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Contents

Overview ................................................................................................................................................. 2
Demand and Supply dynamics: ............................................................................................................... 2
Analysis of price of Uranium ................................................................................................................... 3
Recommendation to key players and policy holders: ............................................................................. 3
Conclusion: .............................................................................................................................................. 3
References .............................................................................................................................................. 4
Overview
Uranium is Australia’s second largest export and contribute significantly to the economic development
of Australia. The economics of Uranium is very complex as it is one of the most strategic resource
which the world demands. If we compare it in terms of the amount of energy it releases, we can say
that one tonne of uranium oxide generates the same amount of energy as 20 000 tonnes of black coal
which is huge. In monetary terms the total value of uranium resource which Australia has will be
around $32 billion. It is also said in the reports that reducing mining is going to cost economically
Australia a large chunk of money as the price of uranium has trebled since 2003 and is continuing to
rise (Asche, 2006).

Demand and Supply


dynamics:
The demand of Uranium in
Australia is the function of nuclear
generating capacity in operation
worldwide, combined with the
operational characteristics of
reactors and fuel (Amavilah, V. H.
S., Economics)management
policies of utilities. If we see the
statistics, there are more than 450+
nuclear power plant operational in
the world with more than 30+
countries using nuclear energy to
produce power. In 2005, nuclear
reactors generated 2626 billion
Source: WNA, Dundee Securities, and various new sources
kilowatt-hours of electricity,
representing approximately 16 per
cent of world electricity production. (ABARE, 2016)

In the recent years, there has been significant push from all the major economies to move to a more
sustainable way of producing electricity and therefore it is predicted that there will be significant
mismatch of demand and supply of in the coming years. It is also predicted that, because of this

Source: International Atomic association


mismatch there will be significant increase in prices of uranium in international markets. If we go by
the data, world present production of uranium is not going to cover the present needs. Presently, the
production is actually meeting only 57 per cent of global requirement which is too less. The shortfall
has been met by secondary sources of supply since the late 1980s. Secondary supplies are essentially
inventories, stockpiles and recycled materials of various types. These supplies can be regarded as
previous uranium production held off the commercial nuclear fuel market for an extended period.
(Douglas, 1980)

Analysis of price of Uranium


There have been multiple attempts to study the price dynamics of uranium without trying to analyse
the influence of price trends on the supply and demand balance in International markets. It is quite
clear that the demand is totally insensitive to the change in price and the concept of breakeven doesn’t
exist in the world of uranium production. This cost would apparently relate to the value which a maker
of power would have to pay for his uranium stock in mind the end goal to touch base at a similar cost
for nuclear produced power concerning the following least expensive methods for producing power
(typically coal). Obviously — attributable to the long lead-times required for the development of
atomic plants - such an idea is more helpful in surveying the monetary favourable circumstances of
atomic power against coal than in making a difference the business and the market to adjust uranium
supply and demand (Darmayan, 1980).

To the extent supply is concerned, a refinement must be made between potential makers and existing
makers. The last have just a constrained capacity of reacting to changes in the monetary condition. it
is significant that in the past there has been a general tendency for average grades to rise during a
recession, and to fall during periods of economic recovery (Douglas, 1980).

Recommendation to key players and policy holders:


As per my understanding the supply of Uranium is quite centralised to very few countries which is
required to be changed. We all know that coal can no longer be a very sustainable solution for our
energy need and we need to encourage countries to adopt sustainable ways of producing electricity
which will not only help the environment but also will help to bring down the electricity cost to quite
minimal. There has be a lot politics growing in and around on the issue of supply of uranium to
developing countries. It is important for our leaders to understand that, restricting the supply of
uranium countries is definitely going to harm them only in a long term both economically as well as
ecologically. (Douglas, 1980)

While changes in pricing strategy can have a restricted effect on existing firms, but may be mining
organizations will not be keen to accept this decision — which frequently have other premiums over
just selling uranium - from proceeding to put resources into uranium investigation. Continuation of
such a pattern over time could prompt an arrival of the low uranium levels same as of the mid-1970s.
(Jean-Paul, 1978)

Conclusion:
Presently Australia is the second biggest exporter of uranium in the world and that’s why it holds a
strategic position on the maps and therefore it is very important for Australian policy makers which
should be a win-win to everyone. Nuclear power is an important component of global energy mix and
Australia is one of the key player who can address the global energy imbalance. (Amavilah, V. H. S.,
Economics)

(Asche, 2006)

References
ABARE, D. A., 2016. [Online].

Ahmed, S. B., 1979. Nuclear fuel and energy policy.

Amavilah, V. H. S., Economics. The capitalist world aggregate supply and demand model for natural
uranium. Energy , 17(3).

Asche, F. O. P. a. S. M., 2006. The UK market for natural gas, oil and electricity: are prices decoupled.
The Energy Journal , 27(2).

Darmayan, P., 1980. The balance of supply and demand, a reassessmen. international symposium of
the Uranium Institute, Westbury House.

Douglas, H., 1980. Reserve/grade relationships by type of uranium deposit: key to strategies for
securing future uranium supplies. international symposium of the Uranium Institute.

Jean-Paul, 1978. The uranium market and its characteristic. Mining Journal Books.

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