Nuclear industry’s revivalNuclear industry’s revival reflected in booming uranium price
Gavin Evans and Christopher Donvill
Bloomberg
NUCLEAR energy’s revival can best be seen in uranium, which outperformed the metals markets last year and might do so again this year.
Uranium is poised to climb 27% to $50/lb in the next six months because “there’s not a lot of uranium available”, said Jean-Francois Tardif, who put 8,4% of his C$300m ($259m) Sprott Opportunities Hedge Fund into it.
The Toronto-based fund jumped 39% last year, when its peers on average returned 9,3%, according to Hedge Fund Research of Chicago.
Uranium gained 76% last year, beating all but one of the 19 commodities in the Reuters/Jefferies CRB Index. Only sugar jumped more.
Not even zinc, the favourite this year among commodity specialists surveyed by Bloomberg News in January, will keep pace with uranium.
Analysts said zinc would advance 21%.
About 60% of uranium consumed in the world’s nuclear reactors is mined each year. Without supplies from stockpiles and recycled Russian warheads, the energy industry would not have enough uranium to keep all of its plants running.
Demand for nuclear power is increasing in China and India because of rising prices for oil, gas and coal. Finland is building a new reactor, and utilities in France and the US are considering additions. Concern that burning fossil fuels contributes to global warming is accelerating the push.
Bob Mitchell, manager of a hedge fund that invests in wholesale uranium, is so bullish that he turned down offers from mining companies to buy his entire inventory.
Mitchell began buying uranium in November 2004, at $20/lb, amid reports that some power companies were moving to replenish inventories. Uranium ended last week at $39,25/lb, according to Metal Bulletin.
After three decades of stagnation, the nuclear industry might get more than $200bn of investment by 2030, said the International Energy Agency in Paris.
“The nuclear industry is undergoing a rebirth,” said Paul Gray, an analyst at Goldman Sachs in London. “The uranium market will remain tight for at least the next three years.” Gray was among the Goldman Sachs analysts who at the start of last year correctly predicted uranium prices would extend their advance. Uranium’s surge revived interest in mining, threatening to end the rally.