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Uranium Shortage Looms in 2014, Benefiting Paladin, RBS Says
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By James Paton

Sept. 22 (Bloomberg) -- Uranium demand will rise and exceed supply in 2014 as China and Russia add nuclear power stations, benefiting producers Paladin Energy Ltd. and Energy Resources of Australia Ltd., the Royal Bank of Scotland said.

The price of uranium will double to a peak of $95 a pound in late 2011, from an average of about $47 a pound this year, RBS analysts Warren Edney, Sam Berridge and Lyndon Fagan said in a research report published today.

Paladin has surged 84 percent in Sydney trading this year and Energy Resources 36 percent as investors bet uranium will rise along with use of nuclear power. Some 48 reactors are being built, compared with 34 in 2008 and 32 in 2007, RBS said. Supplies are “inconsistent” with “logistical, statutory and operating bottlenecks” in Canada, Namibia and Australia.

Demand will climb steadily, leading to “a deficit market from 2014 on,” Fagan said by telephone from Sydney today. Perth-based Paladin and Darwin-based Energy Resources “are well placed” to gain and “should see their margins grow,” he said.

China and Russia are among countries increasing their use of nuclear power as a cleaner-burning alternative to power plants that run on coal and oil. The days of uranium prices below $20 a pound “are history,” the RBS analysts said.

To contact the reporter on this story: James Paton in Sydney [email protected].