Marketing our product

Market overview: 2019

As the market entered into 2019, the spot uranium price had already been falling from its highpoint US$29 per pound reached at November 2018.

While some believed the market still had upward momentum towards the US$30 range per pound level, the spot price continued to slip to US$24 per pound in May 2019 and remained within the range of US$24-$26 per pound towards the end of the year.

At 56.3 million pounds equivalent U3O8 traded, total spot volume in 2019 has slipped from the record-breaking pace set in 2018, but still sits in second place for the all-time annual volume record.

Throughout 2019, despite the declining spot price, the term indicator held firm at US$32 per pound, which reflects the general market view that longer-term supplies are not realistic at today’s low spot price levels.


Rössing Uranium produced 2,449 tonnes of uranium oxide in 2019, which is 30 tonnes less than the 2,479 tonnes drummed in 2018. The black drums that can be seen are the ones that we fill with approximately 400 kg of uranium oxide each. The full drums are sealed and then packed in sea-going steel containers on site, transported to Walvis Bay harbour and then exported to our customers.


Several factors impacted on the market situation during 2019. The foremost one was the various trade issues. Although the United States (US) Department of Commerce’s Section 232 investigation existed before 2019, with an expected outcome in July, buyers (including end-users, traders and investors) slowed down their procurement pace with limited purchasing, which had been very discretionary and origin specific.

Surprisingly, US President Donald Trump decided in mid-July not to pursue import restrictions based on the Section 232 investigation, and instead to create a Nuclear Fuel Working Group tasked with finding ways to enhance national security through improvements to the domestic nuclear fuel industry. Disappointingly, the spot price did not react to this decision as expected.

Tension between the US and Iran increased, potentially causing new US sanctions on entities involved in Iran’s nuclear power programme. At the same time, the US started negotiations with Russia over a possible new Russian Suspension Agreement. Both these events are likely to have prolonged effect on future Russian nuclear fuel supply into the US.

Lastly, nuclear fuel trade was also not immune to the US-China trade war, as the Trump administration added a new 25 per cent tariff on Chinese imports of enriched uranium products (EUP) into the US.

Another factor putting pressure on the spot price was erratic buying behaviours. With Cameco’s McArthur River mine still in care and maintenance, expectations were for Cameco to maintain their bidding pace from 2018, which pushed the price up to US$29 per pound level. However, Cameco changed their procurement tactic and bought discretionarily and quietly.

Moreover, investors — the main purchasing force in 2018 — were much less active in the market during 2019. Only UPC publicly procured a few hundred thousand pounds at US$26 per pound level, and Yellow Cake PLC absorbing an additional 1.175 million pounds from Kazatomprom at US$25.88 per pound. This is a much smaller amount compared with the 8 million pounds procured by Yellow Cake PLC in 2018.

On the supply side, the 2019 global uranium production is estimated to have a net increase of 2.5 million pounds compared with 2018. The slight increase in 2019 was mainly attributed to several mine projects in Kazakhstan, as well as the Husab mine in Namibia.

Shortfall between production and demand was well covered by inventory draw-down and other secondary supply.

Nevertheless, the global uranium supply continued its rationalisation, as output from various other parts of the world fell, including the processing of Ranger stockpiled ore in Australia and US-based ISR production.

Furthermore, Kazatomprom announced their decision to extend their production cut by 20 per cent through to 2021 against its planned level, while Orano announced it will cease production from COMINAK in Niger in March 2021 due to resource depletion.

On the positive side, 2019 also witnessed a series of positive news events on nuclear development. China, for the first time since 2016, finally re-launched its approval for new projects and construction with at least four reactors having been approved (two at CNNC’s Zhangzhou site and two at CGN’s Huizhou site). Concrete has already been poured for some of the reactors.

In France, the country’s energy policy was modified, delaying the timeline of planned reduction of nuclear power in the share of its electricity mix to 50 per cent from the previous target of 2025 to 2035, thereby allowing a operating lifetime extension of existing reactors beyond 40 years.

Lifetime extension also gained progress in the US as the process of granting a second operating license extension for 80 years has begun.

Given all of these factors, for the first time since March 2011 (following the accident at Japan’s Fukushima Daiichi nuclear plant), the World Nuclear Association released nuclear capacity projections with a positive trend in its biennial Nuclear Fuel Report.


Marketing our product

Over the years, Rössing Uranium’s production has been marketed under various market environments. A significant proportion of production is committed through long-term contracts (signed when market prices were higher), which mitigate the impact of the low spot price in the current stagnant market.

In 2019, 75 per cent of Rössing’s total production was delivered under long-term contracts and several historical spot contracts.

Following the successful acquisition of the majority stake by China National Uranium Corporation, the remaining 2019 production will be sold during 2020 to China to be loaded into CNNC nuclear reactors. This vertical integration into the CNNC group opens a significant marketing opportunity into China for Rössing Uranium.

By region, from our total 2019 sales revenue, 51 per cent was sold to customers in North America, 28 per cent to customers in Europe, Middle East and Africa (EMEA) and 21 per cent to customers in Asia.


Figure 3