Analysts: China's Uranium Announcement Overblown

Analysts said Wednesday there was no "breakthrough" in China's uranium reprocessing capabilities, and there would be no impact on the market for the fuel.

"The bottom line is there was no breakthrough, there will be zero impact on Chinese demand for uranium," UxC Senior VP Mike Smith stated in an interview.

This came after China Central Television reported on Tuesday that technology developed by China National Nuclear Corp. could extend the country's uranium resources to last 3,000 years.

China Daily said the following day in a front-page headline that the move would solve the country's uranium shortage.

Dundee Securities analyst David Talbot was equally skeptical.

"We don't put a lot of credence into this spin about a Chinese breakthrough," he said.

Talbot pointed out that the uranium spot price actually rose after the announcement suggesting that "recent uranium buyers don't believe the Chinese reprocessing hype either."

Smith said China had been in negations with Areva regarding technology transfer, and there was speculation that the announcement of a technological "breakthrough" could be related to this.

"There has been speculation that negotiations [are] not going very well" and the government might be trying to pressurize Areva, he said.

According to Smith, China had been reprocessing uranium for 50 years—that's how the country made its nuclear weapons—and the announcement was regarding strides made on the commercialization of the technology, which the country was still "20 years away" from making it economically viable.

Talbot said: "We believe that this news should have no effect on the current supply demand situation - and if this technology is real, its implementation is unlikely for 10–15 years or more."

Fuel reprocessing was currently being used by Japan, UK, France and Russia and accounted for about 3% of world nuclear fuel supply.