Nuclear renaissance remains in sightNuclear renaissance remains in sight
September 29, 2007
Publisher: www.u3o8.biz
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Talk of the proverbial "nuclear renaissance" rears its head again this week, with reports of increasing support for nuclear energy leading the charge.
Politicians, businesspeople and even some high-profile
environmentalists have in recent weeks given thumbs up to uranium, a
metal previously feared and scorned for its devastating military
applications and questionable safety record.
The switch is driven by necessity; oil prices are holding above US$80
a barrel and besides, burning fossil fuels is the opposite of going
green, being far from carbon neutral. And alternatives? Sure enough,
there are many: solar power, wind power, geothermal power, tidal
power... but only nuclear power seems far enough developed and supported to provide a viable substitute for our addiction to oil.
Roughly 15 per cent of Canada's energy is churned out of the country's 18 nuclear reactors. In the United States, 104 nuclear plants are licensed to operate. One of those reactors, Brown's Ferry unit 1, has been shut down since 1985, but the rest provide about 20 per cent of the country's electricity.
And that number is poised to increase for the first time in nearly 30
years. Last Tuesday, New Jersey based NRG Energy Inc. and the South
Texas Project Nuclear Operating Co. filed an application to build two
new reactors at a power station site in Matagorda County, Texas. The
move is already being heralded as the first step toward increasing
nuclear power in the US, expected to pave the way for more applicants.
The reactor is likely a decade away from being operational, but the
application alone has re-sparked a bullish interest in the uranium
sector. New reactors need hundreds of thousands of pounds of uranium
at start-up to reach operational capacity. And with more applications
expected in the coming months, chief financial officers of uranium
producers are dancing on their desks.
Not only that, but utilities are expected to change their buying
strategy. To prevent potential supply squeezes, analysts predict
utilities will be more willing to sign long-term contracts for
delivery of yellowcake.
Uranium spot price remained unchanged this week at $85 a pound, with
no transactions and no new demand reported in the spot uranium market. Futures contracts for December are priced at $88, while contracts for January through December 2008 are valued at $90.
It's interesting to note that all the major producers are confidently
out of the dumps they experienced during last summer's major price
adjustment. Day-to-day fluctuations aside, the stocks of big producers are up from last week and up higher from last month.
For example, Cameco Corp. closed at $45.88 Friday, losing 62 cents, or 1.3 per cent, in day trading, but the company still closed 10 per cent higher than it did at the end of August. Similarly, Denison Mines Corp. closed at $11.15, up a fraction of a per cent from Thursday, but still up about 14 per cent compared to one month ago.
The same can be said for many explorers and junior explorers in the
uranium sector. Crosshair Exploration & Mining Corp. made the most
explosive gains. The company stock fell to $1.20 a share last month,
but has since recovered to flirt with the $2-mark, closing Friday at
$1.97.
But supply continues to emerge on the market; a trader is offering 100 metric tons of UF6 for sale. That's the equivalent of 260,000 pounds U3O8, which could again drive up the delicate supply/demand ratio. Bids were due last Monday, but the results aren't expected to go public for some time. Delivery is set for November 5, with payment due that day.
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