Uranium in the Shadow of the Worldwide Nuclear Power Crisis: A Market Adjustment Problem

Abstract

This paper provides an analysis of the world market for uranium, particularly as it relates to the production of nuclear power. The major characteristics of the uranium market are first described in detail: the geographic concentration of uranium ore and production, the oligopolistic structure of the market, the nature of contracts, the unusual links between buyers and sellers in a large portion of the market created by governmental action and the role of other political factors. The period of declining average prices and excess capacity that began in 1981 is then discussed and the future of the uranium market is considered. The author shows how the market is evolving into a form somewhat closer to that ofmarkets for other minerals and fuels; henceforth the delivery price of uranium will play normal role in adjusting supply to the demand conditions that prevail in the uranium market. He aIso believes that, contrary to the optimistic views observed in the uranium industry, the market is not likely to attain an equilibrium before the latter years of the next decade.