Rio Tinto Rossing

Rio Tinto Rössing uranium mine in Namibia.(Image Rio Tinto)

A couple of large uranium mines reported incidents in the last week that could potentially move the spot price of uranium higher.

Late last week a fire was reported at the Rio Tinto Rössing uranium mine in Namibia. The Rössing mine is one of the largest open pit mines in the world producing 3.2% of worldwide uranium production in 2013. The fire occurred in the final product recovery plant (FDR) and was quickly extinguished. Rio has issued a statement that the no injuries occurred to employees and that mining has resumed as normal.

The second incident will have a bigger impact as BHP will be closing the largest of the three mills at the Olympic Dam mine in South Australia. A key part of equipment (motor strator coil) was damaged due to an electrical failure last month.

This will be a major cut to copper production (60,000-70,000) tonnes but will also affect uranium. BHP has not released any figures on uranium production cuts but if it is similar to copper (~30%) you would see production fall from an estimated 9 million pounds to 6.

Uranium chart 6 months

The uranium spot price has had a pretty good move since the summer and has since pulled back and is trading at the $38 level. The market is still working through an over supply of uranium caused from Japan reactors going offline.

The future looks extremely bullish as hundreds of nuclear reactors are being built and no new supply is coming on-line at current prices.

Read:  Copper surplus in doubt amid Olympic Dam outage or Rio Tinto reports fire at Namibia uranium mine

Related: Azarga primed to ride uranium revival or  NexGen Energy Site Visit: All Signs Point to Arrow

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This is not investment advice. All facts are to be checked and verified by reader. As always please do your own due diligence.