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EXECUTIVE SUMMARY

Executive summary

In addition to updated resource figures, Uranium 2018: Resources, Production and Demand presents the results of the most recent review of world uranium market fundamentals and offers a statistical profile of the world uranium industry. It contains official data provided by 36 countries and 5 national reports prepared by the NEA and IAEA Scientific Secretaries on uranium exploration, resources, production and reactorrelated requirements. Projections of nuclear generating capacity and reactor-related uranium requirements through 2035 are presented, as well as a discussion of long-term uranium supply and demand issues.

Resources1

The overall picture shows an increase in identified uranium resources. Though a portion of these increases relate to new discoveries, the majority result from re-evaluations of previously identified uranium resources. However, additional investment is required to ensure these resources can be brought into production in a timely manner.

Total identified resources recoverable (reasonably assured and inferred) as of 1 January 2017 amounted to 6 142 200 tonnes of uranium metal (tU) in the <USD 130/kgU (<USD 50/lb U3O8) category, an increase of 7.4% compared to 2015. In the highest cost category (<USD 260/kgU or <USD 100/lb U3O8), total identified resources amounted to 7 988 600 tU, an increase of 4.5% compared to the total reported for the previous edition.

Reasonably assured resources (RAR) reported for this edition increased in all cost categories. In comparison, inferred resources decreased overall from 3 255 100 tU in 2015 to 3 173 000 tU in 2017, mainly due to the re-evaluation of resources, with Kazakhstan and the Russian Federation reporting the most significant decreases. The most notable change is reported in the <USD 40/kgU category, with an increase of 49.1% in RAR and 104.5% in inferred resources, compared to values reported in 2015. This can be primarily attributed to currency devaluation in Kazakhstan, which shifted the national resources into the lowest cost category.

1.Uranium resources are classified by a scheme (based on geological certainty and costs of production) developed to combine resource estimates from a number of different countries into harmonised global figures. Identified resources (which include reasonably assured resources, or RAR, and inferred resources) refer to uranium deposits delineated by sufficient direct measurement to conduct pre-feasibility and sometimes feasibility studies. For RAR, high confidence in estimates of grade and tonnage are generally compatible with mining decision-making standards. Inferred resources are not defined with such a high degree of confidence and generally require further direct measurement prior to making a decision to mine. Undiscovered resources (prognosticated and speculative) refer to resources that are expected to exist based on geological knowledge of previously discovered deposits and regional geological mapping. Prognosticated resources refer to those expected to exist in known uranium provinces, generally supported by some direct evidence. Speculative resources refer to those expected to exist in geological provinces that may host uranium deposits. Both prognosticated and speculative resources require significant amounts of exploration before their existence can be confirmed and grades and tonnages can be defined. Unconventional resources are defined as very low-grade resources or those from which uranium is only recoverable as a minor by-product or co-product. For a more detailed description, see Appendix 3.

EXECUTIVE SUMMARY

At the 2016 level of uranium requirements, identified recoverable resources are sufficient for over 130 years of supply for the global nuclear power fleet. Moreover, an additional 73 230 tU of resources have been identified by the NEA/IAEA as resources reported by companies that are not yet included in national resource totals.

A summary has been prepared of worldwide in situ identified resources. Overall, there is a 22% to 33% increase in the resources when they are reported as in situ. The total identified in situ resources increased from 10 188 700 tU reported in 2016 to 10 652 900 tU for this edition. Reporting in situ resources provides a more optimistic view of the available resource base and gives some indication of how the resource base could increase with improvements in mining and processing methods, which would lead to better recovery.

Additions to the conventional resource base in the future could come from undiscovered resources (prognosticated resources and speculative resources), which as of 1 January 2017 amounted to 7 530 600 tU, a 1.5% increase from the 7 422 700 tU reported in the previous edition (NEA/IAEA, 2016). Unconventional resources are another source of potential future supply and currently amount to over 28.5 million tU. It is important to note that in some cases, including those of major producing countries with large identified resource inventories (e.g. Australia, Canada and the United States), estimates of undiscovered resources and unconventional resources are either not reported or have not been updated for several years.

The uranium resource figures presented in this volume are a snapshot of the situation as of 1 January 2017. Readers should keep in mind that resource figures are dynamic and related to commodity prices.

Exploration and mining development

Uranium exploration and mine development expenditures declined from over USD 2 billion in 2014 to USD 663 678 million in 2016. Total expenditures continue to decrease in response to a sustained depressed uranium market since mid-2011.

Worldwide exploration and mine development expenditures as of 1 January 2017 totalled USD 663 678 million, a large, 59% decrease over 2014 figures. This substantial decrease can be partially attributed to the expenditures that were associated with the development of the Cigar Lake mine in Canada and Husab mine in Namibia. However, in addition, significant decreases were reported for Australia, Canada, the People’s Republic of China (China), the Czech Republic, Namibia, Russia and the United States. Kazahkstan reported an increase in expenditures from USD 34.7 million to USD 60.9 million from 2014 to 2015 but this was followed by a sharp decline to USD 23.9 million in 2016. The decline in exploration and development expenditures for this reporting period reflects an adjustment within the industry in response to oversupply, which began with the depressed uranium market in the middle of 2011.

Non-domestic exploration and development expenditures are a subset of worldwide exploration and development expenditures. Only four countries – China, France, Japan and Russia – report their out-of-country (non-domestic) expenditures and this decreased from USD 801 million in 2014 to USD 419 million in 2016. This is mainly due to decreased non-domestic development expenses for China following the completion of the major development and investment in the Husab mine in Namibia.

From 2016 to 2017, Canada had the highest uranium and exploration development expenditures, followed by China and India.

EXECUTIVE SUMMARY

Production

Global uranium mine production increased by 3% from 2015 to 2016. However, production has started to decline with 59 342 tU produced in 2017 and further reductions are expected in 2018 as major producing countries, including Canada and Kazakhstan, limit total production in response to the sustained low price of uranium.

Overall, world uranium production increased by 3% from 60 291 tU in 2015 to 62 071 tU as of 1 January 2017. The changes are principally the result of increased production in Australia, Canada and Kazakhstan along with some other more modest increases reported for China and Namibia. However, production has since declined to 59 342 tU in 2017 and is expected to decline even further in 2018 as major producers are limiting production in response to a depressed uranium market.

Within OECD countries, production increased from 16 217 tU in 2014 to 21 521 tU in 2016, primarily as a result of increased production in Australia and Canada.

In 2016, uranium was produced in 19 different countries, which is two less than the last reporting period as Romania stopped production in 2016 and the Kayelekera mine in Malawi was placed on care and maintenance in May 2014. Production also ceased in December 2016 at the Rozná underground mine in the Czech Republic. Out of the 19 producing countries, 16 are primary producers as France, Germany and Hungary produced uranium only as a result of mine remediation activities. Kazakhstan’s growth in production continued, but at a much slower pace, and it remains the world’s largest producer reporting production of 23 806 tU in 2015 and 24 689 tU in 2016. Production from Kazakhstan totals more than the combined production reported in 2016 from both Canada and Australia, the second and third largest producers of uranium, respectively. Canada and Kazakhstan will produce less in 2018 as both countries announced plans to limit production in response to the depressed uranium market.

In situ leaching (ISL, sometimes referred to as in situ recovery [ISR] production) continued to dominate uranium production accounting for 50% of world production as of 1 January 2017, largely due to continued production increases from Kazakhstan and other projects in Australia and China. Underground mining (31%), open-pit mining (13%) and co-product and by-product recovery from copper and gold operations (6%), heap leaching (<1%) and other methods (<1%) accounted for the remaining uranium production shares.

Environmental and social aspects of uranium exploration and production

With uranium production projected to expand in a mid-term perspective, efforts are being made to develop safe mining practices and to continue to minimise environmental impacts. Brief country overviews indicate the status of site remediation and decommissioning projects and highlight progress that the uranium industry has made on environmental stewardship.

Although the focus of this publication remains uranium resources, production and demand, the environmental and social aspects of the uranium production cycle are gaining increasing importance and, as in the last few editions, updates on activities in this area are included in the national reports. With uranium production ready to expand, in some cases, to countries hosting uranium production for the first time, the continued development of transparent, safe and well-regulated operations that minimise environmental impacts is crucial.

Several countries provided updates for this edition on activities related to environmental aspects of uranium exploration and production including Argentina, Australia, Canada, Finland, Greenland, Kazakhstan, Mali, Namibia, Spain, Tanzania, Ukraine, Viet Nam and Zambia. For several countries with closed uranium production facilities (i.e. Brazil, Canada, the Czech Republic, France, Hungary, Slovenia, Spain, Ukraine and the United States), updates of remedial and monitoring activities are provided in the respective country reports.

EXECUTIVE SUMMARY

For example, Namibia continues to make progress in a number of environmental and social issues, building on the establishment of the Rössing Foundation in 1978. The foundation’s activities focus on education, health care, environmental management and radiation safety in the uranium industry. With the development of the Husab mine, Swakop Uranium has engaged in social responsibility programmes, including committing itself to local procurement, recruitment and employment, training, education and responsible environmental management practices.

Additional information on environmental aspects of uranium production may be found in Managing Environmental and Health Impacts of Uranium Mining (NEA, 2014), which outlines significant improvements that have been undertaken in these areas since the early strategic period of uranium mining to the present day. More recently, the IAEA Bulletin, Uranium from Exploration to Remediation (IAEA, 2018) includes some information on this topic.

Uranium demand

The outlook for nuclear power has decreased since the 2016 report. However, demand for uranium is expected to continue to rise for the foreseeable future as nuclear power is projected to grow in regulated electricity markets with increasing electricity demand and a growing need for low-carbon electricity generation. Promoting incentives for all types of low-carbon electricity production are key conditions for a greater projected growth in nuclear capacity.

As of 1 January 2017, a total of 449 commercial nuclear reactors were connected to the grid globally, with a net generating capacity of 391 GWe requiring about 62 825 tU annually. Taking into account changes in policies announced in several countries and revised nuclear programmes, world nuclear capacity is projected to grow to between 331 GWe net in the low demand case and 568 GWe net in the high demand case by 2035. The low case represents a decrease of about 15% from 2016 nuclear generating capacity, while the high case represents an increase of about 45%. Accordingly, world annual reactor-related uranium requirements (excluding mixed oxide fuel [MOX]) are projected to rise to between 53 010 tU and 90 820 tU by 2035.

Nuclear capacity projections vary considerably from region to region. The East Asia region is projected to experience the largest increase, which, by the year 2035, could result in the installation of between 30 GWe and 120 GWe of new capacity in the low and high cases, respectively, representing increases of more than 30% and 122% over 2016 capacity. Nuclear capacity in non-EU member countries on the European continent is also projected to increase considerably, with between 47.5 and 67.8 GWe of capacity projected by 2035 (increases of about 9% and 56% over 2016 capacity, respectively). Other regions projected to experience significant nuclear capacity growth include the Middle East, Central and Southern Asia, with more modest growth projected in Africa, the Central and South American, and the South-eastern Asia regions.

For North America, the projections see nuclear generating capacity decreasing by 2035 in both the low and high cases, depending largely on future electricity demand, lifetime extension of existing reactors and government policies with respect to greenhouse gas emissions. The reality of financial losses in several reactors in the United States has resulted in a larger number of premature shutdowns to be assumed. In the European Union (EU), nuclear capacity in 2035 is projected to decrease by 48% in the low case scenario and decrease by 3% in the high case.

Key factors influencing future nuclear energy capacity include projected electricity demand, the economic competitiveness of nuclear power plants, as well as funding arrangements for such capital-intensive projects, the cost of fuel for other electricity generating technologies, proposed waste management strategies and public acceptance of nuclear energy. Concerns about longer-term security of fossil fuel supply and the extent to which nuclear energy is seen to be beneficial in climate change mitigation could

EXECUTIVE SUMMARY

contribute to even greater projected growth in nuclear capacity and, consequently, in uranium demand. Recognising the security of supply, reliability and predictability that nuclear power offers and promoting incentives for all types of low-carbon electricity production are key conditions for a faster deployment of nuclear power.

Supply and demand relationship

The currently defined resource base is more than adequate to meet high case uranium demand through 2035, but doing so will depend upon timely investments to turn resources into refined uranium ready for nuclear fuel production. Challenges remain in the global uranium market with high levels of oversupply and inventories, resulting in continuing pricing pressures. Other concerns in mine development include geopolitical factors, technical challenges and legal and regulatory frameworks.

As of 1 January 2017, world uranium production (62 071 tU) provided about 99.9% of world reactor requirements (62 285 tU), whereas in 2017, global primary production provided about 95% of requirements, with the remainder supplied by so-called secondary sources. The secondary supply includes excess government and commercial inventories, spent fuel reprocessing, underfeeding and uranium produced by the re-enrichment of depleted uranium tails, as well as low-enriched uranium (LEU) produced by blending down highly enriched uranium (HEU).

Uranium miners vigorously responded to the market signal of increased prices and projections of rapidly rising demand prior to the Fukushima Daiichi accident. However, the continued decline in uranium market prices following the accident and lingering uncertainty about nuclear power development in some countries has at least temporarily reduced uranium requirements, further depressed prices and slowed the pace of mine production and development. The uranium market is currently well supplied and projected primary uranium production capabilities including existing, committed, planned and prospective production centres would satisfy projected low and high case requirements through 2035 if developments proceed as planned. Meeting high case demand requirements to 2035 would consume less than 25% of the total 2017 identified resource base (resources recoverable at a cost of <USD 130/kg). Nonetheless, significant investment and technical expertise will be required to bring these resources to the market. Producers will have to overcome a number of significant and, at times, unpredictable issues in bringing new production facilities on stream, including geopolitical and local factors, technical challenges and legal and regulatory frameworks. To do so, strong market conditions will be fundamental to bringing the required investment to the industry.

Although information on secondary sources is incomplete, the availability of these sources is generally expected to decline somewhat after 2018. However, available information indicates that there remains a significant amount of previously mined uranium, some of which could feasibly be brought to the market in the coming years. With the successful transition from gas diffusion to centrifuge enrichment and capacity at least temporarily in excess of requirements, enrichment providers are well-positioned to reduce tails assays below contractual requirements and thereby create additional uranium supply. In the longer term, alternative fuel cycles (e.g. based on the utilisation of uranium-238 or thorium), if successfully developed and implemented, could have a significant impact on the uranium market, but it is far too early to say how cost-effective and widely implemented these proposed alternative fuel cycles could be.

Although declining market prices have led to significant reductions in uranium production and a delay in some mine development projects, other projects have advanced through regulatory and further stages of development. Finally, the overall time frame for mine development should be reduced if market conditions warrant renewed development activity. The current global network of uranium mine facilities is, at the

EXECUTIVE SUMMARY

same time, relatively sparse, creating the potential for supply vulnerability should several key facilities be put out of operation. Nevertheless, utilities have been building significant inventory over the last few years at reduced prices, which should help to protect them from such events.

Conclusions

Despite recent declines in electricity demand in some developed countries, global uranium demand is expected to continue to increase in the next several decades to meet large population needs, particularly in developing countries. Since nuclear power plants produce competitively priced, low-carbon baseload electricity, and the deployment of nuclear power enhances the security of energy supply, it is projected to remain an important component of energy supply. However, the Fukushima Daiichi accident has eroded public confidence in nuclear power in some countries, and prospects for growth in nuclear generating capacity are thus being reduced and are subject to even greater uncertainty than usual. In addition, the abundance of low-cost natural gas in North America and the risk-averse investment climate have reduced the competitiveness of nuclear power plants in liberalised electricity markets. Government and market policies that recognise the benefits of low-carbon electricity production and the security of energy supply provided by nuclear power plants could help alleviate these competitive pressures. Nuclear power nonetheless is projected to grow in regulated electricity markets with increasing electricity demand and a rising need for clean air electricity generation.

Regardless of the role that nuclear energy ultimately plays in meeting future electricity demand and moving towards global climate objectives, the uranium resource base described in this publication is more than adequate to meet projected requirements for the foreseeable future. In the wake of recent significant reductions in uranium production, the coming challenges are likely to be those associated with constrained investment capabilities, as a result of depressed market conditions that will push the industry to optimise its activities still further.

URANIUM SUPPLY

Chapter 1. Uranium supply

This chapter summarises the status of worldwide uranium resources, exploration and production.

Uranium resources

Identified conventional resources

Identified resources consist of reasonably assured resources (RAR) and inferred resources (IR) recoverable at a cost of less than USD 260/kgU. Relative changes in different resource and cost categories of identified resources between this edition and the 2016 edition of the Red Book are summarised in Table 1.1. The overall picture is one of resources increasing, with the main increase noted in the reasonably assured resource category, while inferred resources decreased overall. Identified resources recoverable at costs <USD 260/kgU increased by 4.5% to 7 988 600 tU.

Identified resources recoverable at costs of <USD 130/kgU increased by 7.4% from 5 718 400 tU in 2015 to a total of 6 142 200 tU in 2017.

A decrease in the <USD 80/kgU category by 2.1% from 2 124 700 tU to 2 079 500 tU between 2015 and 2017 is largely a result of a decrease in inferred resources and the transfer of resources to the lowest cost category. A significant 63.5% increase in the lowest cost category (<USD 40/kgU) was reported, amounting to a change from 646 900 tU in 2015 to 1 057 700 tU in 2017. This mainly reflects the low-cost resources reported by Kazakhstan, with a major shift of their resources into this category because of local currency fluctuations during this reporting period.

Table 1.1. Changes in identified resources (recoverable) 2015-2017

(a)Changes might not equal differences between 2015 and 2017 because of independent rounding.

(b)Resources in the cost category of <USD 40/kgU are likely higher than reported because some countries have indicated that detailed estimates are not available, or the data are confidential.

URANIUM SUPPLY

Current estimates of identified resources, RAR and IR, on a country-by-country basis, are presented in Tables 1.2, 1.3 and 1.4, respectively. Table 1.5 summarises major changes in resources between 2015 and 2017 in selected countries.

The most significant changes during this reporting period are observed in the reasonably assured resources category with increases of 9.8%, 11.8% and 4.6% reported in the <USD 260/kgU, <USD 130/kgU and <USD 80/kgU categories, respectively. In the lowest cost category (<USD 40/kgU) significant increases were reported of 49.1% and 104.5% in the RAR and inferred resources, respectively. Reasonably assured resources comprise 66% of the identified resource total, an 8% increase over the last reporting period.

Argentina, Australia, Canada, China, Namibia and Zambia reported increases in both reasonably assured and inferred resources. India, Jordan, Kazakhstan, Niger, Turkey and Uzbekistan reported only an increase in RAR with a concomitant decrease in inferred resources as a result of re-evaluation of their resources and while Turkey reported an increase in RAR there was no change in inferred resources. Paraguay reported resources to the Red Book for the first time in over two decades. The Czech Republic, Mali, Spain and Russia also reported decreases in both RAR and inferred resources due to re-evaluation of deposits and adjustments made for mining depletion and increased mining costs. The Islamic Republic of Iran, Mexico and Mongolia reported increases to inferred resources and no changes or small decreases to RAR while Mexico reported an overall increase in the higher cost categories due to re-evaluation of existing deposits. Ukraine reported a decrease in RAR and no change to inferred resources. Indonesia reported an increase in inferred resources and no change to RAR.

Niger reported an increase in RAR in the highest cost category (<USD 260/kgU) and decreases in both RAR and inferred resources in the lower cost categories.

Kazakhstan reported a significant increase in RAR due to exploration activities and transferring of some resources from the inferred category to the RAR category. Significant increases to the <USD 40/kgU are a result of the devaluation of the national currency.

Australia still dominates the world’s uranium resources with about 30% of the total identified resources (<USD 130/kgU) and 25% of identified resources in the highest cost category (<USD 260/kgU). A total of 74% of Australia’s uranium resources are attributed to the world-class polymetallic Fe-oxide breccia complex, the Olympic Dam deposit. Kazakhstan is a distant second with approximately 14% in the <USD 130/kgU and 11% in the <USD 260/kgU cost category. Canada has increased its share since the last reporting period to about 11% in the <USD 260/kgU category. All other countries have less than a 10% share in the highest cost categories. Only 15 countries represent approximately 95% of the total resources in the <USD 130/kgU cost category (see Figure 1.1). In the lower cost categories, Australia did not report any resources and thus Kazakhstan leads with 31%, followed by Canada with 15%, and South Africa and Brazil each with 11% of the total resources in the <USD 80/kgU category. Only seven countries reported resources in the <USD 40/kgU category with Kazakhstan having the largest share at 45%, followed by Canada at 25%, Brazil at 13%, China at 10%, Uzbekistan with 6%, and Spain and Argentina both having less than 1% each of the total in this cost range.

Starting in the 2016 edition, a summary has been prepared of worldwide in situ identified resources (see Tables 1.2b, 1.3b and 1.4b). Table 1.2c is a summary comparison of in situ identified resources and recoverable identified resources by cost category. Overall, there is a 22% to 33% increase in the resources when they are reported as in situ. This corresponds to average recoveries ranging from approximately 67% to 78%. The total identified in situ resources increased from 10 188 700 tU reported in the last edition to 10 652 900 tU for this edition.

Reporting in situ resources provides a more optimistic view of the available resource base and gives some indication of how the resource base could increase with improvements in mining and processing methods, which would lead to better recovery. However, recoverable resources still provide the best and more realistic estimate of uranium supply.

URANIUM SUPPLY

Table 1.2a. Identified resources (recoverable)

(as of 1 January 2017, tonnes U, rounded to nearest 100 tonnes)

* Secretariat estimate. (a) Not reported in 2017 responses; data from previous Red Book. (b) Assessment partially made within the last five years. (c) Assessment not made within the last five years. (d) In situ resources were adjusted by the Secretariat to estimate recoverable resources using recovery factors provided by countries or estimated by the Secretariat. (e) Cost data not provided, therefore resources are reported in the <USD 260/kgU category. (f) Updated to report recoverable resources. (g) Totals related to cost ranges <USD 40/kgU and <USD 80/kgU are higher than reported in the tables because certain countries do not report low-cost resource estimates, mainly for reasons of confidentiality.