EXPENSIVE URANIUM

"I Have Never Seen Any Market Like This One..." -- James Dines, The Original Uranium Bug
Jay Taylor, December 26, 2006 (321energy.com)
- ...I have been around as an adult watching markets since the late 1960s and I would have to agree with James Dines that there has never been a market like the current uranium market…even when oil and gas markets have run through considerable corrections, uranium prices have just kept on rising…let’s quickly review the forces at work behind the rise of U3O8 (yellow cake)…

- Nuclear power plants must have uranium as fuel…
- even at the current price of $72 per pound…uranium would need to rise to $500 before it would begin to equate to the cost of fuel for natural gas driven power plants.
- Uranium production from mines is currently meeting only about 60% of annual consumption to fuel existing 440 nuclear reactors around the world…the stockpile of uranium that resulted from the disassembling of nuclear weapons by the Soviet Union is rapidly drawing down.
- There are no significant new supplies of uranium scheduled to come into production until 2010 or later, but by then there will be new nuclear power plants hungry for additional sources of uranium. Just this past week China announced that it is hiring General Electric to build four new nuclear power plants and Toshiba to build three…there are dozens more power plants on the drawing boards in China and India and elsewhere…

- total production from mines has been inadequate to meet demand since 1985. Prices continued to fall as new supplies from disassembled weapons hit the market. But now, with those stockpiles being consumed, there is an increasingly panicky atmosphere in the uranium markets…
- Cigar Lake was to have supplied the world with about 24% of its annual uranium supply. It is likely [due to flooding] that this mine will be at least one year behind schedule if not more…
- The market forces above are not only bullish for uranium but I believe make this metal almost recession proof…with a major portion of the world’s electricity being supplied by nuclear power plants, and with those plants needing to keep supplying electricity even in a major economic decline, and with supplies of uranium dwindling, it is hard to see how uranium prices would fall…