Marketing our product

All uranium produced by Rio Tinto’s mines is marketed by Singapore-based Rio Tinto Uranium. As one of the longest-operating uranium mines in the world, Rössing Uranium supplies uranium oxide via Rio Tinto to nuclear power facilities located in all three major markets, namely Asia, North America and Europe/Middle East.

Almost all of Rössing Uranium’s production is marketed through long-term contracts with a diverse selection of customers worldwide.

The uranium market remained in a state of significant oversupply throughout 2017 and the spot price languished between US$20.00 and US$25.00 per pound for most of the year. Utility customers are stocked with large inventories and thus have not been very active in the market, leaving most of the spot activity to traders.

The year began on a positive note with the spot price increasing from US$21.00 to US$26.50 in the first quarter, as traders reacted to news that the world’s largest producer, Kazakhstan, was planning to cut output by 10 per cent in 2017.


Samples of our product, U3O8 (uranium oxide), which is marketed mainly through long-term contracts to various customers worldwide.


Unfortunately, the effect was short-lived, as the spot price returned to the low US$20s, and remained low until late in the year. The longterm price was stable in the low-US$30s for most of the year, but there has been relatively little long-term contracting in the last few years as most utilities seek to work down inventories or concentrate on near-term purchasing to maintain flexibility.

Two major developments on the demand side cast a cloud over the industry for much of the year. The first was the surprise election of President Moon Jae-in in South Korea. Under previous administrations, the country had been a world leader in nuclear power, with 24 units in operation and another five under construction or planned for the future.

customers by region

President Moon, however, quickly proposed closing some older units, halting construction of new reactors and developing a plan to completely exit nuclear power by 2025.

This proposal was made despite the absense of any reasonable technical or economic way to replace the large amount of CO2- free power generated by the Korean nuclear fleet. The proposal has received criticism from many quarters and it now appears the Government is beginning to recognise how disastrous this policy would be for the Korean environment and export-driven economy, which was largely built on reliable and cost-effective nuclear power. Nevertheless, this wholly unexpected incident was a blow to industry confdence worldwide and it will take time to see how the policy might be enacted.

The other major negative event was less of a surprise. After years of project delays and cost overruns on its AP-1000 nuclear plant design, United States (US) reactor vendor Westinghouse declared bankruptcy, jeopardising several AP-1000 projects under construction in the US and China. Within one month of that announcement, South Carolina utility SCANA decided to terminate its two-unit VC Summer AP-1000 project, at a cost of $9 billion, with the plants less than 50 per cent complete.

This was a major blow to what was left of the ‘nuclear renaissance’ in the United States and brought back bad memories of the postThree Mile Island period in the 1980s, when a number of reactors under construction were abandoned due to cost overruns and public opposition. In this instance, as with Areva’s failed attempts to construct its so-called Evolutionary Power Reactor (EPR) reactors in China and Europe, the problems were primarily related to design challenges and massive cost overruns.

Fortunately the remaining AP-1000 units under construction in China, while delayed, are still moving forward. And crucially, US utility Southern Company announced that it would continue with its two AP-1000 units under construction at the Vogtle plant in Georgia. So, by the early part of the next decade there should be two new reactors in operation in the US — a far cry from what was expected a decade ago, but still a positive development.

In the wake of all of this bad news, the uranium industry witnessed a positive development late in the year when the two largest producers, Kazatomprom and Cameco, separately announced major supply cutbacks in efforts to reduce the market oversupply and support the price.

Kazakhstan is now the largest-producing country by a wide margin, and the Government-owned uranium company Kazatomprom had executed a successful plan to expand its uranium production almost ten-fold over the past 15 years, using cost-effective in-situ leach technology. However, now realising that the post-Fukushima demand is not what it expected, the company has decided to reduce production by 20 per cent over the next three years.

Similarly, Canadian producer Cameco spent the last few years bringing its large, high-grade Cigar Lake project into production in northern Saskatchewan, during a period when market prices have fallen from the US$60 level to below US$20. Thus, the company announced that it would suspend operations at its neighbouring McArthur River operation for at least ten months in 2018, resulting in a withdrawal of some 15 million pounds from global production. Cameco will deliver into its contracts using material it has in inventory and possibly through market purchases.

These announcements from the two largest producers are an encouraging sign of more supply discipline by miners in a tough market, one that continues to face challenges on the demand side and from low-cost secondary supplies from a variety of sources, including enrichers. The spot price responded accordingly late in the year, rising back to the US$25 level.

While upward price momentum seems to have stalled for now, these are positive signs that producers are starting to take more responsibility for the level of oversupply that exists in the market today.

In short, it remains a very challenging time for Rössing Uranium and other uranium producers regardless of cost position or geography. The current supply-demand imbalance is shrinking somewhat, but a significant price recovery in 2018 appears unlikely in the absence of a major supply disruption.

Importantly, Rössing Uranium’s customers still value reliability and diversifcation, two attributes that Rio Tinto and Rössing Uranium bring to their supply portfolios.

In addition, hopefully the world will increasingly begin to appreciate the critical role that nuclear power plays in the world’s energy security, reliability and carbon mitigation goals.


Pontianus Kwandu at the mine’s Final Product Recovery section is responsible for recording the newly-flled drums of uranium oxide.