Orano Says Rising Uranium Price May Revive Mining Projects

(Bloomberg) -- Orano SA is considering reviving a project to mine uranium in Namibia after rebounding prices for the radioactive metal and increasing demand for nuclear-fuel services boosted 2024 earnings, Chief Executive Officer Nicolas Maes said.

The French state-owned company — which sells fuel and treats waste for plant operators in Europe, North America and Asia — is benefiting from production issues affecting the uranium mining industry, rising atomic output in countries such as China and a US plan to end reliance on Russian uranium-enrichment services.    

“The prices of products that we’re selling have substantially risen thanks to better market prospects and geopolitical tensions,” Maes said during a presentation Tuesday. “That’s encouraging us to revisit a project in Namibia which was mothballed in 2012,” while also pursuing potential developments in Canada and Uzbekistan.

The nuclear group’s net income almost tripled last year, boosted by a series of one-time contracts to return waste treated at a French plant to Japan.

“Several mines of rather significant sizes will reach the end of their production around the middle of the next decade,” Maes said. “There’s enough identified resources to pick up the baton, but there will be a need to put new mines in production.” 

Orano, which got the go-ahead from Mongolia’s government to develop a $1.6 billion uranium project last month, may reach a deal to develop a smaller project in Uzbekistan by year’s end, the CEO said. The group continues diversifying supplies after Niger’s military junta took over operational control of their jointly owned Somair mine and revoked Orano’s license for developing the Imouraren mine last year.

Somair’s production has virtually stopped, while the joint venture has about 1,300 tons of yellowcake — a form of uranium ore — worth about €250 million ($261 million) stored in barrels that can’t be shipped because of an export ban, he said.

Assuming an agreement is reached eventually, it would probably take about two years to fully revive Somair’s output. The African nation accounts for about 1,200 tons of the group’s total production capacity of 8,200 tons. It gets about 5,000 tons from operations in Canada and the rest from Kazakhstan, Maes said.

Should Orano acquire mining assets, it may seek fresh funding from the French government to contain borrowings, Chief Financial Officer David Claverie said during a Wednesday conference call. Free cash flow may turn negative in 2026 and 2027 as the company boosts investment in uranium mining and processing, and radiotherapies.   

The company, which is extending an uranium-enrichment plant in southern France to help utilities reduce their exposures to a Russian supplier, may be in a position to decide to build a similar facility in the US by the end of 2026 or early 2027, the Orano boss said.

In France, Orano and Chinese partner XTC New Energy Materials Xiamen Co. may reach a final investment decision this year to build one of the two plants being considered for making electric-vehicle battery components. 

“As gigafactories are suffering and growing at a slower pace than expected, that’s leading us to revise the time to market our own products,” Maes said.  

(Updates with CFO comments on potential mine acquisitions in ninth paragraph.)

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