global uranium shortage spurs new exploration

Global Uranium Shortage Spurs New Exploration
Bill Foote - January 2, 2014

Snippets

The world is moving back into nuclear power development. Shortages of U3O8 are showing up in buoyant prices, and willing investors in the expansion of mining, processing, and conversion operations globally.

What is the market for uranium?

Uranium ore is extracted from fluvial sandstone formations. At the mine mouth it is concentrated into uranium oxide, U3O8, also known as yellow-cake. U3O8 is often absorbed into resin beads for transport to processing plants where it is manufactured into fuel rods for energy use and into various metals and other fissile materials for medical and military use.

Over the past 40 years spot prices of U3O8 have ranged wildly from a low of $7 per pound in the 1970's to a high of $138 per pound in 2007. The market seems to be holding steady in the $70-$90 per pound range. This is extremely important since it takes at least $60 per pound to find and produce U3O8. Peninsula was able to lock in a $79 per pound long-term contract with a U.S. utility.

Worldwide there are over 400 nuclear reactors producing over 1,800 terawatt-hours of electricity based on about 375 gigawatts of capacity. This is over 18% of global electricity demand. Another 65 plants are under construction with another 167 planned in 10 years. U3O8 demand will climb from 177 million tons by 2020. An additional 374 million tons will be required for initial cores alone.

Kazakhstan is the world's largest producer with over 44% of production going to China and Russia. Russian heavy enriched uranium, or HEU, and U.S. reenriched tailings as secondary supply are coming to an end. The Russian HEU program was designed to recycle weapons-grade uranium for energy use. Uranium will be be in short supply to fill global energy production.

http://m.fool.com/investing/general/2014/01/02/what-profits-yellow-cake