Resources Policy 53 (2017) 394–407

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Resources Policy
journal homepage: www.elsevier.com/locate/resourpol

Long-term availability of global uranium resources MARK

a a,⁎ b
Antoine Monnet , Sophie Gabriel , Jacques Percebois
a
French Alternative Energies and Atomic Energy Commission, I-tésé, CEA/DAS, Université Paris Saclay, F-91191 Gif-sur-Yvette, France
b
Université Montpellier 1 – UFR d’Economie – CREDEN (Art-Dev UMR CNRS 5281), Avenue Raymond Dugrand, CS 79606, 34960 Montpellier, France

A BS T RAC T

Against a backdrop of decarbonisation in the energy sector and the increasing share of nuclear power in the
global power mix, availability of uranium resources presents a major challenge. Since it will be some time before
technologies of future nuclear reactors which remove the reliance on natural uranium are fully deployed, it is
relevant to analyse the availability conditions for uranium in the 21st century.
The first two conditions - technical accessibility and economic value - are associated with production cost. We
study these by modelling the ultimate uranium resources (including both identified and undiscovered resources)
and their cost. This method is based on a regional breakdown of global uranium resources, current known
deposits and an economic filter. It allows us to establish a long-term supply curve in which the quantities of
technically accessible uranium resources are represented as a function of production cost.
The other uranium availability conditions considered are associated with market dynamics, which created by
the relationship between supply and demand. These are modelled in the form of dynamic constraints in a partial
equilibrium market model. This is a deterministic model in which the market players are represented by
regions. It allows us to take account, for instance, of the short-term correlation between price and exploration
expenditure. In the longer term, the constraints modelled include anticipation of demand from electric utilities
(the consumers) and the increasing scarcity of the least costly ultimate resources.
Using a series of forward looking simulations, we demonstrate that the rate of growth in demand for uranium
in the 21st century and its anticipation have a major impact on the increase in price in the long-term.
Conversely, uncertainties related to the estimation of ultimate resources have a limited effect. Lastly, some
variations in supply (uranium production shutdown in a particular region, for example) or demand (irregular
increase) also have a significant impact on long-term price trends or cycles.

1. Introduction
Determining the supply of natural uranium is a high priority for the
future of nuclear energy, in terms of competitiveness and sustain-
ability. Current generation of light water reactors (LWRs) benefits from
a significant competitive advantage over other centralised sources of
electricity production in that their fuel represents a small percentage of
their overall cost. In the future, if uranium resources become scarcer
and their price rises sharply, this advantage may be lost, thus
compromising the competitiveness of nuclear power over other cen-
tralised electricity production sources, or even compared with nuclear
technologies having a lower consumption rate of natural uranium. The
study of uranium availability conditions in the 21st century has been
the subject of a 3-years research programme (Monnet, 2016) which is
summarised in this article.
For the basis of this analysis, we first developed a model for
estimating the "ultimate resources" of uranium (see Section 2).
This model was used to quantify the technically accessible uranium
resources on a regional and worldwide scale and to estimate their
associated production costs. The result is represented by a long-term
cumulative supply curve (LTCS).
In order to be able to develop a market model, we then identified
the dynamic constraints impacting the long-term supply of uranium
(see Section 3). These constraints have a direct impact on either
exploration or production. Analysis of annual exploration activity and
the associated discovery costs allowed us to introduce two key relation-
ships which were subsequently used in the market model developed.
Two original uses of the R/P (reserves-to-production) ratio are also
introduced to model the constraints associated with anticipation of
demand and security of supply.
The study of the balance between supply and demand over time has
helped to develop a uranium market model by considering that the
long-term dynamic is a succession of short-term (annual) equilibria
(see Section 4). This involves a deterministic economic model, in

⁎
Corresponding author.
E-mail address: sophie.gabriel@cea.fr (S. Gabriel).

http://dx.doi.org/10.1016/j.resourpol.2017.07.008
Received 14 March 2017; Received in revised form 31 May 2017; Accepted 27 July 2017
Available online 29 August 2017
0301-4207/ © 2017 Elsevier Ltd. All rights reserved.
A. Monnet et al.
Fig. 1. Cumulative global uranium consumption scenarios (Baschwitz et al., 2009).
partial equilibrium given that it only takes account of the uranium
market.
This is the market model that was ultimately used for the forward
looking simulations based on exogenous demand scenarios (see
Section 5).
Our analysis was not based on modelling demand scenarios as this
involved too many underlying assumptions, hence we adopted a
literature review based approach (IIASA et al., 1998). Two demand
scenarios were subsequently selected: scenario A3, representing high
global demand for nuclear power (5,400 GWe installed capacity in
2100) with a consequently high demand for natural uranium (810 ktU/
year); and scenario C2, representing moderate demand (2,100 GWe
in 2100 and 340 ktU/year). No scenarios representing low growth or a
reduction in the world's nuclear fleet were considered based on their
limited relevance to the study (the availability of uranium resources is
not a constraint in either of these scenarios).
2. Modelling ultimate resources
Several bivariate and multivariate statistical models can be found in
the literature to estimate the abundance and production costs asso-
ciated with a non-ferrous metal such as uranium. The statistical models
give an economic assessment at deposit level then provide a sum of all
the deposit resources. One advantage of this approach is that models
can be specific to each geological environment. Among the models
reviewed in the literature, three have been applied to uranium. They
were developed by Chavez-Martinez (1982), Harris (1977, 1984, 1988),
Drew (1977) and Brinck, (1967, 1971), De Wolde et al. (1971) at the
end of the 1970s, early 1980s. None of them were used to establish a
complete long-term cumulative supply (LTCS) curve of world re-
sources, however; they were essentially used to estimate potential
reserves (undiscovered resources which could be produced at a lower
cost than the market price at the time the studies were conducted) (in
the case of Drew and Brinck) or to estimate the ultimate resources in
different cost categories, but within a specific region of the world (in the
case of Drew and Harris).
In addition to these models, a more advanced method, called
Quantitative Mineral Resource Assessments, has been developed by
the United States Geological Survey (USGS) and applies to all non-
ferrous metals (Singer, 2007). One additional purpose of this method is
to locate undiscovered resources: within a geological environment,
subregions are delimited and data from the Geographic Information
System (GIS), available in well-explored subregions, are analysed to
find similarities with unexplored or less well known subregions.
This aspect of locating undiscovered resources is not included in
our approach and our model has been inspired more by the work of
Harris and Drew than the more recent studies by the USGS.
Our methodology allows for an estimation of ultimate uranium
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Resources Policy 53 (2017) 394–407
resources based on a lognormal distribution of the grade and tonnage
of deposits, on the use of an economic filter and on cost functions
which take account of economies of scale and the type of mining
involved. By calibrating these distributions and cost functions differ-
ently, our model takes greater account of the data available, as well as
the specific economic and geological characteristics of each region.
2.1. Statistical approach based on geological environments
2.1.1. Crustal abundance model
The geological abundance (q), or crustal abundance, of known and
undiscovered resources in a given environment can be defined on the
basis of the total quantity of metal present in the geological environ-
ment in question (q0) and a probability density function of grade and
tonnage f(g,t) as follows:
q = q0 ∬ f (g, t )dgdt (1)
q0 is estimated from the mass of rock M in the geological environment
and the mean grade of the crust clarke (q0 = M × clarke). Note that q0
does not include any consideration of economic value or recovery rate.
The numerical method used to determine the parameters of the
statistical distribution of grade and tonnage f(g,t) is inspired by the
work of Drew. It uses a cost-grade-tonnage relationship as an economic
filter (see below). The form of this relationship is inspired by the work
of Drew and Harris, however its calibration is a separate procedure and
the cost limit used in the filter is specific to our study. To model the
costs for all deposits (known and undiscovered), our study proposes a
method which is more representative of the industrial reality than that
used by Drew and Harris. The numerical procedure used to calculate
the cumulative resources at less than a given cost is also specific to this
study.
It is worth mentioning here that our model is based on the
assumption that uranium is the primary product, i.e. that it incurs all
the investment and production costs associated with mineral extraction.
2.1.1.1. Lognormal distribution of grade and tonnage. It is common,
although sometimes criticised, to assume that f follows a bivariate
lognormal distribution (Harris, 1977) which results in the
mathematical form of f described by Eq. (2), where grade g and
tonnage t are assumed to be independent variables.
⎛ ⎛ ⎞2 ⎞
⎜ (lng − μx )2 ⎜lnt − μy ⎟ ⎟
⎝ ⎠
exp⎜ − − ⎟
2σx2 2σy2
⎜ ⎟
⎝ ⎠
f (g , t ) =
2πgtσxσy (2)
µx, σx2and µy, σy are the means and variances of x = ln(g) and y =
2
ln(t) respectively.
In a given geological environment, the statistics for g and t, taken
from known deposits, can be used to determine the statistical
distribution of grade and tonnage. Unfortunately, deposits are not
sampled randomly. On the contrary, the richest deposits (high grade,
high tonnage) tend to attract economic interest first.
2.1.1.2. Economic filter. To correct the sampling bias that affects
known deposits (Harris, 1984), the idea is to model an economic
filter. This filter is a function which truncates the probability density
function of deposits and separates them into observable and non-
observable deposits, according to whether they are above or below a
given cost limit.
With this filter, the empirical data available corresponds mainly to
observable deposits (known deposits may nevertheless be subeconomic
due to the partially random exploration characteristic). Because of
truncation, the grade and tonnage of observable deposits no longer
A. Monnet et al. Resources Policy 53 (2017) 394–407

follow a lognormal distribution. Instead, they follow a truncated costs) (see (CRU International.) for example). This is the premise on
lognormal distribution, whereby the truncation limits (glim and tlim) which pre-feasibility studies estimate the costs by extrapolating costs
are associated with a cost limit through a cost-grade-tonnage relation- from mines or recent projects2 in proportion to production capacities
ship which characterises the economic filter and which is defined later. and according to exponential relationships (Wellmer et al., 2008).
When glim and tlim are known, the probability density functions for Given that the cost-grade-tonnage relationship explained
truncated distributions have an explicit form which can be related to above does not take account of an optimum processing capacity, a
that of non-truncated distributions (Harris, 1984). (The mathematical separate cost relationship is introduced to estimate the LTCS curve
expressions are given in the Appendix.) in the next step in our model, which provides a more realistic cost
estimate for the industry. The costs of deposits (known or undiscov-
2.1.2. Cost-grade-tonnage relationship ered) are then estimated based on their optimum ore processing
It is assumed that the production cost of a deposit depends on the capacity Kmill (Taylor's rule (Taylor, 1986)) and an exponential cost-
grade and tonnage of its mineral as shown below (Eq. 3): capacity relationship calibrated on the basis of data from recent
mining projects in the same way as for the cost-grade-tonnage
⎛ g ⎞ βg ⎛ t ⎞ βt
c(g , t ) = c0⎜⎜ ⎟⎟ ⎜ ⎟ relationship.
⎝ g0 ⎠ ⎝ t0 ⎠ (3) Kmill (t ) = 0.0143 × t 0.75(in tonnes of ore /year ) (8)
This cost-grade-tonnage relationship can also be written
⎧ ⎛ ⎞ βcc ⎧ ⎛ ⎞ βop
according to Eq. (4), where x = ln(g), y = ln(t), and A is a constant. ⎪ CC (t ) = CC × ⎜ Kmill(t ) ⎟ ⎪ OP(t ) = OP × ⎜ Kmill(t ) ⎟
ln(c(g , t )) − A = βgx + βy ⎨ 0
⎝ Kmill ⎠
0
and ⎨ 0
⎝ Kmill ⎠
0
t (4) ⎪ ⎪
⎪
⎩ ln( CC ) = β × ln( K ) + B ⎩ ln( OP ) = β × ln( Kmill ) + Bop
cc mill cc op (9)
Our model uses this relationship to define the economic filter
required to determine the unbiased function f(g,t).
2.1.4. Plotting the LTCS curve (cumulated resources for each cost
2.1.2.1. Calibration of the cost-grade-tonnage relationship. For a category)
given deposit, the full cost is defined based on investment (capital) The cumulated resources available below a certain production cost,
costs CC, operating costs OP,1 processing capacity Kmill, lifetime LT ( = C1, are calculated using the following intermediate calculations: the
t/Kmill), development time DT and the discount rate a (Eq. 5). numerical calculation of N, the total number of deposits in the
0 LT (t ) environment (total mass of rock M divided by the mean tonnage of
CC (Kmill ) Kmill × OP(Kmill )
Ctot (g , t ) = ∑ + ∑ all deposits), and m(C1), the mean metal content of deposits which are
i =−DT (DT +1)(1+a )i i =1 (1+a )i (5) "cheaper than C1". Eq. (10) and Eq. (11) give the analytical expression
Ctot can be calculated on the basis of data from operating mines or of N and m(C1) in terms of their mathematical expectation.
recent projects, the costs of which are known and available in a public M
N= ∞
database (WISE, 2015).
The parameters βg, βt and the constant A in Eq. (4) are then ∬ tf (g, t )dgdt
0 (10)
obtained through optimisation so that c(g,t) is as close as possible to
LT (t )
Ctot (g, t )/(gt ∑i =1 (1+a )−i ).
m(C1) = ∫ ∫c(g,t )≤C gtf (g, t )dgdt
1 (11)
2.1.2.2. Use of the cost-grade-tonnage relationship. Once calibrated,
Finally, the LTCS curve is created by plotting the function C1 → N ×
the cost-grade-tonnage relationship is used for the economic filter. In
P(C1) × m(C1).
practice, this involves fixing a unit limit cost Clim equal to the current
long-term price of uranium, which corresponds to the cost limit above
which deposits are too costly and non-observable, and then 2.2. Applying the model
determining the grade and tonnage limits glim and tlim below which
deposits are not observed based on the following expressions: 2.2.1. Regional breakdown
The regional breakdown used to estimate ultimate resources
⎛ ⎞ consists of 6 subregions: USA, Canada, Africa, Australia,
glim = exp⎜(ln(C )−A − βt ln (t ))/ β ⎟
⎝ g⎠
(6) Kazakhstan and the rest of the world. These regions were selected
on the basis of the following criteria:
⎛⎛ ⎞ ⎞
tlim = exp⎜⎜⎜ln(C ) − A − βg ln (g)⎟ / β ⎟⎟
⎝ ⎝ ⎠ t⎠ (7) ● Representativeness: the top 5 subregions account for almost 85% of
world production and close to 80% of reasonably assured resources
(RAR) at < USD 130/kgU in 2013 (OECD NEA, 2014).
2.1.3. Cost-capacity relationship ● Availability of data on known deposits and recent mining projects.
When the resources of a deposit are estimated, the lifetime, or the ● Minimal variability in the types of deposit encountered and a certain
equivalent production capacity, is one of the first parameters selected degree of standardisation of mining regulations within the regions to
by industry players when scaling a mining project. It is an economic ensure relative consistency when estimating the costs of ultimate
choice which comes into play very early on in a project and which calls resources.
upon empirical rules, such as Taylor's rule (Taylor, 1986), to
determine the optimum production level for a mine in order to achieve The cost calculation method (cost-capacity relationship) was used
economies of scale (Queen'’s University, 2015; Taylor, 1986; Wellmer for each subregion, taking account of the specific regional character-
et al., 2008). The recent project benchmarks provide evidence of a istics in terms of mining techniques. Hence, for Africa, which is
correlation between production capacity and investment costs (mainly specialised in open pit mining, we decided to use extraction capacity
fixed costs) or, to a lesser extent, operating costs (fixed and variable
2
The greater the similarity between the benchmark mines and the project studied
1
Operating costs are expressed here in units of mineral processed and not in units of (same techniques involved, similar grades, same mineralogy, same legislative and
uranium produced. environmental constraints, etc.), the more relevant the extrapolation.

396
A. Monnet et al. Resources Policy 53 (2017) 394–407

Table 1
Summary of regional estimates of ultimate resources.

Region RUM model (MtU) 2013 Red Book (RAR+IR+PR+SR) (MtU) 2013 Red Book (RAR+IR) (MtU)

< 80 < 130 < 260 < 80 < 130 < 260 < 80 < 130 < 260
USD/kgU USD/kgU USD/kgU USD/kgU USD/kgU USD/kgU USD/kgU USD/kgU USD/kgU

USAa 0.37 0.97 3.56 0.88 2.34 2.60 0.039 0.21 0.47
Canada 0.91 1.53 2.75 0.47 1.34 1.50 0.42 0.49 0.65
Africa 4.61 10.49 31.22 0.28 1.53 1.91 0.24 1.38 1.60
Australia a 3.59 7.25 18.72 NA NA NA 1.35 1.66 1.74
Kazakhstan 3.53 5.71 11.09 0.73 1.35 1.58 0.52 0.68 0.88
Rest of World 0.76 1.64 4.70 1.10 3.63 5.07 0.74 1.44 2.23
Totalb 13.8 27.6 72.0 2.62 9.77 12.23 1.96 5.90 7.64

a
Data from 2011 Red Book (2013 data incomplete)

Red Book do not, by definition, include any undiscovered or already-

mined resources, whereas these are included in our estimate of
ultimate resources. In addition, the 2013 edition of the Red Book
aggregates data from 52 countries, which only represents 75% of the
world's total surface area. Lastly, the methodology used to obtain the
prognosticated and speculative resources (PR+SR) in the Red Book is
not known and can potentially vary from one country to another.
It is important to remember that the model developed only
considers resources from the earth's continental crust and that
uranium is considered to be a primary product. Hence, uranium
resources dissolved in seawater are not taken into account.

2.2.4. Robustness and sensitivity of the model

Fig. 2. Summary of regional estimates of ultimate resources.
Kext (in tonnes of rock per year3) as the key first-order parameter
(instead of processing capacity Kmill), for both investment and operat-
ing costs. Similarly, for very high grade Canadian deposits ( > 1%U), we
chose to use mineral processing capacity Kmill expressed in tonnes of
uranium produced per year.
2.2.2. Input data selection
The UDEPO database (IAEA, 2013) details a total of 1,526 geological
deposits, 1,417 of which were used for the purposes of our study (329 in
the USA, 136 in Canada, 180 in Africa, 111 in Australia, 68 in Kazakhstan
and 594 in the rest of the world). Deposits with incomplete basic data and
those corresponding to regional estimates of resources rather than
individual deposit estimates, as well as those for which uranium was
clearly not the element of economic interest, were all excluded.
A total of 54 projects from the WISE database (WISE, 2015) were
used (12 in USA, 9 in Canada, 14 in Africa, 6 in Australia, 7 in
Kazakhstan and 6 in the rest of the world). Mining projects with
incomplete or inconsistent data were disregarded.
As in any statistical study, representativeness of the study popula-
tion (i.e. the deposits in our case) is key to determining the validity of
results. As far as possible, atypical or abnormal data were excluded, but
due to the lack of sufficient data to date, it has not been possible to
quantify the influence of the number of available data (economic or
geological). Moreover, sensitivity analysis showed significant uncer-
tainties on the ultimate resource estimate. The most sensitive para-
meters include the discount rate, the depth of the earth's crust
considered and the price of uranium representative of current econom-
ic conditions.
For the remainder of the study, so as to take account of all these
uncertainties, we use two estimates of global ultimate resources at <
USD 260/kgU: one at 72 MtU (Table 1) and the other, lower estimate,
at 36 MtU.
3. Dynamic constraints on uranium supplies
Analysis of exploration activity and associated discovery costs allow
the introduction of two key relationships (see Sections 3.1 and 3.2),
subsequently used in the market model developed.
Two original uses of the R/P (reserves-to-production) ratio are also
introduced to model constraints associated with anticipation of de-
mand and security of supply (see Section 3.3).
3.1. Market prices and exploration expenditure

Like many other mineral raw materials, uranium shows a clear

2.2.3. Results
correlation between its spot price and exploration expenditure (see
Application of our model, called the regional uranium model
Fig. 3). Price rises have systematically been followed by an increase in
(RUM), gave the ultimate resource estimates for each region sum-
exploration expenditure and, conversely, price drops have resulted in
marised in Table 1 and illustrated in Fig. 2. The results obtained in
cuts in exploration expenditure.
each region were compared with estimates from the NEA-IAEA
There are, however, a few irregularities. In the early 1970s,
published in the "Red Book" (OECD NEA, 2014). This comparison
exploration expenditure rose before prices. The latter half of the
does have its limitations, however, bearing in mind that the resources
1980s saw a surge in exploration expenditure while the price fell, then
(reasonably assured and inferred resources (RAR+IR)) identified in the
expenditure fell sharply at the beginning of the 1990s while the price
remained stable. Expenditure has stabilised since 2007 whereas the
3
Including ore and tailings price has fallen considerably.

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A. Monnet et al. Resources Policy 53 (2017) 394–407

Table 2
Results of the estimated discovery cost-cumulative exploration expenditure correlations.

Coeff Std err t-stat P > |t| R2

World a 9.5 × 10-8 6.8 × 10-8 14.0 ***

0.81
***
b 0.58 0.08 7.2
USA a 1.3 × 10-6 4.4 × 10-8 30.1 ***
0.95
**
b 0.07 0.10 0.7
Canada a 9.0 × 10-7 2.4 × 10-8 37.4 ***
0.97
***
b 0.35 0.05 7.0
Australia a 3.2 × 10-7 2.4 × 10-8 13.3 ***
0.80
***
b 0.30 0.015 20.3
Africa a 5.1 × 10-7 2.2 × 10-8 23.1 ***
0.93
***
b 0.12 0.02 6.8
Kazakhstan a 1.0 × 10-6 3.2 × 10-8 32.5 ***
0.98
b 0.01 0.007 1.5
Rest of world a −1.1 × 10-7 3.81 × 10-8 −2.8 ***
0.14
***
b 5.0 0.25 19.8
Fig. 3. Uranium spot price (yearly average of month-end prices) and exploration
expenditure (1940–2013). * p < .1,
**
p < .05,
***
p < .01
There are several possible explanations for these irregularities. An
overestimation of exploration expenditure at the beginning of the
1970s is linked to declarations from countries which had previously
not reported exploration expenditure. Additionally, during the Cold
War, uranium exchange markets were separate between the two blocs.
Before 1991, the price indicator in Fig. 3 is therefore not representative
of the exchange market as a whole. Exploration expenditure in the
Soviet Union was the cause of irregularities observed at the end of the
1980s, early 1990s. Finally, the combination of several elements may
explain the most marked irregularity: the continuous rise in worldwide
exploration expenditure since 2007. Firstly, exploration expenditures
incorporate not only prospecting costs but also some development
expenditures, the share of which has soared from 28% in 2007 to 81%
in 2013 in the overall exploration expenditures. Secondly, China has
been implementing a proactive policy by intensifying its exploration
programmes on the Chinese territory in spite of the price drop in 2007.
The historical data presented in Fig. 34 led to the definition of the
following correlation relationship, with a spot price p and exploration
expenditure EXPLO:

log(EXPLO(t )) = 1.15 × log(p(t − 1)) + 8.37(R 2 = 0.76) Fig. 4. Correlation between discovery cost and cumulative exploration expenditure.
(0.10) (0.38) (12)

Additional tests have allowed us to validate the underlying exogen-

ous price assumption in the form of this relationship, and therefore to
use this linear regression subsequently to predict future exploration
expenditure based on simulated long-term prices. We also checked that
the series were not cointegrated. In other words, the short-term
relationship in Eq. (12) can be used in the long-term without fear of
destabilisation by other feedback or second-order balances.

3.2. Discovery cost and cumulative exploration expenditure

In accordance with the NEA/IAEA definition (OECD NEA, 2006),

we consider the "discovery cost" at a given time as the ratio between
cumulative exploration expenditure and all identified resources at <
USD 260/kgU, to which past production is then added.
Intuitively, as a territory is explored, one expects to encounter
increasing difficulty in identifying new resources and thus to see this
reflected in a rise in the discovery cost. The Red Book (OECD NEA,
2014) gives an estimate of this cost per region for 2003 (OECD NEA,
2006). We have extended these estimates over the period 1965 to 2013 Fig. 5. Fluctuations in discovery cost from 1965 to 2013 (observations and simulations).
based on data from the Red Book and studied the correlation between
discovery cost (DISC_COST) and cumulative exploration expenditure
4
(CUM_EXPLO) per region. For each region i, the estimated relation-
The price history from 1968 to 2013 is the yearly average of month-end prices (data
from the Red Book pre-1996 (OECD NEA, 2006) and Cameco post-1996 (Cameco, ship is given by Eq. (13) (Table 2) (Figs. 4 and 5).
2016)). The historical exploration expenditure data is taken from the Red Book and and DISC _COSTi (t ) = a × CUM _EXPLOi(t ) + b (13)
its retrospective (OECD NEA, 2006; OECD NEA, 2014).

398
A. Monnet et al.
There is a strong correlation in all the regions studied (R2 > 0.9
except in Australia where R2 = 0.8). On a global level, the correlation is
significant, but less marked (R2 = 0.8). Correlation is weak in the rest of
the world region (R2 = 0.14 with a slight fall in discovery cost as
exploration continues, which is explained by incomplete historical
data) such that it is preferable to apply the relationship established for
the whole world in this region.
3.3. Security of supply and anticipation of demand
The reserves-to-production ratio, normally written as R/P, is an
indicator of availability of a non-renewable resource used primarily in
the oil and gas industry (British Petroleum, 2015). Its simplest and
most widely used interpretation states that at a rate of production P,
the industry can continue to produce the resource for R/P years living
on the reserves R already identified. This interpretation is often
criticised, though, as it can lead to false prospective analyses. In fact,
it ignores two essential aspects for the long-term availability of the
resource: production fluctuations on the one hand (there is no
guarantee that production will remain constant in the long-term if it
follows demand), and the discovery of new resources on the other.
We propose instead two original interpretations of the R/P ratio.
On a global level, R/P is a simple indicator of scarcity, which can
represent a constraint associated with the anticipation of world
demand (see section 0). On a regional level, this ratio can be
interpreted further as the result of a producer's technical, budgetary
and financial constraints or a regional strategy (see section 0).
3.3.1. World R/P ratio: Anticipation of demand and the need for
visibility by electric utilities
To interpret the R/P ratio on a global level, it is assumed that the
long-term annual production P equals annual demand D.
Mining producers are more sensitive to expected demand, sometimes
even decades ahead, whereas consumers, who are essentially electric
utilities, are more sensitive to supply. The construction of new reactors
sends a strong signal to the mining industry about future demand and
thus about the production capacity needs. Although demand is exogenous
in our market modelling (see Section 4), it is important to understand the
signals that consumers send to the market to stimulate the production
process. We are therefore interested in their supply strategies.
Electric utilities secure their supply in the short-term by using
strategic stocks of several years and in the longer term through
contracts negotiated with producers. Some utilities also seek to secure
their supply into the even longer term by investing directly in mining
projects, sometimes as soon as construction of a new plant is under
way. This need for supply security is reflected in a need for visibility on
mining resources and is explained by the capital intensity of reactors
and their long lifetime.
In a hypothetical situation where an extreme increase in demand
pushes the R/P ratio close to 0, the risk of a supply shortage should be
considered. Conversely, in a situation of rising demand, a stable R/P
ratio that exceeds several decades is a sign of managed risk. In practice,
it is less likely that shortages will arise unexpectedly, particularly given
that nuclear reactors have a very predictable fuel consumption.
These considerations mean that the world R/P ratio can be
interpreted as a macro-economic indicator of the scarcity of a resource
as it is perceived at a given moment. Historically, this indicator has
never fallen below 60 years, hence we have used this value as the
default lower value in our model.
3.3.2. Regional R/P ratio: economic constraints of producers and
policy decisions of individual states
On a regional level or for a producer, P represents a production
capacity rather than the exogenous global demand or even local demand.
A producer's R/P ratio is constrained by a minimum production value
for self-funding their exploration activity, as well as by a minimum value
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Resources Policy 53 (2017) 394–407
of reserves associated with the financial guarantees they must have in
order to continue to develop their production facilities.
The political choices made by individual governments can also
affect the value of the regional R/P ratio. The R/P ratio of a private
producer or a producing region nevertheless remains very closely
linked to the world market given that, on the one hand, production P
contributes to supply which balances world demand, and, on the other,
market price stimulates world exploration expenditure which leads to
the discovery of resources R at a local level.
We have therefore adopted a minimum R/P ratio value of 10 years
in our model.
3.3.3. Modelling and scarcity rent
In our model, demand is exogenous and entirely satisfied by mining
production; applying a constraint to the R/P ratio means that the level
of identified resources R is constrained. Thus, at a time t, the expected
year-to-year R/P ratio is given by Eq. (14), where RES_LTCS(t) is the
discovered resources.
EXPLO(t ) EXPLO(t +1)
RES _LTCS (t −1) + DISC _COST (t )
− D (t ) + DISC _COST (t +1)
R / P(t +1) =
D(t +1)
≥ R / Pmin (14)
Exploration in year t+1 (EXPLO(t+1)) depends on the price at time
t, p(t). If the constraint in Eq. (14) is not verified, i.e. that the perceived
scarcity of the resource exceeds its critical value, a retroactive increase
of the price is applied until the additional exploration expenditure
EXPLO(t+1) is sufficient to satisfy this constraint. This type of
modelling introduces the notion of scarcity rent: we do not apply a
constant growth rate to rent as expounded in Hotelling's rule, rather we
use the minimum increase required to maintain supply security
(represented by the world R/P ratio) at its minimum value.
4. Models of the uranium market
Based on the supply constraints described earlier, which may be
short-term (such as the causal link between price and exploration
expenditure) or longer term (such as anticipation of demand), we will
study the long-term availability of uranium using a succession of short
or medium-term economic balances.
The proposed model is a partial equilibrium economic model, i.e.
restricted to a single market as it does not take account of forces
outside the uranium market such as the markets for other commod-
ities, in other sectors of the economy (inflation, discount rate and other
macro-economic factors), or even in the non-economic context.
To introduce this model gradually, we present 3 separate market
mechanisms, gradually incorporating these constraints:
● M1: perfect competition model, which does not incorporate any
dynamic constraints applying to supply (see Section 4.1).
● M2: model incorporating exploration constraints which create short
or medium-term economic balances (see Section 4.2).
● M3: model incorporating dynamic constraints enabling the long-
term supply-demand balance to be studied using a succession of
short and medium-term balances (see Section 4.3).
The M3 model, which is the most comprehensive, and which we
believe to be the most relevant, is subjected to a sensitivity analysis to
measure the influence of each parameter. The three mechanisms are
then compared (see Section 4.4).
4.1. M1: Perfect competition with no constraints
The first mechanism (M1) does not incorporate any constraint. All
the ultimate resources are assumed to have been identified and fully
available from the outset (no constraints on the production capacities).
A. Monnet et al. Resources Policy 53 (2017) 394–407

Fig. 6. M1: Price trends (A3 and C2 72 MtU). Fig. 7. M2: Price trends (A3 and C2 72 MtU).

Simulation with scenario C2 leads to a gradual increase in prices,

This mechanism does not take any mining rent into consideration and
reaching similar prices to those of the M1 mechanism around 2100:
the market players are not modelled individually.
USD 130/kgU. It therefore seems that introducing the exploration
The M1 mechanism corresponds to perfect competition with no
funding constraint has little effect on price trends: the price influences
constraint. The number of producers is unspecified, but assumed to be
the amount of exploration expenditure, but exploration does not have
large for there to be competitive conditions. The initial supply curve
any direct reciprocal effect on the price.
LTSC(t0) is global (sum of the regional supply curves) and all these
However, it can be seen that the simulation in scenario A3 stops in
resources are assumed to be known to the producers. In this mechan-
2075 due to a shortage: the R/P ratio cancels itself out. The detailed
ism, the producers’ profits are moving towards zero and production is
calculations also show that even though it does not cancel itself out in
carried out by increasing cost. Every year, the price is set at the
scenario C2, the R/P ratio constantly deteriorates, falling from 130
marginal cost of production (cost of the most expensive category of
years in 2013 to 10 years around 2100, which raises concerns of a
LTSC(t0) sought to meet the demand). For a given demand scenario,
shortage around that time. The exploration constraints thus affect the
the price at year t is obtained by simply copying the cumulative demand
t security of supply.
between t0 and t, ∑t D(t ), onto the LTSC(t0) curve. Fig. 6 shows the
0 These results are somewhat unrealistic: on the one hand, it is
price trends obtained for demand scenarios A3 and C2.
unlikely that the shortage identified in scenario A3 will occur without
Irrespective of the increasing demand scenario, this market model
having been anticipated; and on the other hand, it is unlikely that the
predicts a slow, gradual increase in the price of uranium in the 21st
prices will remain at such low levels in the long-term in scenario C2
century.
when the R/P ratio is so low (with such low margins for security of
However this model is somewhat unrealistic as the remaining
supply, a scarcity rent is likely to appear on the market, which is not
ultimate resources are assumed to have been identified right from
taken into account in the M2 mechanism).
the outset, i.e. it seems as if the exploration budget is unlimited,
The results obtained with the M2 mechanism demonstrate the need
whereas it is spread over time and related to the global price. In
to take the exploration constraints into account, which the M1
practice, the exploration budget is also limited by the producers’ own
mechanism does not do. In fact, these constraints reveal a shortage
capital. Self-funding of exploration is all the more important as in a
when there is strongly growing demand (scenario A3). They also show
situation of strong competition between producers the low profit level
that the simulated dynamics are unlikely in the absence of anticipation
limits profits and thus the cash reserves available to carry out
of demand (R/Pmin constraint); in the past the R/P ratio only fell below
exploration. It is also more difficult to utilise private funds as the
the 60-year threshold in exceptional circumstances in the 1980s. It is
expected dividends are as limited as the profits. The constraints
therefore unlikely that it will fall to such low levels during the 21st
associated with the exploration activity are thus particularly important
century. Finally the M2 mechanism is questionable because it assumes
when modelling a competitive market. The M1 mechanism can there-
that the competition on the uranium market is perfect, which is not the
fore be improved by no longer disregarding strong dynamic constraints
case, as shown by the current concentration of the uranium market
such as funding of exploration or increased prospecting costs.
(Monnet, 2014). We therefore propose to model the market in the form
of an oligopoly (with no collusion), taking into account both the
4.2. M2: Perfect competition with exploration constraints exploration constraints (Eq. (12) and Eq. (13)) and an anticipation of
demand constraint (Eq. 14).
The second mechanism (M2) is identical to the first, the only
difference being that the exploration activity is endogenous. The initial 4.3. M3: Oligopoly with dynamic constraints
known resources are limited to the identified resources published by the
NEA-IAEA in the Red Book (OECD NEA, 2014). The resources identified The M3 mechanism currently assumes that the uranium supply is
are fully available with no production capacity constraints. The con- not global, but regional. In line with the ultimate resources model,
straints on the funding of exploration establish the resources discovered supply has been divided into 6 regions for modelling: United States,
each year, but no constraints are applied with regard to anticipation of Canada, Kazakhstan, Australia, Africa and the rest of the world.
demand. Production (respectively the resources discovered) is still For each region, i, the model takes account of three supply curves:
carried out by increasing cost from among known resources (respectively
those remaining to be discovered). The effect of the exploration ● The ultimate resources supply curve, which is the result of the
constraints on the price is thus evaluated in the case of a competitive estimate made with the RUM model (see Table 1 and Fig. 2).
market. Demand scenarios A3 and C2 are compared in Fig. 7. ● The supply curve for the ultimate resources remaining at a given

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time t, which represents the discovered and undiscovered resources,

while the resources that have already been mined (assumed to be
less expensive) have been removed.
● The supply curve for the resources identified at a given time t.
Initially, this curve corresponds to the RAR (Reasonably Assured
Resources) and IR (Inferred Resources) published in the Red Book
and in order of increasing costs.

Each region has its own discovery cost, whereas the exploration
expenditure and anticipation of demand constraints are global. The
global exploration expenditure is deducted from Eq. (12) then dis-
tributed by default in each region in proportion to their profits. Each
region “defends” its market share: if demand increases at t, each
region's production increases in proportion to its market share at t-1. If
a region is short of resources (regional R/P ratio reaching its threshold
value R/Pmin, loc) and therefore unable to maintain its market share, the
regional production is limited by the local constraint and the residual
demand is distributed across the remaining regions. In each region,
production (respectively exploration) is carried out by increasing cost
from among the known resources (respectively in proportion to the
remaining ultimate resources for which the cost is lower than the global
marginal production cost). At all times, the price is set at the global
marginal cost, i.e. the highest marginal cost from among the regions
that are producing, which introduces a differential rent. If the
critical level for security of supply (R/P = R/Pmin) is reached globally,
a scarcity rent is added to the global marginal cost to establish the
price.
The market is modelled as an oligopoly of 6 regions with explora-
tion and anticipation constraints (the market players are combined and
modelled together in these regions), but no rent other than the scarcity
rent or the differential rents is included in the market price to represent
a possible dominant position of any one player. The term oligopoly is
thus used in the literal sense (a small number of producers) without
assuming any collusion between the players (we are not planning to
model a cartel).
The proposed model removes the main limits we outlined in the
previous section:
● Ultimate resources (which includes undiscovered resources) are
taken into account and exploration activity is endogenous.
● Dynamic constraints are applied to the production capacities.
● Resource rents (scarcity rent or differential rents) are introduced
and calculated explicitly in the model.
● The market players are modelled at regional level.
Fig. 8 and Fig. 9 show the price and resource rent trends for
demand scenarios A3 and C2.
Fig. 9. M3: Resource rent trends (A3 and C2 72 MtU).
Two marked trends can be seen in prices for scenario A3: the price
remains fairly stable in the short and medium term (around the 2013
levels), then increases significantly after 2035 (Fig. 8). In fact, this
change occurs when the global R/P ratio reaches its 60-year threshold.
In this situation, the M3 mechanism introduces an increasing scarcity
rent to keep the R/P ratio at its minimum level (Fig. 9). It can be seen
by comparing the two types of rent that the scarcity rent appears and
becomes dominant at that moment. Previously, there were only
differential rents. Over the period of the scenario, the growth rate of
the differential rents is lower than that of the scarcity rent.
For scenario C2, the R/P ratio reaches its threshold later and the
price increase is lower.
The following sections cover the sensitivity analysis carried out in
order to gain a better understanding of the influence of certain
parameters and the effect of regionalisation of the players.
4.3.1. Anticipation of demand constraint
The global R/P > R/Pmin constraint conveys some anticipation of
demand by the market and a need for visibility on the availability of
uranium for consumers. By default, R/Pmin = 60 years has been
retained as the most likely assumption.
Fig. 10 shows the long-term price dynamics obtained with the M3
mechanism for scenario A3 – 72 MtU. Different price trends can be
seen according to the level of anticipation of demand.
● If there is no anticipation (no R/Pmin constraint), the shortage
already observed with the M2 mechanism occurs again, but is
delayed (2100 as against 2080 with M2). The slower decrease in

Fig. 8. M3: Price trends (A3 and C2 72 MtU). Fig. 10. M3: Effect of the anticipation of demand constraint (A3 72 MtU).

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the R/P ratio indicates that exploration is stimulated more and

therefore that the prices are higher with M3 than with M2: the
oligopolistic structure of the market generates profits and thus
higher short and medium-term prices than a perfect competition
structure.
● In the case of the reference constraint level (R/Pmin = 60 years), a
shortage is never reached, but the critical R/P level is reached in
2035. It can be seen that the price then increases quickly up to the
end of the 21st century.
● The same process is observed with a lower anticipation constraint
(R/Pmin = 20 years), but the critical R/P level is reached later
(around 2075) and the price increase up to the end of the century is
less marked.

4.3.2. Regional production constraint

At regional level, the need to provide financial guarantees and the
preference for the present constrain the R/P ratio. The M3 mechanism
imposes a default minimum regional R/P ratio of 10 years. Fig. 12. M3: Effect of regionalisation of the discovery costs (A3 72 MtU).

It can be seen in Fig. 11 that this constraint does not have any
significant long-term effect. The detailed results show that this
constraint affects the regional production costs and the market shares
of the regions and therefore the differential rents, but not the scarcity
rent which is dominant for setting the long-term price.

Fig. 13. M3: Effect of distribution of the exploration expenditure (A3 72 MtU).

● In the long-term, the price variation remains stable and moderate

(less than 50%).
Fig. 11. M3: Effect of the regional production constraint (A3 72 MtU).

4.3.5. Demand in stages

4.3.3. Regionalisation of the discovery costs
There is a strong global or regional correlation between the
discovery cost of new resources and the cumulative past exploration
expenditure. Taking regional discovery costs into account (rather than
a global discovery cost applied to all regions) incorporates the history
of each region's exploration activity.
It can be seen in Fig. 12 that regionalisation has a significant effect
on the long-term price (higher when the discovery costs are identical in
all regions, the variation is greater than one order of magnitude).
4.3.4. Distribution of the exploration expenditure
The M3 mechanism postulates by default that the global explora-
tion expenditure is distributed in proportion to the profits generated by
the different regions. To study the importance of this choice, we
propose to consider a different system for distributing the exploration
expenditure: each year, all the global exploration expenditure is
allocated to the region with the lowest discovery cost.
It can be seen in Fig. 13 that the choice of system for distributing
the exploration expenditure has a significant effect in the medium term
(2035–2060) and a more moderate effect in the long-term:
● The R/Pmin level is reached 25 years later with the alternative
system, which thus maintains a lower price in the medium term.
The demand for uranium has been assumed to be linear (Fig. 1),
which is unrealistic. In fact, nuclear reactors have an increased
uranium requirement at the start of life for their initial loads and have
a limited service life, which means that over the period considered in
the scenarios, in addition to the new reactors built to increase the
installed capacities, the renewal of some must also be included and
consequently uranium consumption cannot be linear. Furthermore, in
the past, increasing the installed capacities involved the deployment of
fleets at national level over relatively short periods. An increase in
uranium demand in stages is therefore studied here in order to get
closer to the actual situation.
It can be seen in Fig. 14 first and foremost that linearization of
uranium demand has little effect when demand growth is moderate
(scenario C2). By contrast, when there is strong demand growth
(scenario A3), significant price variations and considerable cyclicality
can be seen. However, if the variations are compared in greater detail,
it can be seen that the average cost for an electric utility over the entire
period (2013–2113), i.e. the uranium price weighted by demand, varies
very little: less than 5% difference between the linear and non-linear
situations. Consequently, since the fluctuation cycles are short (less
than 10 years) and the average price is hardly affected, one can
consider that the variations in uranium demand in non-linearized
scenario A3 could be reduced by short-term stocking/destocking of

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the rate of availability of the resources of each cost category (associated

with the production dynamics of the identified resources), influence the
production costs without affecting long-term uranium price trends.
This effect on production costs results in modification of the differential
rents, but not the long-term price trends for which the scarcity rent is
the first-order determining factor when demand rises according to
scenarios A3 or C2.

4.4. Comparison of the three mechanisms (M1, M2 and M3)

Due to the regionalisation of the players, the M3 mechanism

includes input data and constraints specific to the regions, which were
not included, or were combined globally, in the other mechanisms. The
most important of these are the input data on the ultimate resources
and the constraint on the trend in discovery costs.
Fig. 15 shows significant differences in the price trends, studied in
demand scenarios A3 (strong growth) and C2 (moderate growth).
Overall, the price variation between M2 and M3 is greater than
between the M1 and M2 mechanisms.
If the M1 and M2 mechanisms are compared, it can be seen that the
price variation remains fairly stable in the long-term. It is around 30% to
50% and slightly greater with scenario A3. In the short-term, a slightly
greater variation can also be seen. The only difference between these two
mechanisms is the introduction of the exploration funding constraint (and
the increase of the prospecting costs in M2; they are zero with M1). By
disregarding this constraint and assuming that all the ultimate resources
have been identified and are available from the outset, the M1 mechanism

Fig. 14. M3: Effect of the demand profile (A3 and C2 72 MtU).

uranium, which is not incorporated in the model. Such stocking would

not in principle pose any technical problems in uranium-consuming
countries, especially if it only concerns uranium intended for initial
cores. In addition, the quantities needed for loading initial reactor
cores can easily be anticipated.

4.3.6. Other parameters

The sensitivity study was broadened to include other parameters in
the M3 model. It has thus been shown that the dynamics of
identifying new resources (by increasing costs or in proportion to
the remaining ultimate resources) have little effect on long-term price
trends (determined by the scarcity rent, which quickly become
dominant over differential rents) or on the regional distribution of
production (changing market shares).
Likewise, the production dynamics of the identified re-
sources were studied, varying the rate of availability of the identified
resources put into production, and it has been shown that they do not
influence the average production costs, only the marginal production
costs, and do not change the relative competition of the regions.

4.3.7. Summary
The sensitivity analysis has shown that anticipation of demand and
the need for visibility for consumers, represented by the constraint on
the global R/P ratio, directly affect price trends, by influencing the
scarcity rent.
Some parameters, such as the regional production constraint, the
parameters representing the dynamics of identifying new resources, or Fig. 15. Comparison of the market mechanisms: price trends (A3 and C2 72 MtU).

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underestimates the production costs and therefore the price.

The M2 and M3 mechanisms differ on two points:

● The M2 mechanism underestimates the differential rents.

The market is assumed to be perfectly competitive in the M2

mechanism and does not group the producers together by region. All
producers that are in competition (their number is not defined) have
access to all global resources. As the resources are depleted in order of
ascending cost, the variations in the production cost between producers
are minimised. Conversely, the M3 mechanism models the producing
regions individually. It is only the cost differences between the
identified resources in the regions modelled that create the differential
rents. In addition, the resource production dynamics take into account
limited availability of the resources in each cost category (in particular
to take account of the lifespan of the mines), which also introduces
differential rents within the regions.
Fig. 16. M3: Effect of the supply and demand scenarios.

● The M2 mechanism disregards the scarcity rent.

Table 3
The M3 mechanism is the only one to increase the market price to M3: Dates when R/Pmin = 60 years is reached.
stimulate new discoveries in order to maintain a minimum R/P ratio
A3 – 72 MtU A3 – 36 MtU C2 – 72 MtU C2 – 36 MtU
when security of supply is critical.
This comparison enables us to conclude that differential rents and 2035 2040 2095 > 2100
the scarcity rent cannot be disregarded when modelling long-term
uranium price trends. Differential rents introduce relatively stable price
variations over time which are fairly insensitive to demand (this can be 5.2. Effect of stopping production in one region
seen by comparing the M1 mechanism, which disregards these rents,
and the M2 mechanism, which includes them, even though it under- We simulate stopping Australia's production in 2050 and analyse its
estimates them: price variation around 30% to 50%). Conversely, the effect on price trends. Australia was chosen because this region plays
scarcity rent introduces significant and increasing price variations an important role in global production and past political choices have
(which can be seen by comparing the M2 and M3 mechanisms). This already restricted or suspended its production for several years.
rent is particularly sensitive to demand: it appears earlier when The results obtained (Fig. 17) show that stopping production in a
demand is high and it increases as demand increases. country such as Australia would result in a period of price fluctuation
followed by a residual price variation in relation to the reference
5. Prospective studies of supply variations situation. This variation continues in the long-term, and the earlier
production is stopped, the greater the variation.
In this final section we carry out some forward looking simulations
of supply variations and study the robustness of the M3 mechanism.
First of all, we study the effect of the estimation of the ultimate
resources on price trends (Section 5.1), and then situations in which
production is suddenly stopped (Section 5.2) or doubled (Section 5.3)
in one region.

5.1. Effect of the ultimate resources

Two supply scenarios have been chosen here: the first with
estimated ultimate resources of 72 MtU at < USD 260/kgU, and the
second with just half, 36 MtU at < USD 260/kgU.
Fig. 16 shows the price trends with these two supply scenarios, for
the two demand scenarios A3 and C2, and Table 3 shows the dates
when the critical value of R/Pmin is reached.
In the case of increasing demand scenarios, the following observa-
tions can be made:

● Uranium demand is the first-order variable which influences ur-

anium price trends. Fig. 17. M3: Effect of stopping Australia's production in 2050.

● The estimation of the ultimate resources affects price trends more in

the medium terms than in the long-term (the characteristic medium
and long-term timescales depend on the growth of demand).
● Increasing the ultimate resources, in the medium term, delays the
price increase associated with the differential rents, which limits
exploration and, in the longer term, brings forward the date when a
scarcity rent appears, and therefore the significant price increase.
5.3. Effect of doubling the production in one region
We now look at the effect on price trends of doubling Kazakhstan's
production in 2040. Kazakhstan was chosen because this region has
already proved, at the start of the 21st century, that it is capable of
rapidly increasing its production, while remaining very competitive,

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Fig. 18. M3: Effect of doubling Kazakhstan's production in 2040.
and also the dominant production technique (in-situ leaching) techni-
cally enables new production capacities to be developed quickly and
with relatively low amounts of investment.
According to the results (Fig. 18), doubling the production of a
country such as Kazakhstan would introduce price fluctuations in the
short and medium term, but would have little long-term effect.
These forward looking simulations have enabled us to identify
determining factors for the availability of uranium, by testing some
assumptions in possible scenarios. The results show that the model that
has been developed is robust with regard to more or less sudden supply
variations: the response of the model in terms of price agrees on a long-
term trend (identical or offset in relation to the reference situation) in
all the situations studied.
However, this model does not enable the uranium demand of the
different regions to be individualised (the demand is global). The
available input data (global nuclear electricity production scenarios)
has led to this choice of model. This is a useful improvement which
could be made to the model, as it would enable specific strategies to be
taken into account for regions that are “producers and consumers” or
“producers but not consumers” or “consumers but not producers” of
uranium.
The model that has been developed no longer takes account of the
two main forms of contract on which today's uranium exchanges are
based: spot contracts and long-term contracts. It only produces a single
price indicator. This limits the interpretation of the results, creating a
certain cyclicality of prices as the electric utilities seem to limit the use
of spot contracts (for which the price index is the most volatile) when
there are price spikes in order to hedge against these fluctuations.
Finally, the forward looking simulations analysed in this section
have the same limitations as all prospective studies: they cannot be
exhaustive. It must therefore be remembered that the results of the
preceding simulations must be used with caution. In particular, they
are only valid for nuclear electricity production scenarios and increas-
ing uranium demand.
6. Conclusion
This analysis of the key parameters for the long-term availability of
uranium resources is based on modelling the ultimate uranium
resources (discovered and undiscovered resources and those already
mined) and modelling the market.
A new methodology for estimating the ultimate resources and their
associated production costs has been developed using available data on
known uranium deposits. The model is based on a lognormal distribution
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Resources Policy 53 (2017) 394–407
of the grade and tonnage of deposits, on the use of an economic filter and
on cost functions which take account of economies of scale (principally
associated with the tonnage of the deposits and their production capacity)
and the envisaged type of mining. The model incorporates the available
data and the specific economic and geological characteristics of each
region in the best possible way by calibrating these distributions and cost
functions differently.
Despite significant uncertainties, the results obtained have shown
that, due to some regions’ specialisation in particular mining techni-
ques and/or their specific economic and geological characteristics, the
ultimate resources of uranium are distributed unevenly throughout the
world. The discount rate, the depth of the earth's crust taken into
account or the price of uranium representative of current economic
conditions are all particularly decisive parameters in the estimation
carried out. However it has also been shown that this estimation only
has a second-order influence on long-term uranium price trends.
The analysis of the structure of the market and its dynamic
constraints has enabled us to define a new model for studying the
market. This is a deterministic model which calculates a series of short-
term economic balances in order to carry out a long-term prospective
study. This model takes into account the causal link between price and
exploration expenditure, increases in discovery costs and anticipation
of demand. The regionalisation of the market players (modelled by an
oligopoly with no collusion) enables differential rents to be introduced
which have a limited short and medium-term effect in the increasing
demand scenarios that have been studied; while the demand anticipa-
tion constraint introduces a scarcity rent, enabling the margins on
security of supply to be maintained, but also leading to a significant
increase in the price of uranium in the long-term.
A sensitivity study has revealed the particular importance of the
demand scenarios, the demand anticipation constraint and even the
regionalisation of the discovery costs: they all have a significant effect
on price trends by influencing the scarcity rent.
The value of the market model that has been developed lies in its
flexibility and the range of possibilities it offers for carrying out
prospective studies. Firstly, it enables resource rent trends and a large
number of regional or global indicators (R/P ratio, production costs,
exploration expenditure, etc.) to be monitored, which makes it easier to
interpret the results: for example, price rises due to an increase in
production costs, or price rises due to scarcity of identified resources,
can be clearly seen. Secondly, the structure of the model is flexible
enough to enable a variety of scenarios to be simulated (supply or
demand scenarios).
However there are still some uncertainties in the estimation of the
production costs and the differential rents because mines are not
discretised in the model. For the scenarios studied which correspond to
a growing demand for uranium in the long term, scarcity rent generally
becomes preponderant over differential rent and this approximation is
limited. On the other hand, for volatile demand scenarios, the model
would need to be improved on this point.
Finally, it is important to remember that there are some limitations
on the interpretation of the results.
The results on uranium price trends can provide information for
consideration of the competitiveness of nuclear energy and the
competitiveness of fast reactors in relation to current nuclear technol-
ogies. However in the absence of an additional analysis of trends in
other costs (cost of other electricity production methods, nuclear
energy investment and operating costs), it is not possible to draw any
conclusions on the changing competitiveness of nuclear energy.
Besides, the scenarios envisaged are far from exhaustive. For
example, we have implicitly assumed that the current market economy
will continue in the 21st century and that there will be no technological
breakthroughs in uranium production methods.
A. Monnet et al. Resources Policy 53 (2017) 394–407

Appendix

Procedure for estimating unbiased distribution parameters

The probability density functions for truncated distributions have an explicit form which can be related to that of non-truncated distributions
(Harris, 1984). After several mathematical conversions, the mathematical expectations (mean values) for grade, tonnage and metal content (γg, γt,
and γm respectively) among the truncated population elements can be expressed as a function of the unknowns µx, σx2 and µy, σy2 (see to ):
⎛ ⎛ 2⎞
Clim 1 c−μ ⎞
exp (μx + σx2 /2) ∫ exp⎜⎜ − 2 ⎜ σ c ⎟ ⎟⎟dc
⎝ ⎝ c ⎠⎠
−∞
γg =
C
⎛ ⎛ c − μ ′ ⎞2 ⎞
∫−∞lim exp⎜⎜− 12 ⎜ σc c ⎟ ⎟⎟dc
⎝ ⎝ ⎠⎠ (15)

⎛ ⎞ Clim ⎛ ⎛ 2⎞
1 c − μ′′′ ⎞
exp ⎜μy + σy2 /2⎟ ∫ exp⎜⎜ − 2 ⎜ σ c ⎟ ⎟⎟dc
⎝ ⎠ −∞
⎝ ⎝ c ⎠⎠
γt =
C
⎛ ⎛ c − μ ′c ⎞2 ⎞
∫−∞lim exp⎜⎜− 12 ⎜ ⎟ ⎟dc
⎝ ⎝ σc ⎠ ⎟⎠ (16)

C⎛ c − μc′′ ⎞2 ⎞
⎛
⎟ ⎟⎟dc
∫−∞lim exp⎜⎜− 12 ⎜
⎝ ⎝ c ⎠⎠
σ
⎛ 2 2
⎞
γm = exp⎜μx + σx /2 + μy + σy /2⎟ ×
⎝ ⎠ ⎛ ⎛ 2⎞
C c− μ′ ⎞
∫−∞lim exp⎜⎜− 12 ⎜ σc c ⎟ ⎟⎟dc
⎝ ⎝ ⎠⎠ (17)
Where:

μx = ln(clarke) − σx2 /2 (18)

And:

μc = βμ
t y
+ βg(μx + σx2 )

σc2 = βt2σy2 + βg2σx2

μc′ = βμ
t y
+ βgμx
⎛ ⎞
μc′′ = βt ⎜μy + σy2⎟ + βg(μx + σx2 )
⎝ ⎠
⎛ 2
⎞
μc′′′ = βt ⎜μy + σy ⎟ + βgμx
⎝ ⎠

γg, γt and γm correspond to the theoretical mean values of the variables according to the truncated distributions (i.e. when bias exists and is not
corrected). Their empirical equivalents are thus the estimators g , t , m . If γg, γt and γm are replaced by their empirical estimates in equations to , the
system contains 3 equations and 4 unknowns. It can be solved using the additional constraint of . The quadruplet solution (µx, µy, σx, σy) can be
found numerically using an optimisation routine which minimises the error Δ defined in

⎛ γg ⎞2 ⎛ γ ⎞2 ⎛ γ ⎞2
∆ = ⎜1 − ⎟ + ⎜1 − t ⎟ + ⎜1 − m ⎟
⎝ g⎠ ⎝ t⎠ ⎝ m⎠ (19)

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