The long-term outlook for the uranium industry and uranium prices remains robust, as concerns about energy security encourage the development of nuclear power, Energy Resources of Australia (ERA) reported on Friday.

The company, in which Rio Tinto holds a 68,4% stake, noted that a number of new uranium mines were currently experiencing difficulties, owing to weaker uranium prices and the global economic crisis.

The current spot price of around $40/lb was “unlikely to offer the necessary return” for several of the higher-cost projects under development, the company said in a statement. 

“If they do not succeed in the next three to five years in production, the market may see a sudden and significant price recovery as it becomes apparent that production increases are not occurring to support the large number of new reactors being built.”

ERA noted that the demand for nuclear fuel was expected to increase significantly over the new decade, as concerns about climate change and energy security encourage the development of nuclear power.

“Nuclear energy, a competitive energy source with low overall greenhouse gas emissions, is now seen as a key component of the long-term energy solution,” the company said.

China, in particular, leads the world with more than 20 units under construction, and several more in the planning stage, ERA said. In total, around 55 units were currently being constructed around the world, with over 100 more planned over the next decade.

ERA noted that much of this growth would take place in its established markets, where the company could seek to capitalise on its long-standing reputation as a reliable supplier, and its relationships with key utility customers around the world.

“Although the economic crisis has temporarily slowed plans for additional nuclear plants in the US and Europe, a number of new units are still expected to begin construction and come into operation towards the end of the decade.”

By 2030, the number of operating units world wide, would have risen from 436 to more than 600.

ERA is currently produces around 10% of the world’s mine uranium. The company has been producing uranium oxide from its Ranger mine, in the Northern Territory, since 1980.

During 2009, ERA produced 5 240 t of uranium oxide.

The company noted that it was planning an ambitious investment programme for 2010 and 2011 for a successful operation at the Ranger project, and to lay a foundation for its future.

The 2010 investment programme includes: the potential construction of an underground exploration decline at the Ranger 3 Deeps mineral resource; progress on other near-mine exploration targets; and the completion of the feasibility study and environmental approval process for the proposed Ranger heap-leach facility.

The facility will produce an additional 15 000 t to 20 000 t of uranium oxide.