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Primary Uranium Supply

According to the Q1 Outlook, uranium production increased slightly year over year from 158.3 million pounds U3O8 in 2015 to 163.4 million pounds U3O8 in 2016. Production in 2017, however, is expected to decrease back below 2015 levels to 157.8 million pounds U3O8, which would represent a 3.4% reduction for the year. Production from Russia, and the United States declined in 2016, while production from Kazakhstan, Australia, and Africa increased slightly. Production in Canada rose 5% or 1.9 million pounds U3O8 from the ramp up of activities at the Cigar Lake mine, which more than offset the roughly 4 million pounds U3O8 of production that was suspended at the Rabbit Lake mine. Cigar production is expected to remain flat at today's levels of 18 million pounds of U3O8 per year through 2025. Canada remains the second largest producing nation with nearly 22% of the world's production from 2016 coming from within Canada. Kazakhstan continues to be the world's largest producer of uranium, representing approximately 39% of production in 2016.

UxC has estimated in its Q1 Outlook that existing mine production, plus new planned and potential mine production, will increase primary uranium supply from an estimated 163.4 million pounds U3O8 in 2016 to 174.7 million pounds U3O8 by 2020, before declining to only 159.5 million pounds U3O8 by 2025. At its height in 2020, the projected production represents an increase of only 7%, as compared to the dramatic increases in uranium demand outlined above. In past years, UxC projected that Kazakhstan was expected to continue to be one of the principal drivers for the increases in primary mine production. In the Q1 Outlook, the main drivers are now limited to the final increases in production planned for Cigar Lake mine in Canada, which is expected to increase annual production to 18 million pounds U3O8 in 2017, and the Husab mine in Namibia, which is being built by a Chinese utility as a source of captive supply with first production factored in during 2017. For other projects to move forward to increase UxC's production forecasts, uranium prices will need to increase appreciably to support their higher cost production profiles and the significant capital expenditures that will be required.  
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