Uranium, as it is mined from the ground, is not directly useable for
power generation. Much processing must be carried out before uranium can
be used efficiently to generate electricity. Uranium's transformation
from ore in the ground into nuclear fuel and ultimately the handling of
waste products is described as the nuclear fuel cycle.
After a successful exploration program, uranium ore undergoes:
Steps one to four are known as the front end of the fuel cycle; steps
six and seven, the back end, refers to what happens after the fuel
comes out of the reactor.
The Uranium Fuel Cycle
Boss Energy is focused on uranium mining which is the first stage of
the front end of the fuel cycle. Uranium from the Honeymoon mine will be
transported to Adelaide from where it will be shipped to a Conversion
Facility and stored until it is purchased by a customer. Once the
uranium has been purchased by a nuclear utility, it will undergo
conversion, enrichment and then be fabricated into fuel and used to
generate electricity in nuclear power stations. All uranium from the
Project is solely for use for the generation of electricity in civil
nuclear reactors. Throughout all stages of the fuel cycle, uranium from
Honeymoon will be subject to the provisions of the Nuclear
Non-Proliferation Treaty and all applicable Australian bilateral
safeguards treaties with customer countries.Conversion plants are
operating commercially in the USA, Canada, France, Russia and China. The
principal destinations for the uranium from the Honeymoon mine will be
the Western conversion facilities: Cameco’s facility in Canada, ORANO’s
facilities in France and Converdyn’ s facility in the US.
Nuclear power plants are operational in 32 countries worldwide and in
2020 the International Energy Agency (IEA) reported that nuclear power
represented approximately 10% of world electricity production.Thirteen
countries in 2020 produced at least one-quarter of their electricity
from nuclear. France gets around 70% of its electricity from nuclear
energy, while Ukraine, Slovakia, Belgium and Hungary get about half from
Figure 3: Nuclear generation by country 2021 (source: IAEA PRIS)
The World Energy Outlook 2021, which is published by the OECD
International Energy Agency publishes annual scenarios related to
energy. The ‘Sustainable Development Scenario’ which is consistent with
the provision of clean and reliable energy and a reduction of air
pollution, among other aims forecasts electricity generation from
nuclear increases by almost 75% by 2050.
Uranium is the heaviest of all the naturally occurring elements
(hydrogen is the lightest). Uranium is 18.7 times as dense as water.
Like other elements, uranium occurs in several slightly differing
forms known as 'isotopes'. These isotopes differ from each other in the
number of particles (neutrons) in the nucleus. Natural uranium as found
in the Earth's crust is a mixture largely of two isotopes: uranium-238
(U-238), accounting for 99.3% and uranium-235 (U-235) about 0.7%.
The isotope U-235 is important because under certain conditions it
can readily be split, yielding a lot of energy. It is therefore said to
be 'fissile' and we use the expression 'nuclear fission'.Uranium is a
naturally occurring element with an average concentration of 2.8 parts
per million in the Earth's crust. Traces of it occur almost everywhere.
It is more abundant than gold, silver or mercury, about the same as tin
and slightly less abundant than cobalt, lead or molybdenum. Vast amounts
of uranium also occur in the world's oceans, but in very low
Table 1: Uranium resources by country in 2019 as a percentage
The table above shows the current known recoverable resources of
uranium by country. Australia has 28% of global uranium resources.
Following the Russian invasion of Ukraine in February 2022 supply
from Russia and supply passing through Russian ports has become
vulnerable to sanctions, transport disruptions and supply chain risk.
Security of supply and geopolitical risk are important factors for
uranium buyers when considering supply sources.
Figure 3: Uranium Production in 2021
The fundamentals for uranium are stronger now than when prices spiked during the early 2000s.
Nuclear power has been recognized as a clean energy source that is
needed to meet future global climate change targets and government
policies are being put in place to support nuclear generation from
existing and future reactors.
Uranium demand in the near term is growing as existing reactor
lifetimes are being extended and reactors under threat of shutdown for
economic reasons are reprieved. Mid to long term demands continues to
increase as new reactor programmes are announced.
On the supply side western the deglobalisation of the nuclear fuel
market continues with western utilities looking to end their dependence
on Russian supply.
Idled mines are restarting and operating mines are moving towards
full capacity operation but increased demand forecasts and reduced
secondary supply are increasing the probability of supply deficits in
the near term.
Incentive costs for new mines, with some notable exceptions, have
risen, as inflationary effects are included in feasibility studies, and
are estimated to be close to $80/lb.
Despite the tightening market, the spot price has stayed in a range
from the mid 40S to low $50s reflecting the stronger influence of equity
markets, from which uranium had historically been insulated. The
improving fundamentals have been seen in the increased level of term
activity, the increase in the term price, the tightening of mid to long
term contracting terms such as volume flexibilities and the return of
the carry trade.
Security of supply is at the forefront of utility procurement
strategy, and this includes limiting dependence on any individual
company or geographic area. As utilities continue to work towards
reducing dependence on Russian supplies, demand for uranium supply from
geopolitically stable nations such as Australia will increase. Honeymoon
with its first mover advantage is in pole position to benefit from
The marketing strategy for Honeymoon is to build a robust sales
portfolio which would cover costs and protect the mine from any future
market downturn while retaining sufficient uncommitted supply to take
advantage of rising market conditions. An important pillar of this
strategy is ensuring that the company has a diversified buyer base. The
company will be targeting global utilities with long term strategic
perspectives. Initially the focus will be on North America and Europe,
where Boss Energy Ltd has strong contacts, and in parallel the company
will be developing its links with South and East Asia.