The growing enthusiasm for nuclear energy resulting from the fight against climate change is leading the Australian mining company Paladin Energy to resume exploration for a potential uranium mine in Labrador, whose access to the international market would be reduced from obviously, by the port of Sept-Îles.
In an investor document, Paladin Energy announced on Monday that “activity has restarted on the Michelin project”. This site is located about forty kilometers from Happy Valley-Goose Bay, a town in central Labrador.
The company first wants to establish the region’s uranium potential before building a mine there and developing a production and marketing strategy. No mention is made of Sept-Îles, but the city on the North Shore has the only deep-water port in the region, suggesting that access to the world market would certainly go through its infrastructure.
The exploration of the Michelin site was put on ice several years ago. The company now argues that the vein could be attractive given that the deposit lies under a thin layer of ice: “The potential for shallow deposits can reduce capital costs and development times. »
If the potential is confirmed, Paladin Energy intends to develop the site “in stages” in order to reduce operating costs and financial risks.
The nuclear craze
“The current supply of primary uranium does not meet demand. […] The projected production from the returning mines will not be sufficient to meet the shortfall,” read the documents released by the company.
A reality that has resulted in the rise in the price of uranium. In twelve months, the spot price of ore — the short-term market for immediate delivery — and that on the long-term markets have increased by 56% and 51% respectively, now standing at 50 US dollars / pound and 53 US dollars / book.
Paladin Energy expects uranium prices to gravitate between US$68/lb and US$78/lb within five years, up nearly 50% from its current value.
The company indicates that in the context of the fight against climate change, nuclear energy should play a crucial role in the decarbonization of the economy: “Nuclear energy today represents 47% of the carbon-free electricity generated in United States. »
In its document, Paladin Energy argues that nearly 150 reactors are to be built over the next 15 years and that with rising natural gas prices, Japan is accelerating the commissioning of its reactors. Other countries, such as South Korea and Romania, are working to increase the share of nuclear in their energy portfolio.
Added to this is the growing interest in small modular reactors (SMRs), a type of lower power reactor that could be used to generate power for remote areas.
What’s more, the war in Ukraine, which is also disrupting the energy market and mining activities in Kazakhstan — the leading uranium producing country — is pushing uranium producers to explore new avenues.
Interest in nuclear power is also reflected in the rise in shares of uranium mining companies. In two years, the title of Paladin Energy has catapulted by almost 500%. However, the company is still not profitable.