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Message: India-an emerging major driver of uranium demand growth
India is ramping up its purchases of uranium to ensure security of supply to feed its growing nuclear reactor fleet. It is on course to almost double its nuclear power generation capacity with six new reactors due to come online by the end of 2016. To this end, India is intent on setting up a strategic uranium stockpile of between 13 and 39 million pounds ("Mlb"). The country is also expanding and accelerating uranium purchases from Kazakhstan, Uzbekistan and Canada. Meanwhile, India's domestic uranium production, which falls short of the country's current requirements, is being restricted so as to create an in-the-ground, strategic reserve.
India's nuclear energy building program is second only to China's in scale, and India is now emerging as a major new player that is driving growing demand for uranium. And U3O8 Corp's project in Argentina could be one of the few new, low-cost uranium deposits developed in the near-term for potential export under Argentina's nuclear co-operation agreements with countries such as China and India.
India's exponential growth in nuclear power - India's 21 operating reactors currently produce 5.3 GigaWatts ("GW"), or <3% of the country's electricity. The six new reactors due to come online in the next 16 months would add 4.3GW, almost doubling India's nuclear energy generation capacity. India plans to have 14.6GW in nuclear capacity online by 2020, requiring the construction of another 22 new reactors. The country aims to continue this exponential growth trajectory with a target of 60GW of nuclear energy capacity by 2032 and a staggering 273GW by 2050 - that is over 2½ times the nuclear energy output of the USA (Figure 1). India's target is to have 25% of its energy needs generated by nuclear by 2050, by which time the country is expected to be the second largest economy in the world.
India restricting domestic uranium production - India produced a record 3Mlb of uranium this year but relies on imports to satisfy the 4.1Mlb per year needed to fuel its existing nuclear plants. This uranium trade imbalance will worsen as demand continues to grow from new reactors while domestic mining projects are hampered by challenging logistics and a desire to keep its uranium in the ground as part of a strategic reserve.
India increasing its uranium imports - In July 2015, Kazakhstan signed an agreement with New Delhi to supply 11Mlb of uranium over the next five years, which is more than double the amount contracted in 2010. India's prime minister also requested that Uzbekistan fast-track its uranium deliveries, of which ~21% of the country's production (or 4.4Mlb) is contracted to India through to 2018. In April 2015, Cameco signed a breakthrough deal to supply India with 7.1Mlb of uranium over five years.
India to build a Strategic Uranium Reserve for security of supply - India has announced that it intends to build up a strategic uranium stockpile to ensure its reactors do not face fuel shortages. An initial 13Mlb reserve pool has been proposed to Cabinet, and approval is likely to be sought shortly for an increase in the reserve to 39Mlb.
Figure 1 - India's Actual and Planned Nuclear Output in GW
Sources: WNA, Financial Post
July 21, 2015 - Dundee Capital Markets Research: Uranium Sector Weekly
July 16, 2015 - Kudankulam units achieve construction and operation milestones
July 8, 2015 - Kalpakkam breeder reactor to go on stream
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