Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Iran’s Nuclear Ambitions Highlight Kazakhstan’s Uranium Potential

Commodities / Uranium Nov 30, 2009 - 01:14 PM GMT

By: OilPrice_Com

Commodities Best Financial Markets Analysis ArticleOne bonus of the global recession is that it wiped a lot of incompetent hedge fund managers and energy speculators from the canyons of Wall Street. As the Gordon Gecko sycophants regroup and look for the next Big Thing, maximizing profit while minimizing risk, the landscape looks very different than it did a year ago. In such a climate, it is uranium, not oil and natural gas that would seem to have the brightest future for one simple, overriding capitalist principle – supply and demand.


Whatever agreements are reached at December’s global climate warming summit in Copenhagen, they can only boost uranium’s appeal, as the carbon footprint of a nuclear power station consists primarily of the carbon cost of mining uranium fuel, not a nuclear power plant (NPP)’s operation. According a University of Wisconsin study, NPPs only emit about 17 tons of carbon dioxide per megawatt, little more than wind and geothermal power, the lowest sources. In contrast, coal has the highest carbon emissions at about 1,000 tons per megawatt. Accordingly, expect to see many nuclear power cheerleaders emerge in Copenhagen.

Consider – two years ago, London’s World Nuclear Association in May reported that worldwide, 256 reactors were either in the planning stage or under construction. Even Ukraine, site of the infamous 1986 Chernobyl disaster, has announced plans to build 22 new nuclear power stations, while the United States, site of the 1979 Three Mile Island partial meltdown accident, has 23 reactors being proposed. These new reactors would be in addition to the 439 nuclear power reactors worldwide in 31 countries generating 372,000 megawatts reported by the International Atomic Energy Agency, an increase of 58 percent, all needing fuel.

According to the Wall Street Journal on November 29, “Iran announced a massive expansion of its nuclear program. President Mahmoud Ahmadinejad unveiled in a cabinet meeting plans to build 10 more nuclear facilities for enriching uranium.”

The nuclear issue even impacted last year’s U.S. presidential election, as Republican nominee John McCain committed his administration, if elected, to begin planning for the eventual construction of 45 new nuclear power plants in the United States by 2030, twice the number currently on the drawing boards.

Europe is also interested in expanding its nuclear power industry, which represents 45 percent of the world's currently operating nuclear facilities and 33 percent of new reactor construction. European nations currently operate 197 nuclear power plants generating 169,842 megawatts, and 12 European countries are planning or considering proposals for up to 67 additional reactors.

The story is the same in Asia. South Korea relies on nuclear energy to produce 45 percent of the country’s electricity and Japan is not far behind, relying on nuclear power for 30 percent of its energy needs.

Asia’s economic powerhouses China and India are interested in nuclear energy as well. India is increasingly interested in nuclear electrical power generation despite the fact that nuclear currently accounts for a paltry 3 percent to 4 percent of the country’s power needs; India has 19 planned and proposed nuclear power reactors.

Like India, China is a relative newcomer to nuclear power generation, deriving only 2.3 percent of its electricity from nuclear power, compared with the United States' nearly 20 percent. Of China's 11 current NPPs; the oldest, Qingshan-1, only came online in 1991. China's Commission of Science Technology and Industry for National Defense in its 11th Five-Year Plan for the Nuclear Industry said China will prospect for and develop indigenous uranium deposits in order to expand the nation’s ability to produce 40 gigawatts of nuclear power electrical generating capacity by 2020.

Further accelerating China’s move towards nuclear power, on 26 November Prime Minister Wen Jiabao announced his country’s plan to cut carbon-emissions intensity 40 to 45 percent by 2020 compared to 2005 levels. Carbon intensity is the emissions produced per unit of economic output, and in order to meet the target, China is apparently committing itself to implementing ambitious energy-efficiency and fuel-switching policies. Since most renewable and alternate non-fossil energy is in the power sector, this would mean a much higher percentage of China’s total electricity generation to meet these goals will need to come from non-fossil fuel sources, including renewables and nuclear energy.

To be on the safe side, China is also developing a national uranium reserve, to commence in 2010.

Despite Beijing’s ambitious attempts to expand uranium production in Xinjiang and elsewhere however, local sources will be insufficient to meet domestic needs despite country-wide prospecting. Analysts predict that within less than a decade China's planned nuclear power reactors will consume 44 million pounds of uranium annually, as more than 16 provinces, regions and municipalities have announced intentions to build nuclear power plants within the next eight years -- a total of 77 planned and proposed new reactors.

The revival of interest in nuclear power in the wake of record high oil prices and despite environmentalists’ opposition will prove a boon for uranium-producing nations. Current global production of uranium is approximately 40,000 tons annually. The math of the analysts quoted above on China’s needs means that without increased production, China alone would consume 55 percent of current world output within a decade.

Canada currently leads world production, with 25 percent of the world's output, followed by Australia. Kazakhstan is currently the world's third-biggest uranium miner. The three countries currently account for more than half of global uranium production. Other uranium mining nations include the United States, the Russian Federation, Portugal, Namibia and Niger, but those seeking reliable supplies must needs look to the “Big Three.”

Kazakhstan contains the world's second-largest uranium reserves, estimated at 1.5 million tons. In 2006 it produced 5,279 tons of uranium, 21 percent more than in 2005.

But Kazakhstan has ambitious plans to massively boost its output of the silvery metal, as evidenced by this year’s production. Kazatomprom, the country's national nuclear corporation, said in a press release last month that the country boosted uranium output an eye-watering 61 percent year-on-year in January-September to 9,535 tons, 3 percent above the government’s target for the period. Part of the reason for Kazakhtatomprom’s success was opening five new mines last year. According to Kazatomprom’s statistics, global uranium output in 2009 is projected to be 11,000 tons in Canada, 9,430 tons in Australia and 12,800 tons in Kazakhstan.

Kazakhstan is not only increasing its mine production, but moving to develop fuel fabrication facilities in an effort to move from mining to the higher value-added production of nuclear fuel fabrication.

Kazakhstan’s nuclear fuel issue will be of keen interest in Moscow, as it is currently a world leader in the technology. Despite its technological mastery, unlike its dominant position in the world’s oil and natural gas market, Russia’s footprint in the global uranium market remains relatively small. Russian state holding company Atomprom is the world’s seventh-largest holder of uranium ore reserves, the third-largest producer of nuclear fuel but only the world’s fifth-largest miner of uranium. Current Russian production is only 3,000 metric tons of uranium ore out of an annual requirement of 18,000 metric tons.

Russia's oldest operational nuclear power facility, Novovoronezh-3, came online in 1971. The Russian Federation now operates 10 nuclear power plants with a total of 31 reaktor bol'shoi moshchnosti kanalnii reactor units, which supply approximately 16 percent of Russia's energy needs. Except for the Bilbino Nuclear Power Plant in eastern Siberia, the other nine complexes are all located in European Russia. Putin’s administration is committed to expanding Russia’s nuclear energy use, noting in his 2007 annual address, “Over the entire Soviet period, 30 nuclear power plant units were built, but we plan to build 26 such units over the next 12 years, and to do so using the most advanced technology available.”

As with its oil industry, Kazakhstan has actively courted foreign investment for its mining operations. Kazakhstan has signed multiple contracts, including technology transfer agreements, with companies from Canada, Japan, France, and China. The world’s leading producer of uranium oxide, Canada’s Cameco, has a 60-percent share in Kazakhstan’s Inkai uranium mining operation, while the state atomic energy agency, Kazatomprom, the world’s fourth-largest producer, also has a stake in Inkai. Nor is the investment one way; Kazatomprom, flush with cash, has proposed purchasing a 10-percent stake in the U.S. company Westinghouse Electric.

While the price of uranium in the last several years has been volatile, the overall trend of the last decade has been strongly upwards. In 2001 a pound of uranium sold for between $5 and $10. Current prices in the spot uranium market have trended between $40 and $50 all year after having soared to $140 along with oil in 2007. The 2007 price resulted from the end of Russian dumping, surging apparent increases in demand plus massive liquidity via hedge funds and participation certificates, plus, combining with the difficulty of valuing uranium stocks. Despite these variables, given the projected construction and demand of NPP plants worldwide over the next decade, even a cashiered Wall Street analyst might be able to conclude that the price trend is likely to be upwards.

Rio Tinto's listed uranium subsidiary, Energy Resources of Australia CEO Rob Atkinson, recently commented in The Australian that current relatively low uranium spot market prices combined the effects of the global recession are hampering mine development in a number of countries, setting the scene for a future uranium shortage, noting, “Given production issues that are going on across the world and the (longer-term) demand from power stations, spot prices seem a bit out of kilter at the moment.” Atkinson’s comments echoed an earlier report, as the Royal Bank of Canada Capital Markets noted in a study, "Investing in Uranium Companies," that a supply gap will exist in uranium after 2013. As
NPPs are licensed to run for 40 years, with many re-licensed for another 20 years, new NPPs will not be replacing existing plants, but only adding to demand.

Kazakhstan’s nuclear policies have won it plaudits in the international community, beginning when it voluntarily relinquished its Soviet-era nuclear arsenal. Now the IAEA is considering Kazakhstan’s proposal to host a nuclear fuel bank on its territory, a gesture that might yet cut the international Gordian knot of Iran’s civilian nuclear program.

In short, Kazakhstan is fast becoming a major player on the world nuclear stage, even in the diplomatic sphere and its potential to increase its share of the world’s uranium market is a certain bet over the next few years, as it has its influence in the global oil market. Its government’s relative stability and investor friendly climate are added pluses, but for those Wall Street Masters of the Universe disinclined to deal with President Nazarbayev’s regime, there are always profits to be made in Namibia and Niger.

And, of course, China, Japan, South Korea and India are only too willing to pick up the slack.

This article was written by John C.K. Daly for OilPrice.com - Who offer free information and analysis on Energy and Commodities. The site has sections devoted to Fossil Fuels, Alternative Energy, Metals, Oil prices and Geopolitics. To find out more visit their website at: http://www.oilprice.com


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in