(Updates to add CEO’s comments in ninth paragraph.)
Jan. 31 (Bloomberg) -- Energy Resources of Australia Ltd., the uranium producer controlled by Rio Tinto Group, expects battered prices to start recovering in 2015 or 2016 on increasing demand in Japan and China.
“We wouldn’t necessarily see a substantial impact on the spot price in 2014,” Andrea Sutton, chief executive officer of the Darwin-based company, said today by phone. “It’s probably mid- to late this decade we believe we’d start to see supply and demand start to change.”
Prices have fallen 47 percent since the March 2011 earthquake and tsunami led to a meltdown at Tokyo Electric Power Co.’s Fukushima Dai-Ichi nuclear power plant. Japan, which has been without atomic power since September, may restart 10 reactors this year following safety reviews, setting up a possible uranium rebound.
Construction in China also is expected to boost the market, Sutton said. China, the biggest energy user, has 20 nuclear power reactors in operation and is building 28 more, according to the World Nuclear Association.
ERA rose 2 percent today to A$1.26 in Sydney trading, while the benchmark index was little changed.
Uranium will average $41 a pound this year, 15 percent more than yesterday’s price, a survey of five analysts earlier this month showed. It traded at $35.75 yesterday, according to data compiled by Bloomberg. The fuel, which traded as high as $152 in 2007, dropped to $34 in August, an eight-year low.
ERA shifted to the Ranger 3 Deeps underground project after the completion of open pit mining at its Ranger mine in Australia’s Northern Territory. That expansion project is on schedule and budget, with production expected to start in late 2015, ERA said yesterday in a statement.
An acid and ore spill last month at the Ranger mine near world heritage-listed Kakadu National Park forced the company to halt processing. The plant can’t resume until the uranium producer gets regulatory approval and separate investigations are completed by the government and the company, ERA said.
The company can’t comment on when the operations may restart at Ranger, Sutton said today.
--Editors: Keith Gosman, Andrew Hobbs