TORONTO, March 2 (Reuters) - Three U.S. uranium producers say they are poised to ratchet up production quickly if prices swing higher after a four-year slump.
The uranium spot price has bounced off the bottom it hit following Japan’s 2011 Fukushima disaster, but it remains below the level needed to boost production.
Although they are small, some U.S. producers benefit from lower costs than conventional miners of the radioactive metal because they use an in-situ mining technique to remove ore in which they inject a chemical solution into wells while leaving rock in place.
That allows companies such as Ur-Energy and Uranium Energy Corp to increase output at lower market prices than can be done at conventional mines owned by Cameco Corp or Areva SA.
Colorado-based Ur-Energy looks to produce 750,000 to 850,000 pounds this year at Lost Creek, Wyoming, most of which it would sell under eight utility contracts. If the spot price climbs to $50 per pound from $38.75 currently, Ur-Energy would push production to Lost Creek’s 1 million pounds capacity, Chief Executive Wayne Heili told Reuters at the Prospectors & Developers Association of Canada convention in Toronto.
“The $50 mark is probably where we would say, if we can get more on the spot market than from our contracts, that’s what we’ll do: produce additionally for the spot market,” he said.
Uranium Energy, which has operations in Texas, placed producing assets on standby in late 2013. A spot price around $45 would lead it to raise production from minimal levels, CEO Amir Adnani said.
UEC’s plant is permitted for 1 million pounds annually.
Conventional U.S. producer Energy Fuels Inc produced 800,000 pounds last year. A price of $60-$65 per pound would spur more production, CEO Steve Antony said.
Cameco is aiming for production of 6 million to 8 million pounds at its new Cigar Lake, Saskatchewan, mine this year. Hitting the upper end of that range depends on technical factors, not prices, said Alice Wong, Cameco’s chief corporate officer.
Heili said now may be the time to consolidate, before the market rebounds. On a bigger scale, U.S. producers could attract greater investment, he said.
In January, Energy Fuels said it would buy fellow U.S. producer Uranerz Energy Corp for $150 million.
“The market is down and valuations are low,” Heili said. “It’s probably a good time to get serious about the business of consolidation.” (Editing by Peter Galloway)