In 2016, the spot price for uranium was $70/kg U and an estimated $521 million (in constant 2017 US Dollars) was spent on uranium exploration. Based on a unit discovery cost of $8/kg U, this level of exploration activity should result in around (521 / 8 =) 65 kt of primary uranium being found each year13. Assuming that the size-frequency for future discoveries matches that found per dollar spent in the last two decades (see Fig. 18), the author estimates that, on average, (19.2 x 521/1000 =) 10 discoveries of >200 t U could be made each year. Over half of these (by number) will be less than 1000 t U in size.
As per Fig. 11, the author estimates that the only ~50% of the discovered metal will eventually be mined, and that the average delay between discovery and development is around 15–20 years. Furthermore, not all of the metal mined will be recovered. Depending on the ore grade and processing method around 5 to 20% will be lost during mining and processing. Assuming (say) ~10% losses, at current levels of exploration, the likely amount of new metal supplied from new discoveries will only be (50% x 90% =) 45% of the total reported discovery rate.
Given this, the current effective discovery rate for the industry is (65 x 45% =) 29 kt U per annum. By comparison, the world produced 62.4 kt of uranium in 2016.
Given the above, industry’s exploration efforts for uranium are currently only replacing half what it mines. For the industry to be sustainable in the longer term it needs (at the very least) to double its output of discoveries. The three main ways of achieving this are:
13 Exploration expenditure data for 2017 is currently not available. However, given that the spot uranium price dropped to
$60/kg in 2017 the current level of exploration is likely to be correspondingly less.
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— Be more effective at exploration. For example, develop tools and concepts that increase the chance of making a significant discovery in a given exploration project.
It could also include finding new districts where the mineral endowment is much higher;
— Be more efficient at exploration. For example, developing tools that lower the cost of finding and testing targets – down from the $8/kg U at present;
— Increase the overall level of expenditure.
The first two options require substantial investment in research & development by industry and government. The last option requires either direct financial support from government and/or higher uranium prices.
7.2. Future scenarios for exploration success
Table 4 estimates the likely number of uranium deposits and contained metal found under a range of different unit discovery costs and uranium prices. The Base Case supply scenario assumes a unit discovery cost of $8/kg U and a uranium price of $130/kg U (all in constant 2017 US Dollars). At this price, the industry is forecast to spend $1009M per annum on uranium exploration. Based on this level of expenditure, it is projected to find (1009/8 =) 126 kt U per annum contained in 19.4 deposits of varying sizes14. Using different discovery costs (varying from $6 to $10/kg U) and uranium prices (varying from ($60 to $260/kg U) the overall amount of uranium found each year could range from 52 to 320 kt U per annum. As noted before, only half of the uranium found will be mined, and of that, a further ~10% will be lost during mining and processing. Consequently, under the Base Case supply scenario, the effective annual discovery rate for the industry is (126 x 45% =) 57 kt U of recovered metal.
Fig. 19 shows the total amount of uranium discovered in the world each year since 1940. It also shows which discoveries have been developed and the associated amount of metal lost during mining and processing. The forecast Base Case supply scenario assumes that the uranium price progressively rises from $60 (in 2017) to $130/kg U by 2026 then remains constant thereafter.
Fig. 19 also includes data on the historic trend in mine production over time. The forward projections are based on Low and High Case demand scenarios published in the latest Red Book [8] – which forecasts that primary uranium demand (sourced from mine production) will reach 66.9 kt (Low Case) to 104.7 kt (High Case) by 2035. In both cases, they exceed the likely effective amount of new supply (57 kt U per annum) from exploration success.
7.3. Discovery perforance/ uranium price required to sustain the industry
For the industry to be sustainable (i.e. find sufficient new metal to replace what it mines), discovery performance needs to dramatically improve and/or the price of uranium needs to rise.
Fig. 20 and Table 5 show the general trade-off between the two options. Based on a unit discovery cost of $8/kg U, the industry needs a uranium price of $156/kg U under the Low Case scenario, or $252/kg U under the High Case demand scenario15.
14 These figures are averages only. In any given year the number and size could be higher/lower. On average 11.4 of the deposits will be in the size range 200–1000 t and 0.8 deposits will be >50 kt U. In other words, it assumes that there is an 80% chance of finding a deposit >50 kt U in any given year.
15 Caution: These projected prices are simply based on the need to find sufficient new deposits to meet future needs. It assumes that only half to the metal found is mined – and that this factor will not change over time. In practice the conversion rate is sensitive to the uranium price (which impact on the project economics). It is also affected by changes in environmental
39 FIG. 19. Total amount of uranium available for discoveries versus current mine production and forecast demand.
FIG. 20. Forecast amount of uranium discovered and developed (under a range of price and discovery scenarios) to meet future industry needs.
regulations and community acceptance. Predicting such changes is beyond the scope of the current study.
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TABLE 4. ESTIMATED LIKELY NUMBER AND AMOUNT OF URANIUM TO BE DISCOVERED IN THE WORLD UNDER A RANGE OF DIFFERENT PRICE FORECASTS AND FUTURE UNIT DISCOVERY COSTS
TABLE 5. ESTIMATED URANIUM PRICE REQUIRED TO STIMULATE SUFFICIENT EXPLORATION TO Uranium Price (2017 US$/kg U)
Estimated amount of uranium found (kt U) per year by deposit size, based on a given unit discovery cost Estimated number of uranium deposits found per year by size, based on a given unit discovery cost Forecast exploration expenditures per year
(2017 US$ million) Unit Discovery Cost
(2017 US$/kg U)
41 MEET FUTURE METAL DEMAND: 2020-2035