Market overview: 2021
During the first seven months of 2021, the spot uranium price oscillated around USD30 per pound. However, with the introduction of the Sprott Physical Uranium Trust (SPUT) to the market, spot prices fluctuated significantly in the last four months of the year.
The explosion of activities led by SPUT helped propel the total 2021 annual volume to set a record of over 101.8 million pounds U3O8 equivalent, and the spot price hit a nine-year high when it peaked at $50.50 before retreating to end the year at $42.00, approximately 40 per cent higher than its position at the start of the year.
The increased spot activity, as well as the global focus on climate change, seems to have also impacted the overall long-term contracting volume, which increased by over 42 per cent from 2020’s 49.5 million pounds to 2021’s 70.5 million, according to industry consultants UX Consulting .
In terms of primary production, Namibia has surpassed both Australia and Canada to become the second largest primary producer of U3O8 globally, after Kazakhstan, which continues to dominate the market from a supply side. (Source: UX Consulting)
We remain optimistic about the role uranium will play in the future energy mix, with nuclear energy being able to provide consistent base-load, as opposed to many other renewable energy sources.
According to UX Consulting, there are now 438 operable units with roughly 392 GWe in capacity in 33 countries, as of early December 2021. Under their Base Case scenario, it is anticipated that global nuclear energy will reach 33 countries with 476 reactors (~444 GWe net) in 2030, and 37 countries with 500 reactors (~480 GWe net) in 2035.
In the forecast scenario, most of the growth by 2035 is anticipated to come from Asia (especially China); however, sizeable nuclear gains are also envisioned in Eastern Europe, Africa, and the Middle East.
While the spot price increased by 40 per cent during 2021, it must be recognised that this is off a very low base and therefore only the continuation of this trend would justify new uranium development projects, as well as bringing some projects currently under care and maintenance back into operation.
Marketing our product
In 2021, Rössing produced 6.4 million pounds U3O8. A total of 1.5 million pounds were shipped to western converters and sold to customers in North America, Asia (excluding China) and Europe, the Middle East and Africa (EMEA).
A total of 4.6 million pounds were shipped to China and sold to CNNC, while an additional 0.6 million pounds were sold in the spot market, capitalising on the sudden price spike towards the end of the year. Rössing continued to benefit from the contractual sales prices in its historical contract portfolio, as well as the beneficial CNNC off-take agreement to sustain the operation.
Several major capital projects and programmes were completed or have been substantially completed, such as the leach tank programme and the additional water reservoir capacity, which will enhance the resilience of the operation and improve its ability to deliver on its contractual obligations, maintaining our 100 per cent track record in this regard.
With the focus moving to technological improvement, life-of-mine extension and continued cost reduction, the marketing team will further strengthen the communication with potential buyers of uranium and try to commit more sales on the market, adding to the longer-term sustainability of the operation beyond 2026.