uranium prices rise to record after texas auction
By Christopher Donville
Dec. 19 (Bloomberg) -- Uranium prices surged 9.9 percent to a record after an auction of 260,000 pounds of the radioactive metal by a Texas producer.
The price of uranium rose to $72 a pound from $65.50 a week earlier, according to market assessments published yesterday by Ux Consulting Co. of Roswell, Georgia. The price of the raw material used in nuclear power-plant fuel has climbed 29 percent since an Oct. 22 flood delayed construction of Cameco Corp.'s Cigar Lake uranium project in Saskatchewan.
``We had a good, solid response to our sale,'' said Dustin Garrow, president of ZB Marketing, the Littleton, Colorado-based consulting company that coordinated the Dec. 15 auction for closely held Mestena Uranium LLC of Corpus Christi, Texas. Garrow said the buyer was a ``non-utility, non-uranium- producer.'' He declined to provide other details.
Uranium prices have soared on demand from hedge funds and other investors on concern supplies will lag behind demand from nuclear power plants.
Cameco, the world's largest producer, has said the Cigar Lake flood will postpone construction by at least a year. The project had been slated to open in 2008. Saskatoon, Saskatchewan-based Cameco predicted the mine would supply as much as 10 percent of the world's uranium when Cigar Lake reached full production in 2010.
Shares of Cameco rose 18 cents, or 0.4 percent, to C$46.19 on the Toronto Stock Exchange. They have gained 28 percent in the past year.
The auction by Mestena was the 11th since the company began production at its Alta Mesa mine about a year ago, Garrow said. As in the recent auction, all of the buyers this year were ``non-utility, non-uranium-producers,'' he said.
Mestena flushes a chemical solution through underground ore bodies to recover uranium from the mixture. The mine can produce about a million pounds of uranium a year, according to the U.S. Energy Information Administration.
Cigar Lake is 50 percent owned by Cameco, with the rest held by AREVA Resources Canada Inc., Idemitsu Uranium Exploration Canada Ltd. and TEPCO Resources Inc. Global uranium consumption is about 180 million pounds a year.
To contact the reporter on this story: Christopher Donville in Vancouver at [email protected] .
(20min delay)