uranium stocks to rise and rise

WHAT do John Howard and the bearded greenie Tim Flannery have in common? Not a lot you might think. Well, they are both doing their best to push up the price of uranium stocks. Even if Treasurer Peter Costello thinks the commodity boom is over (he's wrong, but we'll get to that later) the Prime Minister and Australia's most prominent environmentalist are daily doing more than enough to stoke uranium prices.

The PM has given the, ahem, green light to uranium-fuelled nuclear power more than once. But it's the recent fulsome - if slightly scary - endorsement from Flannery that has made the difference. "Climate change is so catastrophic and imminent that only nuclear power can save us," he claimed recently. With this coalition of conservatives and conservationists pushing nuclear power, it's becoming as difficult to find a card-carrying anti-nuke as it is to find Carlton runaway Brendan Fevola. What's more, the global swing to nuclear power has just begun - Australia has 40 per cent of the world's uranium, so don't bother telling anyone in this sector the mining boom has peaked.

In October the best-performing stock on the S&P/ASX200 was ERA - Australia's biggest uranium producer - which soared 42 per cent. And the biggest driver behind the 5 per cent jump in the overall market during the same period was BHP, the other big uranium miner.

Early last week uranium hit its highest price ever - $US60 a pound. In July last year when "Market Intelligence" first wrote about the looming rush into uranium, the price was $US30 a pound.

And the increase in uranium prices is not over.

In fact the flooding last month of the world's biggest uranium mining project - the Cigar Lake scheme in Canada - means the price is poised to race higher again. Some overseas analysts are now talking about uranium reaching $US100 a pound.

Now, I don't doubt Treasurer Costello has his reasons for calling the end of the boom - a desperate attempt to halt the Reserve Bank from putting up interest rates on Tuesday, perhaps. But the boom is not going to stop today or tomorrow.

In fact, it looks like it's not going to stop for years.

The extended upswing in prices for uranium, iron ore, nickel and many other metals is due to China, and Chinese factories are not going to start paying lower prices any time soon. The crux of the matter is that Australian miners BHP, Paladin, Era, Rio Tinto, Jubilee, Zinifex, Oxiana and a swag of junior explorers don't need prices to be any higher to make big profits - after the prices hikes in recent years it's a whole new ball game and costs (though they are rising) have not risen to match the higher prices.

As it stands, no other metal has managed to get all the ducks in a row in the same manner as uranium.

Yes, nuclear power is scary - but so are coal mines (especially in China).

Yes, it's ugly - but have you ever seen an industrial-scale wind farm? - and it's even got support from commodities curmudgeon Peter Costello.

The Treasurer came out in support of uranium back in April.

James Kirby is editor of Eureka Report at eurekareport.com.au.