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
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
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Miners Lobbied Department of Energy to Revive Uranium Prices

Commodities / Uranium May 08, 2007 - 12:02 PM GMT

By: James_Finch

Commodities During the uranium bull markets of the 1950s and the 1970s, it was the United States Government’s policies which stimulated uranium production. Both actions were followed by multi-year rallies and brought about then-historical uranium price peaks. Each of the previous two bull markets ended when the federal government changed the existing policy.


There may be a reason why this bull market is now running on six years instead of the usual four. Uranium miners began lobbying the U.S. Department of Energy to allow the industry to rebuild after a two-decade-long uranium depression or drought.

First, a bit of important background on this.

Because we meticulously researched many of the developments launching, sustaining and ending those ‘uranium stampedes’ when we compiled Investing in the Great Uranium Bull Market. And of greater significance to investors, when the price action would turn down, putting their investments at risk.

According to NUEXCO/TradeTech charting of the previous two uranium bulls, both ran for about 48 months and then sputtered for the next 15 years both times.

The short-lived, mini-bull of the mid-1990s involved another government interference – the LEU-HEU pact between Russia and the United States – and brought about premature hope. It served as an interruption to the 15-year decline the market was then experiencing, and it did not gain sufficient notice to attract capital to revive the industry.

The present bull market, as have the previous two, have attracted large amounts of financing for both noteworthy and highly speculative uranium projects.

We wondered if the writing was on the wall, and whether the government would strike a third time to continue the 48-month up/15-year down pattern tracking back to the 1950s.

Over the past year, we were apprised of the next uranium sale by the U.S. Department of Energy (DOE). We had believed the amount of uranium to be sold could run as high as five million pounds U3O8 equivalent. This past week, that worry disappeared.

We interviewed Ed Rutkowski of the U.S. Department of Energy’s Nuclear Fuel Supply Security group. “We don’t plan to dump uranium,” Rutkowski told StockInterview.

Rutkowski told us the amount of uranium to be sold in 2007 would be ‘very small.’ The purpose for this sale was to pay the bills at the federal processing facility in Portsmouth, Ohio. This facility cleans up the uranium and brings it up to ASTM spec so it can be used in U.S. nuclear reactors.

Just as we were expecting a lot more uranium to hit the market this summer, so were many miners and utilities. There were rumors about five million pounds being dumped by DOE in the market. This figure came from the Energy and Water Appropriations Bill for Fiscal Year 2006.

In November 2005, Congress authorized uranium sales for remediation efforts, such as the uranium cleanup at the Portsmouth facility, but limited the sales to “as long as the volumes do not exceed 10% of the U.S. annual fuel requirement.” Because U.S. utilities annually consume about 50 million pounds U3O8 equivalent, many suspected the DOE would sell up to their legislated limit – about five million pounds.

Based upon this data and Ed Rutkowski’s frank discussions, the amount of nuclear fuel to be sold ‘probably some time this summer’ might be so modest, it would not faze the current uranium bull.

We talked this matter over with TradeTech chief executive Gene Clark, whose consulting company sets the weekly spot price. NUEXCO/TradeTech has been setting the weekly spot price longer than any other service – since 1968. It is the only consulting company which has continuously published a month-end spot uranium price.

Dr. Clark pointed out the rising uranium price had proven a blessing for the DOE in September 2006. “Because the price of uranium had gone up so much, they raised enough money from last September’s auction – by only selling a little more than 1.8 million pounds U3O8, that they paid the costs to operate the facility through 2007,” he told us.

The U.S. Department of Energy is likely to have a sale, according to Clark, before the end of the year, to pay their Portsmouth operating bills through 2008. But, they are highly unlikely to sell more than a token sum, relative to the amount the DOE holds in inventory.

He calculated DOE’s ‘very small’ amount of uranium could be about 520 thousand pounds U3O8 equivalent – in the form of UF6. Clark believes the current market price for uranium would likely cover the operating costs through 2008. But he added, “With a rise in market prices anticipated, the amount required to be sold could be even less.”

Clark told us the DOE would either go to Congress (not likely) for the money or sell the modest amount of uranium. “The government’s fiscal year ends in September,” said Clark, “so the sale might take place before then. They probably have until November or December to raise the money from a uranium sale.”

Uranium Producers of America

Rutkowski told us, “We have a lot of inventory, but uranium miners are worried that DOE would affect the market. We want to be good neighbors with them.” He also added, “Cameco Corp’s Fletch Newton indicated it would take 7 to 10 years to get the U.S. uranium industry up and running.” Mr. Newton is the chief executive of Power Resources, the Cameco Corp (NYSE: CCJ) subsidiary, which is presently the largest U.S. uranium miner.

Dr. Clark added another dimension to this, “The uranium producers were in a political ‘full-court press’ on DOE to prevent sales of this material, stating that such sales would undercut market prices.” He was right. The dumping would have murdered the bull before it stretched its legs.

Some of the credit behind the current uranium bull market must go to Jon Indall, legal counsel for the Uranium Producers of America (UPA). We’ve talked to Mr. Indall, and we are impressed with his very strong political connections in both New Mexico’s Capitol building and in U.S. Congress. He outlined UPA’s plans in an interview we conducted over a year ago with Mr. Indall.

With the backing of uranium producers, such as Cameco Corp and Denison Mines (Amex: DNN), Indall’s teams has worked closely to sell the UPA case to the Department of Energy. We found evidence of this, during our interview with Ed Rutkowski. He told us, “Miners are raising financing for their projects.”

We’ve also observed Mr. Indall and his staff have helped change the political climate in New Mexico for companies hoping to mine again in the prolific Grants uranium district, such as Uranium Resources (URRE), Strathmore Minerals (STHJF) and Laramide (TSX: LAM).

Perhaps this time, the up and down pattern of the uranium cycle has been extended. If this does happen, it could come about because of the insistence of uranium miners to help rebuild their industry. For now, the U.S. Department of Energy seems to be cooperating.

With Ed Rutkowski, we together calculated the value of the U.S. uranium reserves, which could be offered for sale. Six years ago, they stood at less than one-quarter billion dollars. Last week, during our interview, the market value of those reserves (according to the April 30th long-term uranium price) was greater than US$4 billion.

By James Finch
http://www.stockinterview.com

COPYRIGHT © 2007 by StockInterview, Inc. ALL RIGHTS RESERVED
James Finch contributes to StockInterview.com and other publications. His focus on the uranium mining and nuclear fuel sector resulted in the widely popular “Investing in the Great Uranium Bull Market,” which is now available on and on http://www.amazon.com The weekly spot uranium price is posted on the TradeTech website every weekend at http://www.uranium.info


© 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