Uranium Investing News

Spot uranium prices have just seen a meteoric rise and an equally impressive fall. The metal was buoyed to US$138 a pound U3O8 last summer by eager speculators and hedge funds. In the months that followed, it became evident that short-term supply exceeded demand for the metal and a price correction brought it its price to less than half of last summer’s record levels. It now rests at US$63 a pound U3O8.

But uncertainty in spot uranium price aside, the metal is still hot in a big way as governments around the world try to wean themselves off oil. Uranium is proving an exciting power source in a world struggling to reduce its collective ecological footprint in the face of global warming.

The European Parliament claims nuclear energy will be essential if the EU wants to meet its basic energy needs. The rise to power of a new Australian leader sparked renewed interest in uranium mining in that country. China is going nuclear in a big way, looking for uranium to quench its energy thirst. On that note, four nuclear power plants are already under construction in that country, with 23 others announced and 54 more proposed. Kazakhstan has vowed to surpass Canada and Australia as the metal’s top producer.

Of course, the industry is not without controversy. Opponents point fingers at environmental and security concerns. To address the former, industry leaders point to innovations in uranium mining and enrichment, stricter industry standards, guidelines, and regulations, and a new generation of nuclear power plants. And grassroots resistance from aboriginal and environmental groups forces uranium companies to cooperate with local communities in a fair and transparent manner.

Many of today’s nuclear security issues surround Iran, a country facing major international scrutiny over its nuclear activities. Iran’s defiant president, Mahmoud Ahmadinejad, continued to enrich uranium, despite widespread disapproval from the United Nations and much of the western world.

Just the same, oil prices continue to soar and ink on international nuclear cooperation agreements and massive merger and takeover deals continues to dry. More and more political leaders are embracing uranium, touting it a clean, reliable, and safe alternative to the world’s oil addiction.

And bullish uranium analysts regularly remind investors that the world’s 437 nuclear reactors use roughly 67,000 metric tonnes of uranium each year, but the world’s uranium mines produce nowhere near that amount. The difference comes from utility stockpiles and decommissioned nuclear weapons, both of which are running low. Given the rising global demand for uranium and the length of time it takes to approve a mine and bring it into full operation, a massive supply crunch is expected in the near future. Guess what will happen to uranium prices?