Energy Resources of Australia sees buoyant long-term demand
Alex Wilson
The Australian Business
ENERGY Resources of Australia says it doesn't expect uranium prices to rise much in the short term, but in the longer term demand looks set to outstrip supply.
Chief executive Rob Atkinson said while prices might be stable for now, this could change in the medium to long term as developing nations build large numbers of nuclear reactors while new sources of supply remain constrained."Given the nuclear build which is going on and looking at the existing uranium mines, it is not too difficult to paint a picture in a few years time that there's a bit of an imbalance," he told Dow Jones Newswires.
ERA exported a shipment of uranium to China last year and, while the US, Japan and Europe remain its biggest customers, Mr Atkinson said there was scope for Chinese sales to grow.
"It's still a very early relationship, but it's one which we are very confident will grow over time," he said.
"We view the Chinese as being very important and as being a very important growth market and we will continue to develop that relationship."
Mr Atkinson said he expected ERA's capital spend in the second half to be roughly in line with the first half, when capital expenditure was $18.5 million.
The miner retained the flexibility to sell a small amount of uranium on the spot market if conditions are favourable, Mr Atkinson said, adding that some of its long term contracts also contained a component of spot-related pricing.
ERA, which is a subsidiary of Rio Tinto , also said today first-half net profit more than tripled to $127.6m from $38.9m last year.
The profit result is in line with guidance given by the miner earlier this month, but still represents a strong performance driven by higher output and rising prices.
The company said its sales for the first half to June 30 rose to 2280 tonnes of uranium from 1746 tonnes last year and production for the half rose to 2695 tonnes from 2357 tonnes in the previous corresponding period.
The prices ERA is receiving for its uranium continue to rise as old legacy contracts, struck when prices were lower, roll out of its sales portfolio.
The average realised sales price for the half climbed to $US48.02 a pound from $US35.69 in the previous corresponding period.