U3O8 prices saw their largest quarterly gain in Q3, rising 56 percent from the beginning of the period to the September high. Much of the positivity was the result of the Sprott Physical Uranium Trust (TSX:U.UN).
Created out of the acquisition of Uranium Participation, a Toronto-based holding company that invested nearly all of its assets in uranium, the Sprott trust began to quickly make waves in the nuclear fuel sector.
By mid-September, Sprott's uranium holdings had ballooned to over 27.7 million pounds worth US$1.46 billion.
As the trust bought up pounds from the tightening spot market, attention was drawn to the growing discrepancy between rising demand and the current low production level.
Eyes are also on competition in the spot market from producers that are purchasing to meet contracts following a year of mine shutdowns and logistics woes. Supply issues rising from purchases by Sprott and other producers are expected to be further compounded by increased demand from the nuclear fuel sector.
Even though some nuclear projects were delayed in 2020, the future of the sector holds promise as countries strive to meet ambitious emissions and pollution-reduction targets.
New nuclear reactors will require more uranium production, which bodes well for uranium-producing companies. The long-term outlook for uranium shows that demand is projected to climb 25 percent higher by 2025. This uptick will largely come from Asia's robust and growing nuclear energy industry.
There is also increasing interest in small modular reactors. Capitalizing on the same processes used to create nuclear power on a smaller scale, they offer another way to integrate atomic energy into a project or energy grid.
With that in mind, it's worth looking at which companies are the world's leading uranium miners. The list below lays out 2020's five largest uranium companies that are publicly traded, providing a brief overview of what they got up to last year and what news they have released so far in 2021.
1. BHP (NYSE:BHP,ASX:BHP,LSE:BHP)
2020 production: 8.1 million pounds uranium oxide concentrate
Major miner BHP's Olympic Dam mine in Australia is one of the largest uranium deposits in the world. Although copper is the primary resource mined at Olympic Dam, the project also hosts uranium, gold and silver. According to the company, Olympic Dam has a fully integrated processing facility.
After completing a comprehensive study, the company scrapped plans for a brownfield expansion at Olympic Dam in late 2020. Citing the complexity of the copper deposit, BHP instead has opted to focus on "targeted debottlenecking investments, plant upgrades and modernisation of our infrastructure" at the Australian property.
In 2020, output from the uranium project increased 3.8 percent year-over-year. Totals climbed from 7.8 million pounds of uranium oxide concentrate to 8.1 million pounds.
The Australian mine also houses a massive uranium reserve. According to the World Nuclear Association, Olympic Dam has an estimated 347,000 tonnes of contained uranium oxide.
Currently, BHP is looking for new opportunities to add to its resource profile. One such property is Oak Dam in South Australia. In 2020, BHP conducted additional drilling at the site. The results are under review, but previous work indicates high-grade copper, gold, silver and uranium mineralization.
2. Cameco (TSX:CCO,NYSE:CCJ)
2020 production: 5 million pounds uranium
In 2019, Cameco topped the list of publicly traded uranium producers, accounting for 9 percent of the world's uranium production. In 2020, the uranium major's output instead made up 6 percent of global demand.
The 4 million pound decline in production in 2020 was the result of project shutdowns in Canada, a segment that factors largely into the company's annual tallies.
Cameco's notable Canadian operations include Cigar Lake, which is considered the most prolific uranium mine in the world. Cameco's assets in the country also include the McArthur River mine and Key Lake mill, located in the Athabasca Basin, a well-known uranium jurisdiction.
In the US, Cameco owns the Smith Ranch-Highland operation in Wyoming's Powder River Basin, as well as the Crow Butte operation in Nebraska. Additionally, Cameco has a 60 percent stake in a mine in Kazakhstan.
Back in 2018, the company shuttered McArthur River and Key Lake due to weak spot prices. The closures reduced Cameco's uranium supply dramatically from 23.8 million pounds in 2017 to 9.2 million pounds in 2018.
Due to COVID-19 regulations, Cameco temporarily suspended production at Cigar Lake in early 2020. Operations at the mine were curtailed until late September, which is reflected in the firm's annual output.
Despite the losses of 2020, the uranium miner remains optimistic regarding the future of the nuclear fuel sector. The company also sees a growing opportunity in the widespread electrification happening around the globe.
"Demand for nuclear power is growing and not just the traditional uses of nuclear power. There is a real focus on, and significant investments being made in the development of non-traditional uses, like small modular reactors," Tim Gitzel, Cameco's president and CEO, said in a quarterly review.
He noted that all these factors and the growing demand they create will undoubtedly lead to supply challenges: "On the supply side there are some big question marks about where uranium will come from to fuel the world's growing demand for nuclear power due to years of persistently low prices that have led to planned production curtailments, lack of investment, the end of reserve life for some mines, shrinking secondary supplies and trade policy issues, which are currently being amplified by unplanned disruptions due to the COVID-19 pandemic."
3. Energy Resources of Australia (ASX:ERA)
2020 production: 3.47 million pounds uranium oxide
Energy Resources of Australia (ERA) operates Australia's Ranger mine, the continent's longest-running uranium mine. While mining stopped at Ranger in 2012, the company is still producing material from stockpiled ore.
2020 was the final full year of production for Ranger as the mine was officially decommissioned in January 2021. The Australian mine will now go through final rehabilitation, which is slated to conclude by January 2026.
Production from Ranger's last year totaled 3.47 million pounds, a slight year-over-year decline from 2019's 3.8 million pounds of uranium. Although output dropped, overall production fell in line with yearly guidance.
"ERA will continue to sell contracted and uncontracted drummed uranium oxide to Rio Tinto Uranium for on sale to a variety of customers," ERA's 2020 annual report reads.
ERA is continuing rehabilitation of the Ranger project site and is working towards finalizing closure.
4. Rio Tinto (NYSE:RIO,ASX:RIO,LSE:RIO)
2020 production: 2.8 million pounds uranium
Rio Tinto slipped from the third spot to number four on the list of largest uranium producers in 2020. Its uranium output fell 40 percent year-over-year, from 4.7 million pounds in 2019 to 2.8 million pounds in 2020.
This marks the second year of significant declines for the international miner. In 2019, output fell 29 percent year-over-year, slipping from 6.7 million pounds in 2018 to 4.7 million pounds.
Rio Tinto's uranium output comes partially through the 68.4 percent stake it holds in ERA, which as mentioned manages the Ranger mine, Australia's longest continually operating producer of uranium.
Rio Tinto has attributed part of the output reduction to the lower-grade ore being processed at Ranger.
While the Ranger mine contributed 2 percent of the world's uranium in 2018, it did not make the World Nuclear Association's list of top-producing mines in 2019.
Prior to November 2018, Rio Tinto held a stake in the Rossing uranium mine in Namibia, one of the world's largest and longest-running open-pit uranium mines. Rio sold its stake in the African project to China National Uranium for an estimated US$106 million. The full divestment was completed in July 2020.
5. Other uranium-producing companies
Two of the largest global uranium producers straddle the Europe/Asia border: Kazatomprom (LSE:KAP) and Uranium One. Kazatomprom, Kazakhstan's national uranium and nuclear energy company, has several operations and joint ventures globally. As the largest uranium producer in 2020, its output topped 23.6 million pounds, or 22 percent of global supply. Kazatomprom is only partially public.
Uranium One is a private subsidiary of Rosatom, Russia's state-owned nuclear company. In 2020, Uranium One accounted for 9 percent of world output.
Orano, formerly AREVA, was a publicly traded company until 2017, when it was "split in two and recapitalized ... after years of losses wiped out its equity." It is also a significant uranium producer. Since the separation, Orano has done well, and contributed 9 percent of global uranium supply in 2020.
Aside from the largest uranium producers listed above, there are of course companies that produce smaller amounts. These smaller players include Energy Fuels (TSX:EFR,NYSEAMERICAN:UUUU), which put out 196,500 pounds of U3O8, and Ur-Energy (TSX:URE,NYSEAMERICAN:URG), whose 2020 U3O8 output came to 10,789 pounds.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Energy Fuels is a client of the Investing News Network. This article is not paid-for content.
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