EIA Reports Shortfall in 2015 US Uranium Production

A recent US Energy Information Administration (EIA) report highlights that in 2015, US uranium production dropped to its lowest in 10 years. Meanwhile, Q4 uranium output in the US was the lowest since 2002. 
More specifically, EIA figures show that in Q4 2015, the US produced 585,048 pounds of U3O8, a whopping 24 percent lower than the previous quarter, and 46 percent lower than the same period in 2014. And between the first and final quarters of 2015, there was a 49-percent drop in production.
Looking at 2015 as a whole, US uranium production reached 3,303,977 pounds of U3O8. That’s 32 percent less than the 4,891,1332 pounds of U3O8 produced in 2014; it’s also the lowest production in the US since 2005. The EIA notes that the US’ 2015 production amounted to just 7 percent of the anticipated demand from US civilian nuclear power reactors.

Image courtesy of the International Energy Agency.

In terms of where all of that uranium came from, the EIA states that during Q4 2015, four US production centers were in operation, including Cameco’s (TSX:CCO,NYSE:CCJ) Nebraska-based Crow Butte operation and Wyoming-based Smith Ranch-Highland operation. The others in operation were Ur-Energy’s (TSX:URE,NYSEMKT:URG) Lost Creek operation and Energy Fuels‘ (TSX:EFR,NYSEMKT:UUUU) Nichols Ranch operation. Those facilities are all in-situ leach operations.
By comparison, those four operations plus three others were up and running during Q3 2015: the White Mesa mill in Utah, the Hobson in-situ recovery plant/La Palangana in Texas and the Willow Creek project in Wyoming. Furthermore, the IEA notes that Strata Energy’s Ross central processing plant in Wyoming became operational during Q4 2015; however, it was not producing at that time.

Are uranium prices to blame?

The EIA points in its report to the “continued low market price of uranium” as a key reason behind the slump in US production in 2015. And rightly so.
Since the 2011 Fukushima disaster, uranium prices have struggled to maintain any significant gains. Spot prices are currently trading at $33.50 per pound of U3O8, roughly 40 percent lower than in March 2011. And unfortunately, relief may not be coming soon — earlier this month, Cameco CEO Tim Gitzel warned that a recovery to the slumping industry may not be as imminent as many are hoping.
Still, as while uranium prices remain low, ultimately the supply shortfall predicted by market watchers will arrive. When that happens, investors are likely to see a sharp increase in prices, and that will give companies some incentive to start producing more uranium. “Long-term, we know good things are in store,” Gitzel said.
 
Securities Disclosure: I, Vivien Diniz, hold no investment interest in any company mentioned in this article.