| LONDON, Sept 5
LONDON, Sept 5 Long-term contract prices of
uranium are expected to remain firm on higher production costs,
but the thin spot market will be volatile for at least three
years, participants at an industry conference said this week.
"The nuclear renaissance is definitely here but there are
challenges ahead for global uranium miners," said Sebastien de
Montessus, executive vice president mining at Areva CEPFi.PA.
To meet future demand, the French nuclear group has
increased its exploration budget over the past three years to
$70 million euros from $20 million.
Montessus told the conference that rising energy and
commodity costs for miners would delay some projects and a few
could even be cancelled.
Rising costs would give a floor of about $35 to $45 per
pound in most long-term contracts, said analyst Max Layton of
Indirect costs, including remediation, social and
environmental costs, also had increased and uranium mines would
have to be larger in the future to meet them, Areva's Montessus
The spot market meanwhile is expected to show greater price
"There will be a lot of near-term volatility, although the
long-term fundamentals are still overwhelmingly positive,"
Cameco (CCO.TO) President Gerald Grandey said on the sidelines
of the World Nuclear Association conference.
The volatility has been caused mainly by utilities going in
and out of the illiquid spot market. This has been exacerbated
by investor interest, funds buying spot material and one
producer dumping material.
The price of spot uranium UX-U3O8-SPT hit a record of $136
per pound in June 2007, skyrocketing from just $7 in 2000 due to
a revival of interest in nuclear energy. The interest has been
caused by high oil prices and global efforts to cut carbon
Since June 2007, the weekly spot price has slipped to
(Reporting by Anna Stablum, editing by Karen Foster)