reactors Uranium: it’s only the beginning The uranium price has already quadrupled from 20-year lows in 2000. But this is “only the beginning”, says Richard S. Appel on www.financialinsights.org. Demand has exceeded mined supply by over 60 million pounds for the past several years, and is on an upward trajectory. China plans to build over 30 nuclear reactors by 2020 to reduce its reliance on oil and gas, while Russia is planning 24–and this is in addition to the 30 plants currently under construction worldwide. The US is also set to build more plants. Meanwhile, it takes years to start up a mine, so supply is hardly likely to rise quickly. And the vast uranium stockpiles of the US and former Soviet Union are dwindling rapidly. According to the World Nuclear Association, demand will exceed supply from existing mines and secondary sources such as stockpiles by 100% by 2020. (Article continued below)
The market is so tight, says Appel, that the purchase of under 2 million pounds of uranium by the Uranium Participation Fund–which has a mandate to buy and store uranium for the benefit of its shareholders–boosted the price by 20% in May. The likely emergence of more uranium holding companies as investor interest grows looks set to give the long-term uranium bull market an additional kick. Uranium is moving “sharply higher”.
One promising long-term play on uranium is Canada’s Cameco (CCO.TO, C$52.00, or CCJ, $42 in New York), the world’s biggest miner, says notes Adrian Day in The Gold Report. “Management would have to try very hard indeed not to benefit from higher uranium prices”. MotleyFool.com recommends considering BHP Billiton (BLT, £6.82) which is set to take over WMC resources. That would give it 40% of the world’s known uranium deposits.
Author: Andrew van Sickle Date: 16 June 2005 More articles by this author...
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