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massive uranium supply/demand gap developing

  1. 112 Posts.

    "Speakers at a London conference point to a massive supply gap developing for uranium with mine output unable to keep up with demand from the huge number of planned new global nuclear power projects.

    Author: Lawrence Williams
    Posted: Wednesday , 02 Feb 2011

    Speaking at the Objective Capital Americas' Resources Investment Conference in London yesterday, Ian Hiscock from market analysis group CRU Strategies painted a very positive picture for the global uranium sector moving ahead.

    Hiscock commented that the uranium price, like that of a number of other metal and mineral commodities, was becoming very much a China story - with that country consuming 17,000 tonnes in 2010 and with a huge nuclear power development programme ahead.

    2010 appears to have been a key year with some supply disruptions - notably a big shortfall from Rio Tinto's ERA in Australia where production was some 1,000 tonnes below target, and the shaft accident at BHP's Olympic Dam also affecting supplies - leading to a change from a small global surplus to a massive supply deficit, with spot prices rising around 50% during the year.

    According to Hiscock supply will remain in deficit in 2011 - although a smaller one - but there will be a fundamental shortage of supply for at least the next 10 years - with the supply/demand gap widening as the decade continues and the big planned increase in nuclear power generation plants comes about. He does not see production from new projects as being in any way sufficient to meet likely demand.

    And from the start of the next decade, CRU sees the demand gap widening to some 65,000 tonnes of uranium a year and possibly increasing further - exacerbated by a falling away in secondary supply.

    Long term demand drivers are seen as the push towards more and more nuclear power generation as fossil fuels prices rise, environmental pressures continuing to militate against the development of new coal-fired power plants, energy security etc. - the latter perhaps giving a rebirth to North American uranium extraction. The result will be an inevitable continuing rise in spot prices which will start having an impact on contract prices under which most uranium is currently supplied.

    Following Hiscock, Walt Coles, CEO of Virginia Energy, which is trying to gain permitting and permissions to develop a major uranium deposit in Virginia (where there is currently a moratorium on uranium mining in the State), reckoned that the CRU projections on the global supply shortfalls into the next decade were actually conservative and that their own analysis pointed to an even wider supply/demand gap developing."
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