Zeev's Turnips Patch-No Politics (ZEEV)

[basserdan]

*** Uranium related post <g> ***

Thanks for keeping me in mind BasserDan. I haven't had a chance yet to do much research, so your article could be the prod I need . :)
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Hi Shasta,
For your bottom line's worth, I hope it was.....
Btw, did Ron Paul ever answer your emailed question?


From Barrons:

Reaching Critical Mass?
After years in the dumps, uranium prices boom

By SPENCER JAKAB

AFTER DECADES IN THE DOLDRUMS, uranium miners are aglow over prospects for the fuel that generates 16% of the world's electricity.

Spot prices for uranium oxide recently reached $18.50 a pound, 150% higher than they were three years ago and the loftiest level in nearly 30 years. Some experts believe the factors that have flooded the market and depressed prices for years are fading, and that prices could head even higher.

Just as there's no other natural resource that carries quite the stigma of uranium, there's no other commodity that has traded in such a topsy-turvy way.

The U.S. guaranteed prices from the late 1940s until the 1960s, making it the world's largest producer, but demand remained strong through the 1970s, as nuclear-plant construction took off worldwide. During the energy crisis, 250 nuclear plants were planned in the U.S. alone, more than twice the number ever built. Many contracted with miners for their fuel supply for the first 10-15 years of operation.

But almost none were completed, so the excess uranium was dumped onto the market through the early 1990s.

"With Three Mile Island in 1979, that was kind of the death knell for uranium in this country," says veteran geologist David Miller.

By 1983, the global uranium supply began to be outstripped by demand, but the massive surplus kept prices down. The end of the Cold War brought more supply as Russia dumped uranium and, later, the fuel from thousands of reprocessed warheads. "It's taken 21 years to consume those excess inventories of the first 33 years," says Miller.

One of the final blows to the market was the granting of 72 million pounds of uranium stockpiles to a newly privatized U.S. processor, USEC, in 1997 -- an endowment the company promptly began dumping on the market. Now, however, "USEC's becoming less of a factor in the actual uranium market," said Nick Carter, vice president at uranium consulting firm Ux Consulting. He expects their supplies to be exhausted by 2007.

The realization that the excess product is finally being worked off has sent spot prices soaring. "The market price will tell you that overhang will run out, or already has run out," says Greg Barnes, a mining analyst at Canaccord Capital.

But the intervening years have been tough on the industry, leaving only the lowest-cost miners in business and pushing fresh supply way below demand.

"There's about a 70 million to 80 million-pound per-year shortfall being met from excess inventories and government stockpiles," while demand is 170 million pounds, says Carter.

At the same time, a renaissance is underway in the nuclear-power industry. Of the world's 438 commercial reactors, 31 were completed in the past few years and 27 more are under construction. Experts predict the global share of nuclear-generated electricity could rise from 16% now to 25% by 2030, with developing nations like China and India building several new plants a year.

Even the U.S. has begun relicensing its fleet of nuclear plants, which many had expected to be entering retirement this decade. "I think it's going to be a short time before a new nuclear power plant is announced in the U.S.," says Miller.

So where will the uranium come from, and who stands to benefit from soaring prices? With 20% of global production and 65% of known future capacity, Canada's uranium giant Cameco will play a key role in filling the breach. It owns the largest uranium mine in the world, McArthur River, and is making a huge investment to bring a similar facility, Cigar Lake, online by 2007.

Aside from this, there are no large prospects undergoing development. Development can take a decade, and Miller estimates a similar deposit would have to be brought on line every two to three years to meet global demand growth.

"Prices have been so low for so long that there hasn't been any incentive to find new uranium deposits," says Cameco spokesman Lyle Krahn. This means dozens of more expensive, smaller projects will have to be started.

"Higher prices will induce supply, but uranium is hard to bring on line," says Barnes. "We're in for a period here where supply will be very tight."

But many mines won't be profitable even at the current price of $18.50 a pound, the highest in 30 years. This is why Miller believes it may take $30 uranium to get projects started, creating a bonanza for low-cost producers.

http://online.wsj.com/barrons/article/0,,SB109122780373779347,00.html?mod=b_this_weeks_magazine_mark....