietly had its best year in decades" and "in crucial respects the nuclear renaissance has hit its stride".⁷ How on earth does the Breakthrough Institute reach those conclusions? By celebrating 10 reactor start-ups in 2015 and all but ignoring the eight permanent reactor shut-downs. The shut-downs are relegated to a footnote and completely ignored in the subsequent analysis.

If the latest effort from the Breakthrough Institute is disingenuous, the latest from the World Nuclear Association (WNA) is, well, it's an #epicfail. The WNA has come up with a "vision" for the construction of 1,000 power reactors by 2050.⁸ What distinguishes this "vision" from the WNA's constant lobbying for massive nuclear expansion? This particular PR campaign has a name: Harmony. In the WNA's words: "Renewables, nuclear and a greatly reduced level of fossil fuel work together in harmony to ensure a reliable, affordable and clean energy supply."

Lest the harmony meme die before it even gets a chance to trend on twitter, the WNA finds different ways to insert the word into sentences that are devoid of merit or meaning. Here's an example: "The harmony of purpose that characterised national nuclear programmes in the early years has to be applied now to the global enterprise."

The targets of 1,000 new reactors and nuclear power supplying 25% of global electricity might seem like ambit claims, but the WNA insists that "a great deal of consideration has gone into them and they were set after extensive consultation with leading nuclear industry figures."

How does the WNA propose to attain harmony? There's nothing new in its rhetoric (except the buzzword): a "level playing field" for all low-carbon technologies, "harmonised regulatory processes", and an "effective safety paradigm".

Former WNA executive Steve Kidd has repeatedly poked fun at vacuous PR campaigns such as the WNA's latest push. For example he said last year: "We have seen no nuclear renaissance (instead, a notable number of reactor closures in some countries, combined with strong growth in China) ... The industry is doing little more than hoping that politicians and financiers eventually see sense and back huge nuclear building programmes. On current trends, this is looking more and more unlikely. The high and rising nuclear share in climate-friendly scenarios is false hope, with little in the real outlook giving them any substance."⁹

After the COP-21 UN climate change conference last December, Kidd wrote: "The future is likely to repeat the experience of 2015 when 10 new reactors came into operation worldwide but 8 shut down. So as things stand, the industry is essentially running to stand still."¹⁰

Laser uranium enrichment takes a hit

The uranium conversion and enrichment markets have been just as depressed as the uranium market. One casualty is Australian company Silex Systems which is reeling from the decision of GE-Hitachi to pull out of Global Laser Enrichment (GLE), a joint venture to commercialize Silex's laser uranium enrichment technology. GLE is a joint venture between GE (51%), Hitachi (25%) and Cameco (24%).¹¹

An 18 April 2016 statement by Silex Systems ascribes GE-Hitachi's decision to changes in business priorities and difficult market conditions. Silex's stock price fell 46% on the news of GE-Hitachi's exit and has remained depressed since.¹²

In 2012, GLE received a construction and operation licence for a full-scale laser enrichment facility from the U.S. Nuclear Regulatory Commission. GLE was selected by the U.S. Department of Energy to enter contract negotiations on the construction of a laser enrichment plant at the former gaseous enrichment site at Paducah, Kentucky to re-enrich its inventory of depleted uranium tails. Those negotiations are continuing, but the project hit financial hurdles in 2014 and faces even bigger hurdles now. Silex Systems CEO Michael Goldsworthy said in July 2014: "The global nuclear industry is still suffering the impacts of the Fukushima event and the shutdown of the entire Japanese nuclear power plant fleet in 2011. Demand for uranium has been slower to recover than expected and enrichment services are in significant oversupply."¹³

Responding to the recent announcement, pro-nuclear commentator Dan Yurman said:¹⁴

"It is becoming clear that the way to make a small fortune in the uranium enrichment business in the U.S. is to start with a large one. GE-Hitachi has spent millions developing the technology, including successfully building a test loop, and getting a license from the NRC to build a full-scale isotope separation plant in Wilmington, NC.

"GEH is the second major nuclear vendor to exit plans for the business without breaking ground. In 2013 French state-owned nuclear giant Areva suspended plans to build a $3 billion advanced gas centrifuge uranium enrichment plan in Idaho after getting an NRC license and a $2 billion loan guarantee from the U.S. federal government's Department of Energy. Areva, which is over-extended financially, said that the lack of outside investors caused it to cancel plans to break ground."

Laser enrichment has long raised proliferation concerns. A 1999 US State Department report stated that a laser enrichment facility ''might be easier to build without detection and could be a more efficient producer of high enriched uranium for a nuclear weapons program.''¹⁵ The Bulletin of the Atomic Scientists noted in 2014 that laser enrichment "promises to provide a route to uranium enrichment that is less expensive and harder-to-constrain than the centrifuge enrichment pursued by Iran and North Korea."¹⁶

References:

1. World Nuclear News, 22 April 2016, 'Cameco scales back uranium production', www.world-nuclear-news.org/UF-Cameco-scales-back-uranium-production-2204...

2. PRNewswire, 25 April 2016, 'UPA Calls on Dept. of Energy to Cease Uranium Transfers Until Market Recovers', www.prnewswire.com/news-releases/upa-calls-on-dept-of-energy-to-cease-ur...

3. Christopher Ecclestone, 22 March 2016, 'Uranium ‒ Waiting for Godot or Forging Ahead?', http://investorintel.com/uranium-energy-intel/uranium-waiting-godot-forg...

4. AAP, 20 April 2016, 'Pro-uranium campaign backfires on Twitter', www.sbs.com.au/news/article/2016/04/20/pro-uranium-campaign-backfires-tw...

5. Frik Els, 20 April 2016, 'Uranium market is getting crushed', www.mining.com/uranium-market-getting-crushed/

6. Prasun Sonwalkar, 22 Apr 2016, 'India not in ‘tearing hurry' on nuclear energy: Piyush Goyal', www.hindustantimes.com/world/india-not-in-tearing-hurry-on-nuclear-energ...

7. Will Boisvert, 22 April 2016, 'Global Nuclear Industry Picked Up Steam in 2015', http://thebreakthrough.org/index.php/issues/nuclear/not-dead-yet

8. Agneta Rising, 21 April 2016, 'Energy Harmony on a Major Scale', www.neimagazine.com/features/featurefinding-harmony-4869601/

See also: www.world-nuclear.org/getmedia/26e364ff-0580-429b-ba72-ee043182ccc6/HARM...

9. Steve Kidd, 21 Jan 2015, 'Is climate change the worst argument for nuclear?', www.neimagazine.com/opinion/opinionis-climate-change-the-worst-argument-...

10. Steve Kidd, 8 Jan 2016, 'After COP-21 - where does nuclear stand?', www.neimagazine.com/opinion/opinionafter-cop-21---where-does-nuclear-sta...

11. WNN, 19 April 2016, 'GE-Hitachi to exit laser enrichment JV', www.world-nuclear-news.org/UF-GE-Hitachi-to-exit-laser-enrichment-JV-190...

12. Keith Williams, 21 April 2016, 'New Evidence Of Challenge For Nuclear Power Industry', http://seekingalpha.com/article/3966906-new-evidence-challenge-nuclear-p...

13. Silex Systems, 24 July 2014, 'GLE Restructures to Align with Adverse Market Conditions', http://asxcomnewspdfs.fairfaxmedia.com.au/2014/07/24/01535857-314409088.pdf

14. Dan Yurman, 24 April 2016, 'Starts, Stops & In-between for New Nuclear Projects in U.S.', https://neutronbytes.com/2016/04/24/starts-stops-in-between-for-new-nucl...

15. Michael Richardson, 6 Aug 2012, 'Uranium on the laser's edge', www.canberratimes.com.au/opinion/uranium-on-the-lasers-edge-20120805-23n...

16. Lawrence M. Krauss et al., 13 Jan 2014, 'Five minutes is too close', http://thebulletin.org/five-minutes-too-close

Those of us living in uranium producing countries are subject to endless rhetoric about the potential for uranium exports to radically improve the economy. Here in Australia, the mantra is that we have the potential to be the 'Saudi Arabia of the South' because of our extensive uranium deposits. That nonsense is trotted out not just by industry spivs but also by politicians, trade union officials and even by academics.¹

Saudi oil export revenue in 2014 was US$285 billion², while Australia's uranium export revenue was US$0.48 billion.³ So Australia's uranium export revenue would need to grow almost 600-fold to match Saudi oil revenue!

In fact the entire global uranium trade is pittance in comparison to Saudi oil. The value of annual global uranium requirements in recent years has been around US$10 billion.⁴

The uranium market has been in the doldrums since the Fukushima disaster. But for industry boosters, the glass is always half full. Either prices are high, or prices are low which makes it a great time to buy. An ETF Trends analyst notes that the Global X Uranium ETF – a fund which 'offers exposure to uranium mining companies worldwide'⁵ – has lost more than 86% of its value since late 2010.⁶ ETF's take? "But finally, maybe, hopefully, uranium stocks could be poised to rebound."

Cameco's share price has dropped 70% since 2011.⁷ Buy, buy, buy! As one uranium booster put it: "The current market turmoil has created a once in a generation opportunity for savvy energy investors."⁸

And of course, the figures can be spun in different directions. Uranium was the best performing mined commodity of 2015 according to Macquarie Bank, and the average spot price in 2015 was up 18% on the previous year.⁸

That's all true, but it's not saying much. As FNArena put it: "As we move into 2016 we note that 2015 was a year in which the spot uranium price proved a rampant outperformer. The price has hardly moved much in the past few months, thus uranium has left other commodities such as oil, iron ore and copper in its dust."⁹

Moreover the modest bounce was underwhelming since the uranium price was coming off an all-time low in real terms¹⁰ – the spot price fell below US$30/lb U3O8 in mid-2014 and is now around $35 (and the long-term contract price is a sickly $44).¹¹ And the small price increase was partly due to disruptions at two of the world's largest uranium mines, Rossing in Namibia and Olympic Dam in Australia.⁸

The current price is so low that uranium mines are struggling to break even. Greg Peel from FNArena states that prices are below the cost of production for "many mines."⁹

The price is far too low to encourage investment in new mines. Rob Chang, an analyst with Cantor Fitzgerald, states that the break-even costs for new uranium mines is around $70–$80.⁸

The current spot price is about half the pre-Fukushima price and about one-quarter of the peak of the 2005–07 bubble. The industry and its boosters hoped that the end of the US/Russia Megatons to Megawatts program, which involved converting highly enriched uranium (HEU) from weapons into fuel for power reactors, in December 2013 would lead to increased prices. But that didn't happen. The Ux Consulting Company noted: "In the aftermath of the Fukushima disaster, many reactor projects worldwide have been delayed, and in some cases, new reactors have been cancelled. The decline in demand stemming from the Fukushima accident more than negates the reduction in supply that resulted from the end of the U.S.-Russia HEU deal."¹²

The industry hoped that the restart of reactors in Japan would lead to increased prices. But only three reactors have restarted and the uranium price hasn't bounced.

The industry hoped that the growth of nuclear power would lead to increased prices. But nuclear power has been stagnant.

The industry hoped that the drawing down of inventories would lead to increased prices. But inventories are massive and growing. According to the Ux Consulting Company, global uranium inventories as of last September were upwards of 1.1 billion pounds U3O8 equivalent (423,100 tUeq).¹³ That's enough to satisfy current global demand for 6.3 years.¹⁴

The uranium market will remain driven by inventory for many years, UxC's Jonathan Hinze said last September.¹³ In other words, inventories will keep prices down for many years.

Japan is "swimming – some would say drowning – in uranium" according to Jim Ostroff, senior editor of Platts Nuclear Publications.¹⁵ According to nuclear booster James Conca, Japan's uranium inventory will suffice to fuel the country's power reactors "for the next decade".¹⁵ Perhaps more, given the slow pace of the reactor restart process.

China's uranium inventory is estimated at 280 million pounds U3O8e (107,700 tUeq) as well as a significant quantity of enriched uranium.¹³ According to Macquarie Bank, China has a "staggering" stockpile and in 2016 will have the equivalent of nine years of projected 2020 consumption in inventory.¹⁶

Future prospects

The industry is getting increasingly desperate, looking for a bounce from political conflicts upsetting existing production and supply networks (e.g. the Russia / Ukraine conflict) or from further mine failures and closures. According to a Mineweb.com article: "What could bring a major price surge forward though remains major supply interruptions – either for geopolitical reasons, or for debilitating technical problems at one or more of the key producers."¹⁰

Amongst all the puffery there are some honest assessments of the uranium industry's miserable state. Surprisingly, Nuclear Engineering International (NEI) is one of the better sources of analysis.

Writing in NEI last October, Thomas Meade and Julian Steyn state:

"The sizeable gap between projected production and forecast reference demand through the early 2020s indicates that there may not be much upward pressure on market prices until the next decade. ... Unfortunately for uranium suppliers, excess supply is expected to persist. In an effort to maintain near-term viability suppliers have postponed new mines under development, cut back production activity or completely halted production ... The uranium market continues to struggle with oversupply, which is forecast to continue beyond the current decade. There are several causes, but the decline in demand after Fukushima remains the primary one."¹⁷

Writing in NEI in May 2014, former World Nuclear Association executive Steve Kidd stated that "the case made by the uranium bulls is in reality full of holes" and he predicted "a long period of relatively low prices, in which uranium producers will find it hard to make a living".¹⁸ Kidd's predictions are looking rock solid.

References:

1. ACF, 2013, 'Yellowcake Fever: exposing the uranium industry's economic myths', www.acfonline.org.au/sites/default/files/resources/ACF_Yellowcake_Fever.pdf

2. OPEC Annual Statistical Bulletin, 2015, www.opec.org/opec_web/static_files_project/media/downloads/publications/...

3. Estimate based on World Nuclear Association data, www.world-nuclear.org/info/Country-Profiles/Countries-A-F/Australia/

4. Annual uranium consumption is about 179 million pounds globally.

Thomas Meade and Julian Steyn, 2 Oct 2015, 'Treading water in the uranium market', www.neimagazine.com/features/featuretreading-water-in-the-uranium-market...

Most uranium is sold on long term contracts, with typical prices in recent years being around US$50– 55 / pound U3O8.

www.cameco.com/invest/markets/uranium-price

5. www.etftrends.com/etf-resume.php?quote=ura

6. Tom Lydon, 21 Sept 2015, 'Maybe Some Hope for the Uranium ETF', www.etftrends.com/2015/09/maybe-some-hope-for-the-uranium-etf/

7. Sarfaraz A. Khan, 30 Sept 2015, 'Whatever Happened To Uranium's Recovery?', http://seekingalpha.com/article/3543176-whatever-happened-to-uraniums-re...

8. Andrew Topf, 12 Jan 2016, 'Nuclear Renaissance Has Analysts Bullish On Uranium', http://oilprice.com/Alternative-Energy/Nuclear-Power/Nuclear-Renaissance...

9. Greg Peel, 27 Jan 2016, 'Uranium Week: The Outperformer', www.fnarena.com/index2.cfm?type=dsp_newsitem&n=04E94862-A0A3-8285-8DB1A4...

10. Lawrence Williams, 22 April 2015, 'Uranium outlook positive but perhaps not outstanding unless … ', www.mineweb.com/news/energy/uranium-outlook-positive-but-perhaps-not-out...

11. www.cameco.com/invest/markets/uranium-price

12. UxC, 'Uranium Suppliers Annual – 2015', www.uxc.com/products/rpt_usa.aspx

13. WNN, 15 Sept 2015, 'Uranium inventories driving markets', www.world-nuclear-news.org/UF-Uranium-inventories-driving-markets-150915...

14. Based on 66,883 tU required in 2015.

www.world-nuclear.org/info/Facts-and-Figures/World-Nuclear-Power-Reactor...

15. James Conca, 4 Jan 2016, 'As The World Warms To Nuclear Power, The Outlook For Uranium Is Up', www.forbes.com/sites/jamesconca/2016/01/04/the-2016-uranium-market-refle...

16. Stephen Cauchi, 31 Dec 2015, 'Australian uranium in demand as China goes full steam for nuclear', www.theage.com.au/business/energy/australian-uranium-in-demand-as-china-...

17. Thomas Meade and Julian Steyn, 2 Oct 2015, 'Treading water in the uranium market', www.neimagazine.com/features/featuretreading-water-in-the-uranium-market...

18. Steve Kidd, 6 May 2014, 'The future of uranium – higher prices to come?', www.neimagazine.com/opinion/opinionthe-future-of-uranium-higher-prices-t...