Thisweek saw another sobering anniversary — 30 years since the fire and explosion thatdestroyed a nuclear reactor near the town of Pripyat, in northern Ukraine.
The resultingmeltdown spread radioactive material all over Europe, threatening a generation ofchildren with thyroid cancer, and sparking calls for an end to nuclear power.
But 30years on from Chernobyl, and with the memory of Japan's Fukushima disaster in 2011still relatively fresh, the nuclear power industry is traversing a renaissance rightnow.
Nuclearpower may be on the retreat in the developed world, but in other large, power-hungrydeveloping nations, it is seen as a cheap and viable alternative to the coal-basedgeneration blamed for millions of deaths in smog-choked China.
As aresult, global nuclear generating capacity is set to increase by 45% in the next20 years, according to a recent report by the World Nuclear Association. The peakindustry lobby group estimated that global nuclear electricity generating capacitymay increase to 552 GW by 2035, from 379 GW at present.
Figuresfrom Uranium One Inc.,a Canada-headquartered but Russian-owned uranium miner, showed there are 442 nuclearreactors operating at present, with another 67 under construction.
All up,the World Nuclear Association estimates that this new nuclear capacity will boostannual uranium demand by more than 100 million pounds.
Minerslook ready to meet this new demand, despite the rock-bottom prices for the yellowpowder — worldwide uranium production in 2015 of 60,500 tonnes was the highest levelsince 1980, with low-cost producer Kazakhstan leading the way in expanding output.
Thereis bad news — a combination of oversupply, and Japan's delay in switching back onits power plants — has resulted in a buildup in inventories. In Canada, the ramp-upof the massive Cigar Lakemine, controlled by Cameco Corp.,is further unbalancing the market.
The spotU3O8 price fell to US$25.69 per pound in early April, according to figures fromthe UxC brokerage. That is the lowest price since 2005. The price rose slightlyin the following weeks, to US$27.50 per pound April 25, according to the broker.
But eventhough the market is at a low ebb, pundits say prices may have hit the bottom, asCameco suspended operationsat some of its mines and cut its own output forecasts for 2016.
Similarcutbacks have happened in Australia and the U.S., while with the prevailing lowprices, few new projects are likely to come online — the one exception being Cameco'sCigar Lake, where production is still ramping up.
But whilethings may be tough for uranium miners in Canada, the U.S. and Australia, thingsare much different in Kazakhstan, the world's biggest and cheapest supplier.
Outputof the yellow powder has surged by 600% in the last decade in Kazakhstan, spring-boardingthe Central Asian state to the top rank of uranium producers, with 42% of worldproduction.
Withthe dramatic fall in value of the tenge, Kazakhstan's national currency, minersthere are now the cheapest major producers.
The collapsein energy prices in 2014 forced the government of the oil-rich state to abandonits currency peg to the dollar. As a result, the tenge fell from approximately 150tenge to the dollar in early 2014, to approximately 337 tenge per dollar by April.
Whilethe fall impoverished many Kazakhs, the change was a major boon for the country'smining industry, which exports most of its output. At National Atomic Co. Kazatomprom JSC, the state-owned uraniumexporter, sales of its yellowcake abroad were suddenly twice as competitive.
Anotherfactor is the country's embrace of in situ leaching, said Alexander Boytsov, directorof resource development at Uranium One.
Almostall Kazakh mines use in situ leaching, also known as in situ recovery, a uraniumextraction technique that involves drilling wells into uranium-containing ground,injecting high-pressure leaching agents in, then pumping out the resulting uranium-richsolution.
The method,which was independently researched in both the U.S. and the U.S.S.R. in the 1960s,produces uranium at a much slower rate, but with significantly lower unit costscompared with traditional uranium mining, according to Boytsov.
He saidabout 50% of the world's producing uranium mines now use in situ leaching, withmost producing at less than US$35 per pound of production.
Becauseof the cost advantages, this percentage is likely to increase in the future, accordingto Sergey Breus, general director of Ulba Konversiya, a Kazakh-based uranium processingjoint venture between Cameco and Kazatomprom.
"AtMcArthur River inCanada, they mine at great depths, with grades from 17% to 35%, and with one shovelload of ore, they mine our one month's production at [Kazakh in situ mine] ," he said.
"Butstill, even with that high grade, the cost is much higher than we have in Kazakhstan."
Publiclyavailable data supports his contention.
At Cameco,which primarily produces uranium from conventional mines, the average cost per poundof output was C$36.38 during 2015, according to the company's fourth-quarter investorpresentation. This average included the costs of Cameco's in situ mines as well,as the company did not provide a mine-by-mine cost breakout.
Thiscompares to Uranium One, an exclusive user of in situ recovery, where productioncosts averaged approximately US$10 per pound in the third quarter of last year.
Meanwhile,Uranium Energy Corp.,a NYSE-listed in situ miner, reported average production costs of US$21.77 per pound.
Speakingto SNL Metals & Mining on the sidelines of the MINEX Central Asia 2016 conferencein Astana, Kazakhstan, on April 21, Ibrayev thinks uranium prices have bottomed,and that nuclear power is a realistic option to counter climate change — which explainsthe high number of reactors planned or under construction.
"InChina, coal is out, they have realized the damage it causes. It is nuclear and renewable,and maybe gas," he said.
He pointsto nuclear station construction in India and Russia, as well as Japan's decisionto reactivate its nuclear plants, as reasons to be optimistic.
To helpmeet this demand, Ibrayev said Kazatomprom and its joint ventures will raise outputover the next four years by approximately 2,000 tonnes. After this, output will"plateau," as operations in Kazakhstan are hitting their peaks.
Likeothers, he thinks the real danger in the uranium business is underinvestment.
Withmany of the world's biggest mines set to run out of reserves over the next decade,uranium prices must rise to encourage construction of new mines after 2025, accordingto the World Nuclear Association.
Thatmeans the industry must begin to explore again, Ibrayev said.
"Theissue of replenishing the resource base in Kazakhstan is becoming more and morepressing. So for the first time since our independence, we decided that Kazatompromshould start geological exploration with our own funds and expertise," he said.
The companylaunched a six-year drill program last year, adding that it already spent 800 milliontenge drilling 175 new wells throughout the country.
The programis aimed at replacing approximately 195,000 tonnes of uranium resources by earlynext decade.
BulatUzhkenov, chairman of Volkovgeolgia, Kazatomprom's exploration subsidiary, saidfinding more uranium "is a national priority" right now at a time whenKazakhstan's other major exports — oil and gas — are suffering from low world prices.
He saidVolkovgeolgia's prospecting efforts will mainly focus on the Shu-Sarysuisky province,in the south of the country, where approximately 57.8% of Kazakhstan's uranium resourcessit. Resources there are mostly oxidized uranium, are found at a relatively shallowdepth of between 100 meters and 300 meters, and all can be extracted using the insitu method, he noted.
The explorationsubsidiary has purchased new rigs for use in exploring for both uranium and othersolid minerals.
A totalof 124,000 square kilometers will be explored under the program, and different typesof exploration techniques may be used, including remote sensing for heat anomaliesand isotopes, as well as traditional field and ground surveys using geophysicaltechniques.
Ibrayev,however, told SNL that the state nuclear company is preparing to sell off over 30of its "non-core" subsidiaries, including renewable energy companies andservice providers not linked to uranium.
The salesare expected to be complete by 2018, leaving Kazatomprom as a pure uranium company.
One ambitiousplan is to expand the product range to include more processed fuel products, andeven full nuclear fuel assemblies.
"Until2015, we mainly sold uranium dioxide … but starting this year, we have shifted toselling more processed products, like fuel pellets, powder, and enriched uranium.We plan to continue this and strengthen it further," he said.
He outlineda plan to start a dedicated marketing company, headquartered in Switzerland, whichwill assume responsibility for widening Kazatomprom's market base, selling to countriessuch as Iran and India and the Middle East, where several countries are proposingto construct reactors.
The companyis looking to start with fuel conversion, and is seeking joint ventures to researchnew nuclear fuel technologies.
Anotherplan is for Kazatomprom to begin its own nuclear power generation.
He pointsto the government's decisionlast year to delay a Russian proposal to construct a nuclear power plant in thecountry. It was decided that a new plant was not needed, because Kazakhstan alreadyhas excess electricity generating capacity. But the plant may still be built, hesaid.
"Itis still on the government's agenda, though, because it may be we can export thiselectricity."
"Ithink we have hit the bottom for the uranium price, we are seeing the lowest pricesever," he noted.
A uraniumfund that buys and stores excess output could help to manage prices.
"Allof our joint ventures and enterprises will fulfill their contracts to supply, butpart of our production will be reserved in this fund in order to ensure price sustainability."
The uraniumcould be sold slowly as prices become more favorable, he said.
As of April 26, US$1 was equivalentto 331.81 Kazakhstan tenge