Overview

Since the publication of the 1998 WEC Survey of Energy Resources, the international uranium industry has experienced continued change in response to the very low market prices.

World uranium mine production decreased from 1988 until 1994 despite the continuous growth in world uranium requirements. Production then increased in 1995, 1996 and 1997, before falling back in 1998 and 1999. Production in 1997 was about 36 700 tU, but then declined by about 5% to 35 000 tU in 1998 and by a further 7% to 32 600 tU in 1999. The decrease in production in 1998 was primarily caused by the oversupply of uranium offered at very low prices and the resulting decline in both the long-term and spot market price in 1997 and 1998. Since 1993 production from mines has met less than 60% of world reactor demand. Over much of the period to 1998 the balance was met by surplus uranium produced prior to 1990 to meet both expected civilian requirements and demand for military uses.

Following an increase in medium and long-term prices from 1994 to mid-1996, prices again sharply declined in 1997 and 1998. After medium and long-term prices on the US market increased by US$ 2-3/lbU3O8 for domestic and foreign purchases between 1995 and 1996 there was again a downturn of US$ 1.50-2/lbU3O8 through 1998. Following an increase of nearly US$ 3/lbU3O8 in 1997 the EURATOM multi-annual contract price fell by less than US$ 1/lbU3O8 in 1999. The spot-market price continued as a two-tiered system, with some countries allowing unlimited imports from the Newly Independent States (NIS) – Kazakhstan, Russian Federation, Ukraine and Uzbekistan, and others (mainly the USA and the European Union) imposing restrictions. Following a recovery of the unrestricted price from its lowest point of about US$ 7/lbU3O8 in 1994 to about US$ 15.50/lbU3O8 by mid-1996, the price plunged to US$ 9.65 by the end of 1997. It continued down to US$ 8.45 and US$ 7.60 respectively, by year-end 1998 and 1999. The corresponding restricted price increased to US$ 16.50/lbU3O8 by mid-1996. From September 1996, however, it started to decrease, reaching about US$ 12/lbU3O8 and US$ 8.75/lbU3O8 respectively by year-end 1997 and 1998. However, a price rally early in 1999 left the restricted spot price at US$ 9.60 by year-end.

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