The Red Dragon hunts for yellowcake (The prices could more then...

The Red Dragon hunts for yellowcake

(The prices could more then double)

In the next ten years alone, over one hundred new nuclear power plants will be designed, constructed, and brought online.

Half of those reactors ? including some of the world's most advanced ? will be built in China.

According to China?s National Energy Administration, the country will increase its nuclear capacity by more than tenfold to 80 gigawatts (GWe) by 2020.


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China expects to ramp up its nuclear power capacity to 80 GWe by 2020. After that, the country anticipates domestic nuclear capacity to continue rising to as much as 500 GWe by 2050.

At that point, the World Nuclear Association says China?s demand for uranium will reach 44 million pounds annually. But domestic supply will have only reached 5 million pounds by that time, leaving a sharp deficit in fuel resources.

This isn't news to the Chinese...

Concerned of a future supply deficit, China has been aggressively securing long-term uranium contracts.

In fact, most industry experts believe that China is largely responsible for driving uranium prices from $40 per pound in the summer of 2010 to over $70/lb today.

But even at $70/lb, China will continue to be an aggressive uranium buyer.

You see, the total cost of the uranium fuel required to run a nuclear reactor represents between 40% and 50% of operating at one of today's existing plants.

But new technologies have made nuclear power generation much cheaper and more efficient. And the fuel cost to operate a new state-of-the-art reactor represents only about 20%-25% of the total cost of power generation.

Given the efficiency of the new nuclear power plants being built in the country right now, it's unlikely that Chinese planners are concern by the recent increase in price...

Uranium prices could more than double from current levels before the China stops buying ? especially given their history of aggression in acquiring other strategic resources like gold, oil, and rare earth metals.