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U308 related: Another Sign That A Nuclear Renaissance Is Inevitable - Oil Prices Rose 19% In 2011
January 3, 2012
http://seekingalpha.com/article/317065-oil-prices-rose-19-in-2011-another-sign-that-a-nuclear-renaissance-is-inevitable
Oil prices rose 19% over the course of 2011, the third consecutive year marked by a rise in the price of oil. Below is the monthly chart of Brent Crude Oil that illustrates the clear uptrend.
While currency devaluation, geopolitical tensions, and speculators are all forces that may be contributing to rising oil prices and greater market volatility, a growing factor that suggests the price rise will continue is the supply/demand imbalance in the oil market. In other words: demand for oil and other fossil fuels is only growing, but the supply of them is diminishing. The chart below illustrates.
While I believe the world will likely be using fossil fuels as a primary source of energy for some time, we are clearly at a point where a new source of energy is needed. I believe nuclear energy is the primary candidate destined to grow, for the following reasons:
1. It can provide "baseload" - meaning always on - energy
2. It is emission-free
3. It has high power density, which means it does not require an inordinate amount of land and thus is conducive to powering cities
4. It is inexpensive
No other source can really make these same claims. Wind and solar are much more expensive and cannot effectively provide baseload energy, which is precisely why they remain insignificant sources of power on a global basis. Technological breakthroughs may change this, though I don't see this on the horizon, and believe renewables will have limited roles in the global energy market until this changes.
And so, the rise of nuclear energy is virtually inevitable -- the world will demand it for survival. Accordingly, China already has 25 nuclear power plants under construction, and realizes that nuclear will be a key part of how its nation is powered as it increasingly urbanizes. Investors can recognize China as the "smart money" -- the force driving the market's demand and sending prices higher -- in the nuclear energy market.
Of course, this transition will not occur overnight - nuclear power plants take a long time to build - and so oil, coal, and natural gas will continue to play an important role in providing energy to the world. Investors will need to be patient, as this market may take up to a decade to really get going. The value network is still developing and much depends on how government participates and regulates the market, as well as what innovations entrepreneurs will develop as the market grows.
For now, the investment opportunity is simple: uranium. Nuclear power is most easily obtained through processing of uranium, and so uranium mining firms are the buy and hold opportunity for patient investors looking to participate in the nuclear renaissance. Uranium ETFs like URA as well as mining companies like Uranerz (URZ), Uranium Energy Corporation (UEC), and Cameco (CCJ) are plays that make sense from this perspective, with UEC being my favorite due to the adept leadership of its Amir Adnani - its founder and CEO with a background as a serial entrepreneur with a marketing focus - as well as the firm's focus on ISR mining which I regard as an enabling technology that will allow UEC to experience lower mining costs than traditional open pit mines.
As compelling as the uranium story is, I cannot overemphasize the need for patience. Nuclear energy is still not appreciated and the entire energy market is poorly understood. This represents a great opportunity for the educated investor, provided they have patience and conviction, and understand the economics of nuclear is really the only option barring some type of technological breakthrough that currently is nowhere in sight. As always, investors will find it to their advantage to focus on the actions of the smart money - which in this case is China - while ignoring short-term sentiment factors like the concerns about nuclear energy stemming from the Fukushima crisis.
While uranium remains the mineral to invest in and focus on, investors should also keep an eye out to see how Thorium develops. Thorium is a potential substitute for uranium in the production of nuclear power, and possesses less of a radiation risk - a common criticism of uranium. However, the value network for thorium is a bit undeveloped at the moment, and it does not appear that there is yet a "smart money" faction that can push prices higher. Thorium is also more a more expensive way of generating nuclear power, an obstacle I suspect will need to be overcome if thorium is to become a serious opportunity for investors looking to invest in the nuclear renaissance.
So get ready for a whole new energy paradigm as we move away from oil. Understand, though, the process will take time, and that the science and economics suggest the opportunity is nuclear energy unless there is some type of a big technological breakthrough. And of course, patience is your friend; while the economics will, as always, ultimately dictate what happens, the process can be slow. China is the one to watch, and so long as they are committed to the market, any sell-offs in opportunities to invest in nuclear energy, namely via uranium mining firms, constitute an opportunity to buy the dip.
Disclosure: I am long UEC, CCJ.
Pancontinental Uranium Corporation: Crossland Recommences Drilling at Charley Creek, NT, Australia Testing REE Targets
Press Release Source: Pancontinental Uranium Corporation On Tuesday April 5, 2011, 6:30 am EDT
http://finance.yahoo.com/news/Pancontinental-Uranium-iw-451980356.html?x=0&.v=1
VANCOUVER, BRITISH COLUMBIA--(Marketwire - 04/05/11) - Pancontinental Uranium Corporation (TSX-V:PUC - News) ("Pancon") and its joint venture partner, Crossland Uranium Mines Limited (ASX:CUX - News) ("Crossland"), are pleased to update shareholders on the recommencement of drilling at Charley Creek, NT, Australia.
"Collaring the first drill hole at Cattle Creek"
Drilling at the REE Project at Charley Creek began March 31 near the site of the bedrock REE discovery announced March 9, 2011. The prospect has been named Cattle Creek.
The drill program, contracted by Crossland to specialist air-core operators, Budd Drilling Pty Ltd, will extend for six weeks. It is anticipated that over 8,500 metres of drilling will be completed in 250 to 300 holes, depending on depths to hard rock. The first 50 holes will be drilled to scope the area immediately around the REE discovery hole.
As of April 4, 2011, the first 25 holes of the program have been drilled. The first 271 samples were submitted to the laboratory on April 4. The turnaround on results is about four weeks.
The Cattle Creek Prospect was revealed by the re-assaying for REE of samples collected in a 2008 Crossland exploration program for uranium. Five metres of REE mineralization, which averaged 1.03% Total Rare Earth Oxides (not including Yttrium) from 37 metres, was identified in hole CCA121. Extensive stream sediment sampling results seem to suggest that the area warranting further testing covers approximately 40 square kilometres.
Following completion of the scoping drilling at Cattle Creek, the rig will move to the Cockroach Dam Prospect, where sampling of an alluvial resource will be advanced. The rig will collect samples from deeper alluvium than could be sampled using auger drills used earlier in the program. This drilling should finalize the field work required to produce an initial resource estimate from the Cockroach Dam Alluvial deposits.
The rig will then move to test a selection of the large areas of alluvial fans that drain north from the MacDonnell Ranges, where the Joint Venture hopes to define viable volumes and grades of REE to support a long term sand mining operation producing heavy minerals containing REE and zircon.
It is expected that by the time these three programs of drilling are completed, the results of the scoping drilling at Cattle Creek announced today will have been received, After those results are received, the rig will return to Cattle Creek for more scoping drilling.
REE markets and Charley Creek's potential
In Crossland's recent PowerPoint presentation to brokers and analysts in Australia, they were able to access current research from the US Department of Energy specifying the REE's that are in critically short supply around the globe in the short and medium term.
In the short term, they are Europium, Indium, Neodymium, Terbium, Yttrium and Dysprosium. In the medium term, they are Yttrium, Europium, Terbium, Neodymium, and Dysprosium.
The initial results at Charley Creek suggest that the REEs tend towards the heavy REEs which make up the shortfall lists from the USDoE.
To view the March 28 Crossland PowerPoint featuring current research on the REE market and detailed maps and images of the Charley Creek REE project go to http://panconu.com/Investors/Crosslandpresentationmarch2011/default.aspx.
All technical information in this release has been reviewed by Geoff Eupene, Qualified Person for Crossland and Pancon.
About Pancontinental Uranium Corporation
Pancontinental Uranium Corporation ("Pancon") is a Canadian-based company focused on uranium and REE discovery and development. Through a 50:50 joint venture with Crossland Uranium Mines Limited ("Crossland") of Australia, Pancon has established one of the strongest management teams in the uranium industry. This management and operating team has unparalleled experience from exploration, through development to operations, and includes people who were instrumental in the discovery of two of the largest uranium deposits in the world. Pancon and Crossland hold an impressive uranium exploration portfolio with projects in prolific, mining friendly districts.
Active exploration is ongoing at three Australian projects which include Chilling, Charley Creek, and Kalabity. The Chilling project has the potential to host a mirror image of a portion of the renowned Alligator Rivers Uranium Field containing the large Jabiluka, Ranger and Koongarra deposits. Charley Creek has the potential for large, lower-grade, Rossing-type, granite-hosted uranium deposits and REE. The Kalabity project lies in a district of historic uranium/radium mining that contains a variety of known uranium deposit styles.
Pancon has earned a 50% interest in this significant uranium and REE project portfolio through the joint venture with Crossland through the expenditure of A$8 million. Pancon and Crossland are also pursuing exploration beyond Australia through an international subsidiary company, Crosscontinental Uranium Limited, and immediate plans include formulating an exploration program in Burkina Faso.
ON BEHALF OF THE BOARD OF DIRECTORS
Rick Mark, President & CEO
For additional information, please visit our website at www.PanconU.com.
Cautionary Language and Forward Looking Statements
This press release may contain "forward-looking statements", which are subject to various risks and uncertainties that could cause actual results and future events to differ materially from those expressed or implied by such statements. Investors are cautioned that such statements are not guarantees of future performance and results. Risks and uncertainties about the Company's business are more fully discussed in the Company's disclosure documents filed from time to time with the Canadian securities authorities.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contact:
Contacts:Pancontinental Uranium CorporationRichard MarkPresident and CEO604-986-2020 or Toll Free: 1-866-816-0118Pancontinental Uranium CorporationKeith PateyDirector of Communications604-986-2020 or Toll Free: 1-866-816-0118604-986-2021 (FAX)www.panconu.com
China cuts rare earth export quotas, U.S. concerned
A worker shovels cast-off tailings out of a channel underneath a pipeline that transports crushed mineral ore containing rare earths to a disposal dam near Xinguang Village, located on the outskirts of the city of Baotou in China's Inner Mongolia Autonomous Region in this October 31, 2010 picture.
Credit: Reuters/David Gray
BEIJING | Tue Dec 28, 2010 6:07pm EST
http://www.reuters.com/article/idUSTRE6BR0KX20101228?feedType=RSS&feedName=GCA-GreenBusiness&rpc=43
BEIJING (Reuters) - China said on Tuesday it will cut its export quotas for rare earth minerals by more than 11 percent in the first half of 2011, further shrinking supplies of metals needed to make a range of high-tech products.
China produces about 97 percent of rare earth minerals, used worldwide in high-technology, clean energy and other products that exploit their special properties for magnetism, luminescence and strength.
The rare earth issue could further strain U.S.-China ties, which have been battered this year by arguments over human rights, Tibet, Taiwan, the value of the Chinese currency and North Korean military attacks on South Korea.
Chinese President Hu Jintao is due to visit the United States next month for talks with President Barack Obama that both sides hope can stabilize the vital relationship.
Beijing says its curbs are for environmental reasons and to guarantee supplies to Chinese clean energy firms it is trying to promote internationally. But it has also said its dominance as a producer should give it more control over global prices.
China's Commerce Ministry allotted 14,446 tons of quotas to 31 companies, which was 11.4 percent less than the 16,304 tons it allocated to 22 companies in the first half of 2010 quotas a year ago.
China slashed the export quota by 40 percent in 2010. The export restraints on rare earths has inflamed trade ties with the United States, European Union and Japan in particular.
In Washington, the U.S. Trade Representative's office expressed concern over the latest announcement.
"We are very concerned about China's export restraints on rare earth materials. We have raised our concerns with China and we are continuing to work closely on the issue with stakeholders," a USTR spokeswoman said.
Last week, the trade representative's office said China had refused U.S. requests to end export restraints on rare earths, and the United States could complain to the World Trade Organization, which judges international trade disputes.
TURBINES AND HYBRIDS
Wind turbines and hybrid cars are among the biggest users of rare earth minerals, which analysts say are facing a global supply crunch as demand swells. The minerals are also used in some weapons systems.
This little-known class of 17 related elements is also used for a vast array of electronic devices ranging from Apple's iPhone to flat-screen TVs, all of which are competing for the 120,000 tons of annual global supply.
While industrial users of rare earths in industrialized countries face tighter supplies and higher prices, China's export curbs have created opportunities to open mines or revive dormant production in Canada, Australia and the United States.
After China's announcement, shares of Molycorp Inc, the Colorado-based company that owns a rare earth mine in California, rose as much as 11.6 percent.
But the headline-driven surge in a firm whose value has tripled since July proved only temporary, in part reflecting the fact that Molycorp's rare-earth mine in Mountain Pass, California, is due to come back online only late next year.
Canada alone has at least 26 publicly traded companies, including Great Western Minerals Group and Rare Element Resources, that have rare earth projects in some stage of exploration.
Jack Lifton of Technology Metals Research, a Chicago-based consultancy, said Molycorp and Australia's Lynas Corporation Ltd can eventually offset shortfalls from Chinese cuts in supply and refining capacity -- but not before early 2013.
"Until one of them can produce commercial quantities of high-purity rare earths on a regular basis, the market will belong to the Chinese entirely," he said.
In a short statement on its website (www.mofcom.gov.cn), the Chinese Commerce Ministry said it had added more producer companies to the quota list but cut volumes allocated to trading companies.
CLEAN UP, CONSOLIDATION IN CHINA
Japan has been hard hit by the export curbs. Japanese imports of rare earths shrank further in November, reflecting the impact from China's de-facto ban on shipments of the minerals that was lifted late last month.
The European Union has also expressed concern over China's limiting of rare earth exports, though the bloc's trade commissioner said earlier this month China had reiterated that rare earth supplies would be sustained.
With more than 100 mines and some 40 refineries, "the Chinese seem to be quite serious about cleaning up the sector environmentally and consolidating it," said Lifton.
Beijing has been trying hard to impose discipline on its chaotic rare earth sector and is expected to establish a rare earth industry association by next May, said Wang Caifeng, an official with the Ministry of Industry and Information Technology, speaking at a conference on Tuesday.
Tougher environmental regulations for the rare earth sector are also expected to be unveiled next year, the China Business News reported on Tuesday.
(Reporting by Niu Shuping, David Stanway and Michael Martina in Beijing; and Roberta Rampton and Paul Eckert in Washington; Editing by Vicki Allen, Will Dunham and Todd Eastham)
Roar Earths
Submitted by Ryan Puplava CMT on Tue, 28 Dec 2010
http://www.financialsense.com/contributors/ryan-puplava/roar-earths
Rare earth metal miners were roaring this morning with many of the Market Vectors Rare Earth ETF component holdings up double-digit percentage points. On my daily volume breakout screen, 5 of the top 16 volume breakouts were in rare earth/strategic metals miners, including: China GengSheng Minerals Inc (CHGS), Avalon Rare Metals Inc (AVL), General Moly Inc (GMO), Rare Element Resources Ltd (REE), and REMX (the Market Vectors Rare Earth ETF itself). Those are just a few of the top volume breakouts across the U.S. markets. Here’s a list of holdings within the REMX ETF as per Bloomberg and their performance today:
Shares of many rare earth and strategic metals flew on Monday and Tuesday this week based on an announced rare earth mineral export quota cut from China, the largest producer of rare earth metals in the world. So what are the implications should the largest producer in the world restrict supply? Prices go up. It’s the same idea behind the oil cartels. Control the supply of a resource with inelastic demand and you have the setup to make substantial profits.
“China’s Commerce Ministry allotted 14,446 tonnes of quotas to 31 companies, which was 11.4 percent less than the 16,304 tonnes it allocated to 22 companies in the first batch of 2010 quotas a year ago.” (Source: Reuters)
Are Rare Earth Metals in a bubble?
On October 21st, Mark Smith, the CEO of Molycorp, was caught in a faux pas by calling the product his company produces, a bubble. “They (prices) are really spiked right now and there may be a bubble occurring because of all of the news and the frenzy.” He was referring to a short-term spike in prices last October in an interview with Fast Money on CNBC. He believes the long-term fundamentals will remain strong as China has made it clear they will continue to restrict supply; however, he believes that “when you see prices that are increasing by 600 or 700 percent in a 30-day period, you have to be very careful and make sure that you’re not making future business plans on those types of price increases.” This is the kind of prudent planning you see in the majority of resource company CEOs – it’s normal.
Short-term price spikes aren’t bubbles. They’re merely blow off excesses in speculation that drive up prices as supply gives way to the stronger of the two forces. Eventually, supply steps back in and you get a consolidation or reversal if demand has dried up. I think Mark Smith realized his mistake as his November 9th and December 21st interviews on Fast Money suggest he has reversed his comments, that there “isn’t a bubble in rare earth prices.”
The definition of a bubble, as defined in David Scott’s Investment Terms for Today’s Investor, is “a price level that is much higher than warranted by the fundamentals. Bubbles occur when prices continue to rise simply because enough investors believe investments bought at the current price can subsequently be sold at even higher prices. They can occur in virtually any commodity including stocks, real estate, and even tulips.”
All it takes to identify a bubble is common sense. Even though it’s clear to me that bonds are in a bubble based on net inflows into bond funds, the 30-year chart on interest rates, the debt levels of the United States, and inflationary expectations, it’s not clear when a bubble should or has burst until it has already happened. What I’m saying is, bubbles, trends, and bull markets can surprise to the upside and last as long as there’s somebody willing to pick up the tab at the end of trading. When the last dummy says, wait a second here, and a bid fails to appear, that’s when the game unravels.
Is there a bubble in rare earth metals? Well, the fundamentals are there. Everybody knows the story: China, producing 97% of the world’s production, is cutting that production and keeping it. What happens if China says, “Just kidding”? Well, then the game unravels, but until then…like Mark Smith said…China has made it clear they will continue to restrict supply; however, I hope you see just what the bull market in rare earth hinders on. If that fundamental story is gone, then the game unravels.
High rare earth prices are attracting investment outside of China. Supply will come on stream to meet demand. Capitalism demands it. China has a monopoly on production of rare earth metals, not the resource itself. World production was 124,000 metric tons in 2009. Molycorp said they’re currently producing 3,000 tons a year on existing stockpiles, but will ramp up when new ore from operations comes online in 2012. They are aiming for annual production of 20,000 tons by the end of 2012. Lynas Corporation is predicting it will plan 11,000 tons a year, but with further investment, they’re looking to double that production by the end of 2012. Unless China has plans to expand its production, while restricting it at the same time, China’s 97% market share on world production of rare earth elements will fall. Do you see the conundrum that rare earth bulls will be facing in a year or so?
Source: www.Nikkei.com
Do I believe that rare earth metals are in a bubble? The answer is yes as price is artificially being lifted by China’s control of the resource. For now, the fundamentals are pointing towards higher prices until market forces increase world supply to match China’s cuts. Because unless China stops cutting production as other production sights go online, they will lose market share and control.
The story behind buying rare earths at today’s price, is you believe China will make an announcement tomorrow, or the day after (metaphorically speaking), they’re going to cut supply again or demand will increase. Efficient market theory tells us that yesterday’s cut is already priced into the market today. It’s likely that China will continue to cut production over the next year. They will continue to have a monopoly for a while longer; however, capitalistic forces are clearly at work as Molycorp’s IPO in addition to Sumitomo’s investment nearly financed all of Molycorp’s plans to bring the Mountain Pass project back online. Lynas Corporation, about the same market cap as Molycorp, has plans to increase production as well. If supply increases faster than demand increases, price falls. It’s simple economics.
Rare earth mining is an area I’m invested in. The rare earth story has been out for a while since China announced plans to cut production of rare earth elements in April of 2009. So I’m not talking out of a bearish bias, having missed the run - on the contrary. I’m invested now, but eventually, I plan to get out when capitalist forces create enough supply to satiate demand. Natural gas at $11.88—uranium at $138—oil at $147; eventually, price demands supply. Just ask the Japanese steel industry how much rare earth gets smuggled out of China each year in their steel beams. Price always gets what it wants.
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Pancontinental Uranium Corporation ("Pancon") is a Canadian-based company focused on uranium discovery and development.Through a 50:50 joint venture with Crossland Uranium Mines Limited of Australia, Pancon has established one of the strongest teams in the uranium industry. The joint venture is led by a management and operating team with unparalleled experience from exploration, through development to operations, and includes people who were instrumental in the discovery of two of the largest uranium deposits in the world.
Fact Sheet - September 2010 & Crossland Presentation - March 2011 |
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