The uranium mining industry began immediately following World War II, but a commercial market did not develop until 1968-1973.
This report outlines developments in the structure of the uranium mining industry over the period from World War II to the present time. Firstly, the history of the market, price development, and features of supply and demand are reviewed. Secondly, the dynamic of the evolution of the structure of the mining industry is examined. Finally, using porter’s model for forces driving industry competition (Porter 1980, p.4), set in the present day industry structure, future strategies for industry participants are discussed.
The main features of the present day industry structure are:
1) the backward integration by buyers (the utilities) into production.
2) a concentration of production in terms of both geography and the number of companies involved.
3) the presence of governments along with their considerable powers of intervention.
The report concludes that the concentration of production is likely to reverse sometime in the 1990s as utilities move to improve supply security by increasing diversification of supply, thus decreasing the power of the mining companies and reversing the trend towards concentration. Some of this diversification will occur in the CIS (USSR), South America, Northern and Central Africa, and China.
However, despite warnings from within their own ranks, the utilities, in a complacent manner, reminiscent of that characterising their actions in the early 1970s, do not presently appear to be aggressively pursuing more open diversification policies. In addition, they seem content to purchase heavily on the spot market at prices which more reflect the short run variable costs of production rather than the more realistic long run marginal costs. If this continues, then, when inventories fall to minimum required levels later in the 1990s, and prices raise production levels, the mining companies may, at least for a time, reap the benefits of the growth strategies they have steadily pursued through the 1980s.