PLENTIFUL ENERGY

Figure 13-1. Uranium spot market price trend (Source: TradeTech [14])
13.2.2 Effect of Uranium Price
Uranium prices for long-term contracts have been less volatile. The uranium
price increased sharply in the mid-1970s, from about $8/lb to above $40/lb, when
the large expansion of nuclear power was in progress. When nuclear power plant
orders were delayed or canceled in the late 1970s and early 1980s, the uranium
price started a steady decline, which lasted about twenty-five years. The uranium
prices for long-term contracts, which supply about 85% of the demand, have been
rather opaque because there is no terminal market quotation and full details of
contract clauses are seldom released. Figure 13-2 illustrates the differences between
the long-term contract prices and the spot-market prices as estimated by Euratom
for the European market. [15] The Euratom spot-market prices track the U.S. spot
market very closely. As can be seen, the long-term contract price decline has been
less drastic. The spot-market prices started to increase during 199697, closing the
gap with long-term contract prices. However, when uranium from weapons
stockpiles became available in the late 90s, it depressed the spot-market prices. The
effect lasted a few years, but since 2004 the uranium price has increased sharply.
The recent uranium price trend purchased by the U.S. utilities is summarized in
Figure 13-3. [16] There is no question that the sharp increases in spot-market price
and the continued expansion of nuclear energy around the world will exert pressure
on the long-term contract prices as well. This is evidenced in the U.S. market, as
shown in Figure 13-3; however, it is impossible to predict the future price levels.
For the analysis presented here we assumed $30/lb as the reference case. The
impact of varying uranium price on the fuel cycle cost is illustrated in Figure 13-4.
The sensitivity of fuel cycle cost to uranium price can be seen in the following: If
the uranium price were to escalate fivefold above this assumption, to $150/lb, then
282