Paladin foresees uranium  supply crisis
Paladin chief executive John Borshoff. Picture: Michael O'Brien/ The West Australian

WA miner Paladin Energy insists uranium demand will bounce back by the end of the decade and the current malaise will lead to a supply crisis.

The effects of Japan's Fukushima nuclear disaster of 2011 were having more of a negative effect on supply than demand, Paladin insists in a uranium supply, demand and price study it has conducted.

The comments came as Australian-based Paladin released September quarters figures for its African mines showing production fell 5.8 per cent from the previous quarter to 1.929 million pounds.

The Fukushima nuclear disaster of 2011 sent the industry into freefall as heavy nuclear users, including Japan and Germany, shut nuclear reactors and sought alternative power sources.

The situation for the industry is still dire with prices recently hitting two-year lows.

However Australian Prime Minister Julia Gillard is currently in India and is expected to start negotiations on uranium sales there from the nation's uranium assets.

Paladin chief executive John Borshoff said demand by 2020 would be eight per cent lower than pre-Fukushima scenarios, but supply would be 25 per cent lower than was expected if the pre-accident uranium price trend had been maintained.

The current low pricing and a difficult financing environment was delaying new uranium projects, he said, with BHP Billiton recently shelving its plans to expand the Olympic Dam mine, the world's largest known uranium deposit.

"In summary, this market analysis confirms a supply industry in crisis in which production is unable to meet emerging requirements in the short to medium term," he said.

The global uranium market continues to be negatively affected by Japan, where only two reactors re-started in July while 48 remain idle awaiting government approval.

"The lack of nuclear electricity has imposed significant strain on the Japanese power utilities which reported financial losses totalling $US4.5 billion ($A4.41 billion) post-Fukushima and there is growing concern in the Japanese business community regarding the economic impact of higher electricity prices," Mr Borshoff said.

A planned 16-day annual maintenance shutdown at Paladin's Kayelekera mine contributed to the fall in production.

Sales for the quarter were 1.224 million pounds, generating revenue of $US61 million ($A59.76 million) representing an average sale price of $US49.83, compared to a $US48.85 spot price.

The lower sales numbers were due to the company building up inventory in preparation for new contracts and sales of more than two million pounds in the December quarter as the company tries to control costs following recent heavy financial losses.

The company's shares closed half a cent higher at $1.23, having plummeted nearly 80 per cent since Fukushima.

The West Australian

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