solid buying, page-2

greetings meyans,
interesting article from mining weekly.

TORONTO (miningweekly.com) - Analysts said on Wednesday there was no ?breakthrough? in China?s uranium reprocessing capabilities, and there would be no impact on the market for the fuel.

?The bottom line is there was no breakthrough, there will be zero impact on Chinese demand for uranium,? UxC senior VP Mike Smith stated in an interview.

This came after China Central Television reported on Tuesday that technology developed by China National Nuclear Corp could extend the country?s uranium resources to last 3 000 years.

China Daily ? the state-owned paper targeted at Westerners ? said the following day in a front page headline that the move would solve the country?s uranium shortage.

Dundee Securities analyst David Talbot was equally sceptical.

?We don't put a lot of credence into this spin about a Chinese breakthrough,? he said in a January 5 note titled ?China's uranium reprocessing hype?.

Talbot pointed out that the uranium spot price actually rose after the announcement suggesting that ?recent uranium buyers don't believe the Chinese reprocessing hype either?.

Smith told Mining Weekly Online that the Chinese had been in negations with French nuclear company Areva regarding technology transfer, and there was speculation that the announcement of a technological ?breakthrough? could be related to this.

?There has been speculation that negotiations not going very well? and the government might be trying to pressurise Areva, he said.

According to Smith, China had been reprocessing uranium for 50 years ? that?s how the country made its nuclear weapons ? and the announcement was regarding strides made on the commercialisation of the technology, which the country was still ?20 years away? from making it economically viable.

?Nothing is different from what it was on Sunday night,? he affirmed.

Talbot said: ?We believe that this news should have no effect on the current supply demand situation - and if this technology is real, its implementation is unlikely for 10-15 years or more.?

Fuel reprocessing was currently being used by Japan, UK, France and Russia and accounted for about 3% of world nuclear fuel supply.

PRICES TO RISE FURTHER

Meanwhile, another UxC analyst, Eric Webb, said that both long-term contract and spot uranium prices would likely clock further increases this year.

?If prices have a decent year, spot would close 2011 maybe 10% higher, just under $70/lb,? he told Mining Weekly Online in a separate interview. Prices were $62,50/lb on January 3.

?I don?t foresee a huge increase over the year ? we?re not going to have a repeat of 2007.?

Denver-based TradeTech said earlier this week that there had been a record volume traded in the spot market last year, at 42,8-million pounds.

?China?s ambitious nuclear power expansion plan and the signing of two new contracts for its long-term uranium supply attracted renewed interest from the financial and investor sectors and propelled the price movement,? TradeTech president Treva Klingbiel said in a statement.

UxC said, however, that there had been 50-million pounds traded last year, compared with 55-million pounds in 2009.

?MAGIC LEVEL?

UxC?s Webb said that the $60/lb level was a ?magic? one, as producers needed the fuel to sell at this minimum threshold to justify building new mines.

It was also a key level that affected how much uranium enrichment plants needed feed into their plants.

?It?s like making apple juice... the harder you squeeze an apple, the more juice you get out. But it also costs more to squeeze harder,? he said.

best wishes for the year ahead, dcob.