Australian Uranium News - Research

Uranium Supply Crunch By 2016

2012-01-29T03:57:00.000-08:00

Published on Saturday January 29 2012 (AEST).

A nuclear expert gave uranium supply three more years at most before it seriously falls behind demand from the nuclear power industry.

Mr Thomas Drolet president of Drolet and Associates Energy Services said during a presentation at Cambridge House's Vancouver Resource Investment conference that "2016 We have to have supply in the market or the lights will gradually go out in the nuclear system."

A uranium supply crunch is widely anticipated to hit the nuclear industry starting next year as Cold War era sources of uranium dry up. To illustrate the severity of the shortage that the nuclear industry faces, Drolet highlighted 2010 uranium production from mining 118 million pounds versus consumption 190 million pounds.

Mr Drolet said that you can do the delta difference yourself referring to how much of a supply gap miners will have to make up for in coming years. That uranium is going to have to come from somewhere.

Mr Drolet argued that the Fukushima nuclear disaster in Japan, only delayed the onset of the coming pinch on uranium supply. But even in his downside analysis the uranium deficit still comes by 2015.

While Japan has idled most of its 50 nuclear reactors in the wake of Fukushima, Mr Drolet wagered that the country would have no choice but to bring online at least 30 of the reactors or suffer brutal economic consequences. If it did not do so industry in Japan would start to fail.

(Sourced from www.mineweb.com)

Mitsubishi Predicts Restart for Japan Reactors

2012-01-17T23:15:00.000-08:00

Published on Wednesday January 18 2012 (AEST).

TOKYO—The chief executive of Mitsubishi Heavy Industries Ltd. said he expects Japan's idled nuclear reactors to restart operations this spring despite widespread safety concerns among the Japanese public, and that the domestic backlash against nuclear technology won't affect overseas demand.

Japan has idled all but five of its 54 commercial reactors, and has been conducting so-called stress tests to gauge nuclear plants' resilience to natural disasters. So far, no Japanese reactor shut down for regular maintenance has been restarted amid the public's safety concerns after the March tsunami that triggered an accident at the Fukushima Daiichi nuclear complex.

But Hideaki Omiya, Mitsubishi Heavy's president and chief executive, said during an interview with The Wall Street Journal that he is confident the plants will resume operations soon, after they gain approvals from local officials nearby.

"My sense is that this process will be completed by spring, and from spring to summer this year there will be a resumption of operation at some power plants," Mr. Omiya said.

The Japanese heavy-equipment manufacturer is one of Japan's three major nuclear-plant-equipment makers, along with Hitachi Ltd. and Toshiba Corp. Nuclear equipment accounts for about one-third of Mitsubishi Heavy's nearly ¥1 trillion ($13 billion) in power-systems revenue, which itself makes up 34% of the company's total revenue—the largest of its six core businesses.

The last of Japan's reactors still in operation are slated to go offline by May, effectively eliminating the source of one-third of the country's electricity supply.

The Japanese government has signaled its intent to persuade municipalities near nuclear plants to approve restarts before the traditional midsummer peak in demand for electricity.

Prime Minister Yoshihiko Noda has vowed to scrap plans for new plants as part of a policy designed to gradually reduce Japan's dependence on nuclear energy as older reactors are decommissioned.

Still, Mitsubishi Heavy is optimistic about nuclear energy's future outside its home market. "There's been a severe backlash against nuclear-plant construction in Japan so we don't expect to see a lot of new reactors here for some time," Mr. Omiya said. "But globally, demand for nuclear power is not declining."

While the company expects to see higher revenue from safety upgrades of existing nuclear plants in Japan and increased reactor decommissioning projects, the loss of new domestic orders has prompted it to curtail growth plans. The company abandoned a goal of doubling its annual nuclear revenue of ¥200 billion to ¥300 billion by 2014, Mr. Omiya said.

Mr. Omiya said he expects to see strong demand at home and abroad for power-generation equipment, especially natural-gas-fired plants.

Mitsubishi Heavy has been hurt by the sharp appreciation of Japan's yen against the dollar and other currencies to record levels because it depends on foreign markets such as the U.S. and China for about 50% of its sales. A strong yen reduces the price competitiveness of exports and erodes the yen value of dollar-denominated profits.

Noting that Mitsubishi Heavy loses about ¥5 billion for every one yen appreciation in Japan's currency against the dollar, Mr. Omiya said the company might shift more of its output overseas. "If the current yen strength continues…manufacturers like us will move more production offshore and spur the hollowing out of Japanese industry," he said.

The European financial crisis is another headache for Mitsubishi Heavy and other Japanese exporters, even though their direct exposure to euro-denominated sales might be limited. "We're worried about how the European crisis will affect the [overall] Japanese economy," Mr. Omiya said. "The impact on the U.S., China and the rest of Asia is also a big concern."

For the fiscal year ended on March 31, Mitsubishi Heavy said Europe accounted for 15% of its net sales, compared with 26% from Asia and 21% from the U.S.

John Collier Speaks On Nuclear Power Plant Safety

2012-01-12T13:13:00.000-08:00

Published on Friday January 13 2012 (AEST).

John Collier video recorded in 1995. A significant proportion of our electricity is generated by thermonuclear reactions. The dangers attached to these processes and the radioactive products are well known and publicized. Much less well known are the measures taken to ensure that the highest levels of safety are realized in practice.

Flooding At Ranger Uranium Pit May Hit Energy Resources Production

2012-01-11T20:22:00.000-08:00

Published on Thursday January 12 2012 (AEST).

URANIUM miner Energy Resources of Australia today said the highest December rainfall on record had flooded its Ranger pit in the Northern Territory, preventing it from accessing high-grade ore.

ERA, which is controlled by Rio Tinto, said it hasn't been able to fully drain the pit, and that access is highly dependent on rainfall experienced for the rest of the wet season. The delay may impact uranium oxide production in the 2012 calendar year, it said.

ERA reported a 30 per cent increase in output to 2641 tonnes for the 12 months to December 31, 2011, although this was coming off a low base amid a difficult period for the miner.

Ranger, the second-biggest uranium mine in the world by production in 2010, is just about spent and ERA is encountering lower-grade ore at the bottom of the pit, triggering a spate of production downgrades.

"The delay in obtaining access to the high-grade ore located towards the bottom of Pit 3 may impact production of uranium oxide in 2012. However, the extent of this impact is presently uncertain," ERA said in a statement.

The company recently ditched plans to build a heap leach facility to process poorer quality ore, and instead chose to pursue a possible expansion of Ranger through development of the adjacent Ranger 3 Deeps deposit.

Uranium Spot Volume Climbs to Record Level in 2011

2012-01-05T20:39:00.000-08:00

Published on Friday January 06 2012 (AEST)

DENVER, CO, Jan 05, 2012 (MARKETWIRE via COMTEX) -- The year 2011 was a tumultuous period as uncertainty clouded the uranium market and TradeTech's U3O8 Spot Price Indicator (bloomberg:TDTC) ended the year at US$52.00 per pound U3O8, amid record spot volume as the market continued to stabilize following the crisis at a Japanese nuclear power facility in March.

Early in the year the uranium market showed signs of stability as the spot price followed a strengthening trend that began in 2010, when the market was recovering from a global financial crisis that began in late 2008. TradeTech's Weekly U3O8 Spot Price Indicator had climbed to US$73.00 per pound U3O8 on February 4. However, the spot price settled at $67.75 on March 11, when Japan's Fukushima nuclear station was severely damaged by a devastating earthquake and tsunami.

As the crisis continued to unfold, buyers and sellers considered potential short- and long-term impacts of the events in Japan while the uranium market tried to regain stability. On August 26, the spot price fell to the lowest point of the year -- $48.85 -- before rebounding to $56.25 by mid November, when traders became more active and purchased the majority of material sold that month. As 2011 came to a close, spot market demand remained primarily discretionary and TradeTech's U3O8 Spot Price Indicator was $52.00 per pound U3O8, the company noted in its December 31 Nuclear Market Review.

Despite price volatility affecting the spot uranium market throughout much of 2011, higher spot volume prevailed to set a new record of 45.8 million pounds U3O8, surpassing spot transaction volume of 42.8 million pounds U3O8 in 2010, the highest level recorded in two decades.

"Fourth quarter sales of more than 9 million pounds brought 2011 spot market volume to a new record level, as traders, uranium producers, and financial entities attempted to place material before year end," TradeTech President Treva E. Klingbiel said.

"Presently, spot uranium supply remains extremely thin as most sellers hold firm to offer prices and wait for increased demand during the first quarter of 2012. Demand is expected to gain momentum in January, with price volatility returning to the market as activity increases," Klingbiel added.

URANIUM DEVELOPMENT: Second Shaft Breaks Through At CIGAR LAKE

2012-01-04T16:18:00.000-08:00

Published on Thursday January 05 2012 (AEST)

SASKATCHEWAN - The second shaft at the Cigar Lake uranium project reached the mine workings 480 metres below surface on Jan. 3, 2012. The project is operated by Cameco (50%) of Saskatoon. Areva Resources Canada (37%), Idemitsu Uranium (8%) and Tepco Resources (5%) hold equity stakes in the project.

The second shaft will provide for improved ventilation underground and an additional means of accessing or exiting the mine.

"The breakthrough is a key milestone on our path to safe, clean and reliable production from this exceptional orebody," said Cameco president and CEO Tim Gitzel. "We expect to resume full mine development and construction activities in 2012 and remain on track to start ore mining by mid-2013."

Construction at Cigar Lake was begun in 2005, and development had to be halted in June 2005 when the workings were flooded following a major inflow of brine via the second shaft. Originally, Cameco thought construction would be delayed six months and the extra costs would amount to 10% or 20% of the original $520 million construction budget.

The remediation eventually cost in the neighbourhood of $102 million. It was carried out in phases that included cement injection at the problem area, installation of freezing equipment, securing areas where future rockfalls might start more water problems, and rehabilitating all the underground systems such as ventilation and pumping.

During 2011 the rehabilitation was completed and regulatory approvals were secured for a revised mining plan and increased discharge capacity for treated water. Freezing the orebody from surface has also begun.

Information about the high grade Cigar Lake deposit is posted at www.Cameco.com.

Uranium 2012 Preview Fundamentals

2011-12-27T00:33:00.000-08:00

Published on Tuesday December 27 2011 (AEST)

At the beginning of 2011, analysts everywhere championed a "renaissance" of nuclear power. The Japanese tsunami and subsequent Fukushima nuclear accident in March challenged market sentiment; spot prices and stocks alike suffered setbacks. The Energy Report has been there for the entire wild ride, interviewing industry experts, sharing sector news and scouting out the best companies for any market. Read on for a retrospective of expert commentary on this still-promising sector.

After a sluggish 2009 and a slow 2010, uranium seemed to be coming into its own at the beginning of 2011. The spot price went from $42/pound (lb) at the end of the decade to start 2011 above $60/lb. It quickly topped $70/lb in February and had $75/lb in its sights before the March 11 Fukushima nuclear accident slammed it back down briefly to $50/lb. With the exception of a couple bounces, it stayed lower through the rest of the year, closing at $52/lb.

The Energy Report research shows that uranium company stock prices generally followed the spot price as measured in the UXA1 Commodity Futures Price (shown as the bright red line). The real low for almost all the companies—and the commodity itself—was in August and September, with signs of life returning in the fall.

The week after Japan's natural disaster and subsequent nuclear emergency, we called then-Jennings Capital Mining Analyst Alka Singh for some context in the article, " Uranium Future Intact."

"I'm still using a long-term uranium price of $75 per pound," she said confidently. "But, there is so much market uncertainty that I put off initiating coverage on uranium names because of negative sentiments people have surrounding this sector. I think that all of this is more emotionally than fundamentally driven. Actually, this is a great buying opportunity to pick some of the better uranium companies with the solid assets and management teams. I'm just waiting for the market volatility to slow down."

When asked about how to spot the best opportunities, Singh had this advice: "The companies that are already in production with all their permits and most of their long-term contracts in place are the best companies to own right now. The long-term contracts have already been signed, so the utilities are actually paying the set price for the next five to eight years. Typically, companies that are already in production tend to sell about 70% to 80% of their production on these long-term contracts. Only 10% to 15% of their production is sold on spot prices. So, companies already in production with low cash costs and long-term sales contracts in place are the types of companies that you would want to own."

Singh was not alone in her positive view of the long-term uranium market. In July, Mining Analyst David Talbot spoke about his continued bullishness for the market in an interview titled "Uranium and Lithium Demand Powers Stocks."

"We remain bullish on the spot price of uranium," Talbot said. "In January, we said it was all about uranium demand and it largely still is. The demand picture hasn't really changed as much as the general media portrays. We might see uranium demand decline about 5% to 10% from where we predicted, by about 2020. But, we still expect about 240 to 280 million pounds (Mlb) of demand per year by then, which is really an increase of about 30% to 55% from here."

In an August article titled "Catalysts, Not Uranium Prices, Grow Stocks," Haywood Securities Analyst Geordie Mark advised investors to forget about the price of uranium and focus on the strength of individual companies.

"I think investors are looking for value within the sector. That can be translated as a company either witnessing good production growth potential, or nearing production having mitigated risk by receiving relevant permits and licenses. It could also be a company that has shown significant potential for resource growth. So, there is still investment potential. There is still interest in the sector, but investors are far more selective."

Later that month, Frontier Research Report Publisher Carlos Andres suggested looking outside the usual sources for investments in an article titled "Uranium and Potash Stocks on the Frontier."

"Emerging and frontier markets provide opportunities to buy high-quality companies at a discount simply because of the perceived risk factor," he said. "So we look at places such as Mongolia, which is a resource-rich country that is just beginning to realize the benefits of 20 years of market liberalizing. As a result, foreign direct investment has been steadily increasing, the rich resource endowment is starting to be developed and the country is experiencing historic economic growth. From a broader perspective, there are emerging and frontier market economies in South America, Southeast Asia and Africa with similar stories, although they all have their own unique twists. Countries like Colombia, Peru, Chile, Brazil, Guyana, Argentina, Ghana, Namibia, Tanzania, Botswana, Ethiopia, Indonesia, Papua New Guinea and others all play an important role in meeting historic and rapidly increasing global demand for natural resources."

Andres acknowledged that investing in frontier countries is not without risk. "Mining projects around the world are confronted by governments that want a bigger piece of the pie and at worst might want to nationalize their projects. In addition, big, state-owned enterprises coming from China, India and others are looking to buy publicly traded mining companies outright. Thus, capital coming from the main public natural resource markets like Canada, the UK and Australia, has to compete with these forces around the world. It is impossible to say how this competition will play out in the end, but I don't think state-owned enterprises and national governments can run Western capital off the playing field because the mature natural resource markets in the world are in the West. The expertise for finding these resource deposits and defining, developing and operating mines actually rests in the West as well. They need Western capital, expertise and technology to operate effectively. A balance will have to be found between the giant state-owned enterprises from emerging countries like China and India, and Western capital, technology and management. How it plays out in the end is anybody's guess. But eventually market and geopolitical action will define the balance. It's probably safe to assume that in meeting their resource needs, behemoths like China and India will have to be content, at least to some extent, on being customers rather than owners."

We checked in one last time in December with Dundee Capital Markets Vice President David Talbot for an article titled "The Uranium Industry Is Alive and Well."

"I think we will come back to double-digit returns," Talbot predicted. The stocks actually had double-digit returns on three occasions this summer. But Fukushima put long-term viability of the sector in doubt for some time due to significant negative press, which kept coming, and often it was just wrong. Uranium and uranium equity markets now seem to be hypersensitive to negative news, and the spot price was declining due to supply concerns earlier this year. Stocks were trading hand-in-hand with uranium prices. We think that Fukushima ultimately is responsible for only about 30–35% of the value lost in the uranium equities while many of the stocks are down by about half."

Then Talbot itemized the probably drivers for higher prices in 2012. "We believe that demand will really outpace supply beyond 2013. Uranium demand continues to be strong. Nuclear build continues to increase despite Fukushima and despite that the reactors are now offline in Japan and Germany. Today there are 12 more reactors in operation, under construction, planned or proposed than there were before the Fukushima incident. So that's about 997 reactors on the drawing board right now in one way, shape or form. We have seen uranium production increase about 28% over the past four years with almost all of that growth coming from Kazakhstan and Namibia. In fact, Canada and Australia are actually in decline over the same period. So despite this big runup in uranium prices from about $20 six years ago, we really haven't seen the mine construction that we had expected. Projects have been delayed, deferred or canceled for many reasons. We are estimating maybe just under 200 Mlb of production by 2020 if everything goes forward as planned.

"Another important driver is the reduction in secondary supply resulting from the HEU Agreement, the downblending of the Russian nuclear weapons program and then selling that uranium for nuclear fuel. The HEU Agreement is expected to go offline by the end of year 2013, and the Russians continue to confirm this. The end of the HEU program would remove 24 Mlb from supply annually. That number is huge. It's about 18% of all uranium mining. That is definitely positive for the fundamentals."

India To Require 5,057 Tonnes Of Uranium Between 2012-17

2011-12-22T02:39:00.000-08:00

Published on Thursday December 22 2011 (AEST)

New Delhi, Dec 21 (PTI) India would require an estimated 5,057 tonne of uranium during the 12th Five Year Plan period from 2012-2017, government told the Lok Sabha today.

"The country''s uranium requirement in the 12th Five Year Plan period is estimated to be 5,057 tonne," Minister of State in the PMO V Narayanasamy said in a written reply.

He said this includes 318 tonne of low enriched uranium for the Tarapur Atomic Power Station (TAPS) I-II and the Kudankulam I-II units.

As part of a long-term uranium procurement agreement, India would import 1,375 tonne of natural uranium dioxide pellets from Russia and 1,150 tonne of natural uranium ore concentrate from Kazakhstan, he said.

On Australia''s moves to lift the ban on uranium imports to India, Narayanasamy said, "No formal communication has been received by the Government of India from Australia, so far."

"It is not possible, as yet, to provide the time by which uranium for our reactors would be available from Australia," he said.

In reply to a separate question, Narayanasamy said a decision has been made to invite IAEA missions - Operational Safety Review Team (OSART) and Integrated Regulatory Review Service (IRRS) - for peer review of safety of nuclear power plants and of the regulatory system respectively.

"The Central Government is in touch with IAEA for scheduling the visit of OSART team in 2012," he added.

Areva Halts Namibian Trekkopje Uranium Development

2011-12-14T12:58:00.000-08:00

Published on Thursday December 15 2011 (AEST)

AREVA yesterday said it was putting its investment in the US$1 billion Trekkopje uranium project on hold as the French nuclear fuel and services giant braced itself for a worldwide loss of up to US$2 billion for 2011.

Central to Areva’s financial woes is a provision for an asset write-down of US$1,97 billion for property and equipment at its UraMin operations, which include Trekoppje as well as Bakouma in the Central African Republic and Ryst Kuil in South Africa.

In addition, state-owned Areva slashed its uranium resource estimates at Trekkopje by nearly 42 per cent.

At a strategic action plan presentation in Paris, Areva chief executive Luc Oursel said the Trekkopje deposit is now estimated to carry only 26 000 tonnes of uranium – down from 45 200 tonnes previously.

Oursel also announced an investigation into the 2007 UraMin deal, which cost Areva US$2,5 billion. French Industry Minister Eric Besson on Monday UraMin was “bought at a very high [cost] level”.

The Financial Post yesterday quoted David Talbot, an analyst at Dundee Capital Markets, saying that Areva bought UraMin before there were any significant metallurgical studies on the Trekkopje asset.

“They were reaching for pounds in the ground,” he said. “That deposit just doesn’t work the way they expected.”

In his presentation, Oursel said Areva has decided “to postpone the start of the three mining production projects stemming from the acquisition of UraMin”.

Trekkopje was expected to reach full capacity next year, producing 3 000 tonnes of uranium a year. In February this year, however, Areva said full production would be delayed until 2013, because of the “complexity” of the project.

By the time of going to press yesterday, Areva Processing Namibia could not tell The Namibian what the exact implications of Oursel’s announcement for Trekkopje would be.

Well-placed sources however dispelled rumours that Areva would be pulling out of Namibia.

The Fukushima nuclear disaster in Japan and its impact on global uranium prices also contributed to Areva’s financial meltdown.

When the company bought UraMin fours years ago, spot uranium prices were at a record height of US$135 per pound. Now it trades in the range of US$50 to US$55 per pound.

It is not just the UraMin outfit that will be hit by Areva’s turnaround plan, called ‘Action 2016’.

The company’s investment freeze also includes shelving a controversial nuclear enrichment plant project in Idaho in the US. Areva would cut its total investments by 34 per cent over the 2012-16 period, compared to the period 2007-11, Oursel said.

The company also plans to cut up to 1 500 jobs in Germany, and has instated a hiring freeze on support jobs like information technology in France.

Oursel said that the German job cuts were necessary following the German government’s decision to shut down eight nuclear reactors and progressively phase out the remaining nine reactors between 2015 and 2022. Germany represents six per cent of Areva’s order book of 44 billion euros.

Global Scarcity of Uranium Looms

2011-12-08T03:22:00.000-08:00

Published on Thursday December 08 2011 (AEST)

Challenges in sourcing funds for new mining projects, interruptions in both new and ongoing mine production, as well as the conclusion of the Highly Enriched Uranium agreement are near-perfect ingredients for a shortage of uranium in the very near future, a top producer warns.

Tim Gitzel, Chief Executive Officer of Cameco Corp., the world's largest uranium producer, said the problem lies more on the way investors and producers make their calculations.

"They take every possible project, think it's going to operate to perfection, and add it up and say 'there's lots of supply,'" Gitzel said. "It's easier said than done."

Gitzel argued that investors, traders, analysts and critics concentrate too much on a "post-Fukushima attitude."

"People don't focus so much on the supply side," he said.

Prices of uranium, a radioactive heavy metal used as an abundant source of nuclear energy, have tumbled 24 per cent since the March 2011 magnitude-9 earthquake and tsunami that hit Japan that caused a partial meltdown at Tokyo Electric Power Co.'s Fukushima Dai-Ichi nuclear plant.

The crisis at Fukushima led nations to pause and re-evaluate existing as well as future nuclear programs. Germany, for one, announced it will terminate its nuclear reactors by 2022.

The Japan nuclear disaster, coupled with Germany's declaration, prompted Cameco in August to slash its full-year global uranium demand estimate to 175 million pounds (79,400 metric tons) from 180 million pounds.

Data from the World Nuclear Association showed global mined uranium supply reached 53,663 tons in 2010, but is still insufficient to meet global demand. As a result, some utilities have been utilizing recovered fuel from Russian warheads as contained under the HEU agreement.

But now Russia has declared it will withdraw from the HEU accord by the end of 2013, all the more constricting world supply. Russia's pronouncement will remove 24 million pounds from present global supply. The HEU agreement has been in effect since the 1990s.

In 2010, Cameco yielded 22.8 million pounds of U3O8 - a tradable form of uranium. It has plans to raise annual output to 40 million pounds by 2018.

Uranium Sales To India Opens Up A Whole New World

2011-12-02T13:17:00.000-08:00

Published on Saturday December 03 2011 (AEST)

WE should be thankful for small mercies. Before delivering a triumph to Julia Gillard on selling uranium to India, Labor's national conference this weekend is having a debate on the issue.

Indian Prime Minister Manmohan Singh and Julia Gillard. Picture: Lyndon Mechielsen Source: The Australia

That will be a change because so far we've heard little more than applause for the Prime Minister's announcement three weeks ago that she would seek to change party policy to allow sales to a country that has not signed the Nuclear Non-Proliferation Treaty.

She says it is time to modernise the party platform. Those who agree present the change as little more than tidying up a diplomatic anomaly.

There is a case for a change in policy, including the contribution nuclear power can make to reducing India's carbon emissions, the practical reality that other countries are willing to sell uranium to India and that we already sell to countries like China and Russia.

But there is more to it than that.

"I am horrified that the media have not explained the enormity of this proposal," says Ron Walker, a former diplomat.

As a head of the nuclear division in the Department of Foreign Affairs in the 1990s and chairman of the board of governors of the International Atomic Energy Agency in 1993, his views are worth considering.

No anti-nuke activist, he subscribes to the policy first adopted by the Fraser government: that we should use our position as a major uranium supplier to demand strict safeguards against nuclear non-proliferation.

Leaving aside its surreptitious development of the nuclear bomb, India has been presented as the model nuclear citizen. Unlike China, Russia and Pakistan, it has not exported its nuclear weapons technology and expertise, at least on any significant scale.

Therefore, so the argument goes, India deserves to be made the exception to the rule that we do not sell uranium to countries that do not sign the NPT.

Walker thinks this is a dangerous idea that risks unravelling the whole international non-proliferation edifice -- one that, despite its failings, he says has discouraged a host of countries, including Australia, Canada, Sweden, Brazil and Argentina, not to pursue plans to develop nuclear weapons.

He also argues that India is far from blameless. Unlike other major powers, it still is producing fissile material to make bombs, has failed to sign the Comprehensive Test Ban treaty and refused to make any concrete commitment to disarmament.

"India's rejection of multilateral commitments on non-proliferation and nuclear disarmament is at least as contemptuous of the concerns of all other countries as India claims those countries are of its security concerns," Walker wrote in a recent Lowy Institute blog.

"If it were willing to accept commitments similar to those undertaken by NPT countries, this could easily be negotiated."

Walker tells Inquirer that the idea of "special mates' rates" for India is the start of a slippery slope. "Once you start making special rules for your mates, are we then going to say that Israel (also outside the NPT) isn't a mate? How could we be harder on Japan and South Korea if they acquired nuclear weapons?"

It is a view echoed in 2006 by Alexander Downer when he was foreign minister: "The problem is, if you start to make an exception for India then it raises questions, of course, about Pakistan, and then it raises questions about Israel. You'd have to be pretty persuasive in not extending the same privilege to Pakistan and Israel."

Then there is the risk of a new arms race. "No one can be certain that China will not follow the US example (of becoming a nuclear supplier to India), sell more nuclear material to Pakistan and set itself up as the sole arbiter of whether doing so is legitimate and responsible," Walker argued in an earlier Lowy Institute paper. "Or that Russia or Namibia won't start supplying Iran on a similar basis."

Kevin Rudd as opposition leader recognised the dangers in 2006, when he said: "The consequences of the collapse of the (NPT) regime for Australia are acute, including the outbreak of regional nuclear arms races in South Asia, Northeast Asia and possibly even Southeast Asia."

The US has extracted concessions from India in return for selling it nuclear fuel, equipment and technology. The argument is that this will bring India into the international fold of responsible nuclear citizens. But it still has some distance to go. India has promised to maintain a moratorium on nuclear tests, but will not go the whole way and sign the test ban treaty.

It will work with the US on an international treaty to stop the production of fissile material, but not stop doing so itself just yet. It has promised not to transfer enrichment and reprocessing technology to countries that do not have it -- an issue on which it has a better record than others.

Gillard says Australia will require strict adherence to IAEA rules, as well as "strong bilateral undertakings and transparency measures that will provide assurances our uranium will only be used for peaceful purposes".

But, as former Defence Department secretary Paul Barratt has pointed out, the Prime Minister has indulged her penchant for making announcements first and negotiating second, thus weakening her bargaining power. If India baulks at some of the conditions Australia places on uranium sales, what are the chances Gillard will reverse her reversal of policy?

In any case, Walker argues that a bilateral agreement is not enough and that it is the multilateral system that provides the real protection. Rather than backtracking on international commitments, Australia should be looking with other countries to bring India, Israel and Pakistan under the international umbrella.

"The aim is to put multilateral meat on the bare bones of India's new willingness to accept the responsibilities of a nuclear-armed state that is supportive of non-proliferation," Walker writes in his Lowy paper.

Gillard has responded to the urgings of the Obama administration, tying us into America's broader strategy of India as a counterweight to China. Whether this is in Australia's interests, particularly if it develops into an anti-Chinese containment strategy, is another issue worth debating.

Selling uranium to India may be realpolitik. But it is a decision we should make with eyes wide open and without pretending there are no consequences.

Australia's Move On Uranium Sales To India Welcomed

2011-11-16T14:36:00.000-08:00

Published on Thursday November 17 2011 (AEST)

The Australia India Business Council (AIBC) has welcomed Prime Minister Julia Gillard's support for uranium exports to India, a move that has boosted optimism across the sector here.

"The ability for India to generate the power needed to support its rapidly growing economy is reliant on safe and secure access to nuclear power. With Australia holding a significant share of the world's uranium reserves, it represents an important opportunity for trade that can be managed, given appropriate levels of transparency," said Arun Sharma, national chairman of AIBC, which this year celebrates 25 years of promoting trade and business relations between the two countries.

Gillard will ask the ruling Australian Labor Party, at its annual conference in December, to overturn its long standing policy of selling uranium only to countries that are signatories to the Nuclear Non-Proliferation Treaty (NPT). She will argue that though India has not signed the NPT, Australia, as the third largest producer of uranium in the world, cannot afford to miss out on the jobs and economic benefits this move would bring.

India is hoping that nuclear power will meet 25 per cent of its energy needs by 2050. "This opens up another avenue for Indian mining companies, which have been investing in energy resources, especially thermal coal. Besides buying uranium mines, there is scope for significant more investment in setting up processing plants," Ravi Bhatia, a senior technology business executive here for the past 29 years, told Business Standard.

BHP Billiton is working towards expanding the Olympic Dam mine, the world's largest uranium deposit and a leading copper resource in outback South Australia. "If the government changes its policy in relation to uranium sales to India and it ensures the appropriate safeguards are in place, BHP Billiton will review its position and take those matters into consideration.

However, currently we do not sell uranium product to India. That remains our position," Samantha Stevens from BHP Billiton told Business Standard.

India currently consumes about 3.5 million pounds/year of oxide (two per cent of global demand in 2011, of 192.5 mn pounds. "It imports oxide from Kazakhstan, Brazil and South Africa; enriched fuel and fuel assemblies are imported from France and Russia. We forecast five per cent per year growth in demand over 2010-2020; modest, because India has not yet been able to secure trade agreements with large producersâ, Tom Price, global commodity analyst at UBS Equities Research, told Business Standard

While the states of South Australia, a substantial uranium exporter, and Western Australia are backing Ms Gillard'ss proposal of allowing uranium exports to India, Queensland premier Anna Bligh has ruled out uranium mining in her state, which accounts for 42 per cent of all Australian trade to India.

Meanwhile US President Barack Obama, who arrived here today on a brief Australia visit, rejected reports that the US had influenced Gillard's decision. "We have not had any influence on Australia's decision to explore what its relationship in terms of the peaceful use of nuclear energy in India might be," he told reporters while addressing a joint press conference with her in Canberra. "India is a big player and the Australia-India relationship is one that should be cultivated. I don't think Julia or anybody else needs my advice in figuring that out. I will watch with interest what's determined."

Uranium Market Awakes Post Fukushima

2011-11-14T21:34:00.000-08:00

Published on Tuesday November 15 2011 (AEST)

Two weeks ago the spot uranium market remained fairly quiet but expressions of interest for supply began to be sought by buyers. This proved enough to spark up interest from traders, it would seem, because last week saw a sudden surge in activity.

There is still a producer out there looking for 900,000/lbs of U3O8 equivalent and last week two utilities joined the fray seeking a total of 500,000lbs, reports industry consultant TradeTech.

Sensing upside afoot, traders piled in last week to take out most of what was on offer which has now cleared the market of material available in 2011, notes TradeTech, as well as the lowest priced material available for the first quarter 2012.

Thirteen transaction were completed totalling 1.8mlbs of which half was traded on Thursday and Friday. To put the week's volume into perspective, eighteen transactions totalling 2.2mlbs were completed in the entire month of October.

The buying rush was enough to send TradeTech's spot price indicator up US$4.00 for the week to US$56.25/lb. Has uranium now shaken off the Fukushima blues or is this just a false dawn? Early days. TradeTechs' term price indicators remain at US$55/lb (medium) and US$63/lb (long).

First Glimpse Inside Fukushima Nuclear Plant

2011-11-12T23:03:00.000-08:00

Published on Saturday November 13 2011 (AEST)

Workers will spend the next 30 years dismantling its nuclear reactors

* There are up to 3,300 workers a day arriving at the nuclear plant

* Every day after work they discard their protective clothing, which is treated as radioactive waste

* Japanese officials guided journalists through the plant today for the first time since the disaster

* Conditions at Fukushima have been slowly improving and a 'cold-shutdown' is scheduled for the end of the year

Inside a reactor: The interior of the No. 4 reactor building at Tokyo Electric Power Co.'s tsunami-crippled Fukushima

Crushed: A glimpse inside the devastated nuclear power plant No. 4 after the destruction

Clean up effort: Workers will also be cleaning up the devastation inside the reactors after the March tsunami

Crippled: The steel walls of the nuclear power plant are crushed from the destruction

A view of the crippled Fukushima, showing the cranes working in the reconstruction attempt

Uranium Market Buyers Interest Returning

2011-11-08T11:59:00.000-08:00

Published on Wednesday November 09 2011 (AEST)

Uranium industry consultant TradeTech closed its indicative spot uranium price at US$51.75/lb for the month of October. That's down US25c from the previous weekly spot price and also US25c down from the end-September closing price. And that about sums up the uranium market over the past couple of months ? a whole lot of not much.

October proved a very quiet month in the market, with 18 transactions completed for a total of only 2.2mlbs, down from 4.2mlbs in September. All month the spot price fluctuated in a range of less than US$2.00/lb.

The lack of action is largely reflective of a stalemate between buyers and sellers, in which the buyers have not been all that keen, but sellers have not been prepared to lower prices to settle deals. It still appears US$50/lb is a rough line in the sand.

Also complicating matters have been differences in product demand (U3O8 and UF6) and differences in location of delivery requests across the globe, all of which underlines the fact there is no "real" global spot price for "uranium", and that's why TradeTech offers only an indicative price based on its market observations.

The industry remains unsure about levels of Japanese stockpiles no longer required, about ongoing US government plans to convert tailings stockpiles into useable product, and about the world's intentions from here with respect to nuclear energy, despite the Fukushima event now being eight months in the past.

On the other hand however, the market has also been able to note ongoing corporate interest in uranium mining, most recently exhibited by rival bids for Canadian miner/explorer Hathor from industry heavyweights Cameco and Rio Tinto .

The good news is that a primary producer entered the market last week seeking 900,000lbs of U3O8 split between four different points of delivery. When a producer is buying spot uranium it usually implies a contract shortfall through lost production. TradeTech further notes several utilities ? the real end-users of uranium ? are contemplating entering the market for product in coming weeks.

The bad news is that the insignificant spot price movements of the last few months are an indication of sellers unwilling to sell too low, rather than a lack of sellers. Thus if some decent bids do begin to hit the market, TradeTech suspects they may be jumped on.

TradeTech settled its indicative spot price for last week at US$52.25/lb which is up US25c from the week before. Indicative term prices remain at US$55/lb (medium) and US$63/lb (long).

Japan Restarts First Reactor At Genkai Post Fukushima

2011-11-07T23:36:00.000-08:00

Published on Tuesday November 08 2011 (AEST)

A Nuclear reactor at Kyushu Electric Power Co.'s Genkai power plant in Saga Prefecture resumed power generation at around 3 p.m. Wednesday, after it was reactivated late Tuesday following a one-month hiatus, company officials said.

If all runs smoothly, the plant's No. 4 reactor is expected to be back to normal operation Friday, despite opposition from local residents.

It was the first time since the start of the nuclear crisis at the Fukushima No. 1 power plant in March that a utility has restarted a reactor that went offline due to a technical problem.

The reactor shut down automatically Oct. 4 due to an abnormality in its steam condenser that emerged after repairs were carried out using a faulty manual.

Japan Approves $11.5 Billion In Funds For Tepco

2011-11-03T23:19:00.000-07:00

Published on Friday November 04 2011 (AEST)

Japan's Government approved Friday support funds for Tokyo Electric Power Co., also known as Tepco, with the move coinciding with the release of updated figures showing a massive net loss for Tepco for the fiscal year ending in March.

Tepco will receive about 900 billion yen ($11.5 billion) in funds via the Nuclear Damage Liability Facilitation Fund to help compensate victims of radiation from the Fukushima Daiichi nuclear disaster.

Tepco said Friday it expects a net loss of ¥576.3 billion for the fiscal year. It also said it plans to reduce staff numbers through a hiring freze, to cut pension benefits and to maintain a 20% salary reduction as part of cost-cutting moves.

The measures will help lower operating costs by ¥237.4 billion in the 2013 fiscal year, Tepco said. Tepco shares ended 0.7% lower in Tokyo morning trade.

In a related development, Japan's Ministry of Environment said contaminated materials released by Tepco's crippled reactors will be collected for the next 30 years and stored in concrete bunkers in Fukushima prefecture at a cost of about ¥1.1 trillion, according to Bloomberg News, which cited a ministry document.

Australian Labor Party Discriminatory Ban On Uranium Exports To India Has Little Australian Support

2011-10-30T20:01:00.000-07:00

Published on Monday October 31 2011 (AEST)

The labor party are so hated by the vast majority of the Australian people that the opposition party the liberals are virtual certainties to win the next Australian federal election.

At that time India will again be restored to its rightful place in the eyes of the Australian people and uranium exports will go ahead.

New Delhi can relax, the Australian media is doing its lobbying for it - especially on the uranium front. Slamming Prime Minister Julia Gillard's foreign policy as "obsolete and discredited", a writer in The Australian has contended that it is prejudicing Australia's ties with India, the emerging third-biggest economy in the world.

"That the ALP (Australian Labor Party) ... should continue to impair Australia's economic and strategic interests is intolerable. If this situation continues uncorrected at the December national conference then Gillard should be held to account for allowing Labor's atiquated obsessions about uranium and nuclear power to prevent Australia from following an India policy that its ministers know is desirable and inevitable," wrote Paul Kelly, the paper's editor-at-large.

Kelly quoted Rory Medcalf of the Lowy Institute, a think tank, as saying: "A decision to stick with the old policy (of not selling uranium to India) will convince India's political elite that Labor is never going to be a natural partner for a rising India."

Kelly wrote: "Consider the facts. Australia exports uranium yellowcake to China, Japan, South Korea, the US, Taiwan and several European countries... (Hence) there is no justification, strategic or economic, for the ban (on selling to India)."

The ban was imposed by the Kevin Rudd government in 2008, reversing an earlier decision by the previous Howard government.

The Australian media sees Prime Minister Manmohan Singh's absence at the ongoing Commonwealth heads of Government Meeting (CHOGM) as a clear snub to Australia over its no-uranium-for-India policy.

Kelly quoted Labor Senator Stephen Loosley, described as a foreign affairs specialist, as saying: "The Indians have sent a clear and unambiguous message at Perth. They regard this issue as important to them."

He again quoted Medcalf to say that "New Delhi does not immediately need our uranium but responds to Labor's ban with 'frustration and bafflement'. The situation is so bad that Australia, in Medcalf's words, 'refuses even to talk' to India about uranium exports."

In another piece, titled 'Empty chair at CHOGM shows India policy hurdle', Greg Sheridan, The Australian's foreign editor wrote: "...We only need to look to India, as the world's most populous democracy, to realize that for all the fashionable dogma about colonialism, the spread of democratic institutions has been beneficial for people in countries where they have been properly administered.

"Despite enormous challenges, India continues to lift millions of people out of poverty as it modernizes its economy and asserts itself as an international power. Just as India represents the greatest weight of the Commonwealth, and perhaps the strongest manifestation of its ideals, so the absence of its Prime Minister, Manmohan Singh, from Perth delivers the sharpest blow to CHOGM."

He went on to add: "If this summit is to affirm its relevance it must attract engagement from India. Julia Gilard will be privately disappointed at this snub, which cannot be divorced from the pallid state of Australia's broader relationship. Over many decades Australia did not place sufficient emphasis on this relationship. John Howard belatedly recognized this and, after his second visit, in 2006, sought to elevate the bond.

"One important initiative in this process was agreeing to export uranium to India. On coming to power, Kevin Rudd also saw the potential and visited New Delhi. But Labor overturned the export decision because India is not a signatory to the Nuclear Non-Proliferation Treaty. This, together with attacks in Melbourne on Indian students, soured the relationship. The figuratively empty chair in Perth (India has sent its vice-president) emphasizes the urgent need to repair this relationship. Ms Gillard should endorse former South Australia premier Mike Rann's call to change Labor policy on uranium exports."

Noting that "India is a responsible nuclear power and vibrant democracy facing massive energy needs", he said: "The move will help achieve the aim of minimizing global carbon emissions, aside from the benefits in boosting our trade and strategic relationship. Bonding with India should be a top foreign policy priority and should not be held hostage to the Labor Party's feel-good anti-uranium symbolism."

The last Indian prime minister to visit Australia, the media noted, was prime minister Rajiv Gandhi in 1986.

Though media reports say that Vice President Hamid Ansari, who is leading the Indian delegation to CHOGM in Manmohan Singh's absence, will take up the matter of uranium exports in his meeting with Gillard on Sunday, officials say this is not likely.

Indian High Commissioner Sujata Singh told reporters here that "Australia has a stated position on uranium exports... and we will not bring up the matter till that position changes".

Cotter Plans To Reopen Uranium Mill Near Cañon City

2011-10-27T15:57:00.000-07:00

Published on Friday October 28 2011 (AEST)

Cotter Corp.'s uranium mill near Cañon City plans to restart operations using ore shipped in from New Mexico, according to a letter filed with the state.

But Gov. John Hickenlooper said a bill passed by the state legislature last year likely prohibits Cotter from beginning a new project until it cleans up contamination left by Cold War-era uranium processing.

Additionally, Hickenlooper said he will dispatch his chief of staff, Roxane White, to the Cotter Mill next month to evaluate cleanup efforts at the site declared a Superfund environmental disaster in 1984.

"This is very important to the people down there," he said. "I'm definitely looking at it, and Roxane is looking at it, so we can understand it in some detail and assure ourselves that there isn't risk to human health or the environment."

The Denver Post reported Sunday that state and independent reports over a 30-year period showed Cotter's two tailing ponds south of Cañon City are leaking. Additionally, a state engineer found in 2004 that the ponds were "unusable" for hazardous-waste disposal. Even so, the state — in charge of supervising the cleanup — is sticking to a plan developed in 1969 to keep the waste there permanently.

Cotter Mill manager John Hamrick did not return phone calls.

Cotter is currently demolishing its buildings and disposing of the debris in one of the leaking tailing ponds. In a June 24 letter, Cotter said it intended to "maintain its Radioactive Materials License for the purpose of processing Mount Taylor ore."

For the company to reopen, Hickenlooper said, it would have to obtain a new license, which would require a "very public process with a lot of public input."

Cotter's proposal appears to contradict plans made by Rio Grande Resources Corp., owner of the Mount Taylor Mine west of Albuquerque. Cotter and Rio Grande are owned by San Diego-based General Atomics.

Rio Grande told the U.S. Nuclear Regulatory Commission in 2008 it intended to mill uranium not at Cotter but at a planned mill near the New Mexico mine, records show. The company did not return a call and e-mail from The Post.

Western Mining Action Project attorney Jeff Parsons said he believes Cotter is trying to drag out final shutdown of the mill to avoid what are expected to be detailed reviews of the cleanup. Because the mill is a Superfund site, the EPA must sign off on final plans.

"This is Cotter's way of trying to push off the serious work, and the state is enabling them by not looking into the claim about Mount Taylor," said Parsons, who is representing residents suing to force Cotter to post a larger bond to guarantee cleanup of land and water near the mill.

Although the mill and adjacent neighborhood were declared a Superfund site 27 years ago, new pollution has recently been discovered, and the state still doesn't have detailed data on groundwater contamination around the mill, said Steve Tarlton, the state health-department radiation-unit manager who has overseen the cleanup for the state since 2003.

The state's estimate for cleanup costs was $43 million; however, it has permitted Cotter to put up only $20.8 million to guarantee the work will be completed.

The goal is for the U.S. Department of Energy to take the site over from the state, but first the site must be stabilized and cleaned up, which state regulators said is at least 10 years away.

Despite being owned by General Atomics, one of the country's top defense contractors, Cotter has in the past cited financial issues and threatened to walk away from the Superfund site.

State Sen. Kevin Grantham, R-Cañon City, said regulators are in a tough spot.

"I think they're walking a tightrope," he said. "A bad solution would be to chase a company away from the table that's moving in the right direction."

Uranium Market On Rios Radar

2011-10-25T15:11:00.000-07:00

Published on Wednesday October 26 2011 (AEST)

Diversified mining giant Rio Tinto made a bid for Canadian junior Hathor Exploration last week which significantly gazumped an earlier bid by Canada's uranium leader Cameco. Hathor's highly prospective acreage in Saskatchewan is nearby existing Cameco operations.

Cameco would thus be able to extract greater synergies out of Hathor compared to Rio coming in cold, but analysts are not convinced Cameco, which is still developing its flagship Cigar Lake project, is keen on being dragged into a bidding war. Rio's bid highlights the company's waning legacy uranium exposure, with Rossing in Namibia on the decline and the future of Australia's Ranger mine, in which Rio has a majority owning via Energy Resources of Australia , unclear.

The point for the global uranium market is, nevertheless, that a global mining giant still sees value in uranium mining. On the other side of the ledger, Rio is divesting of aluminium assets.

Last week also brought news that European group URENCO and US conversion company ConverDyn would team up to bid on the depleted tails stockpile sitting at the US Department of Energy. Congress has been looking at ways to commercialise the stockpile to provide funds for environmental clean-up operations.

Once again, such interest betrays a more general market interest in uranium, suggesting that global nuclear energy was not swept away in the Japanese tsunami. However, while such news might spark more spot market interest on the buy-side, one would assume, last week saw little interest from buyers such that sellers, including producers, were forced to reduce pricing.

Industry consultant TradeTech reports five transactions in the spot market totalling just under 800,000lbs of U3O8 equivalent. By week's end prices had moved lower, such that TradeTech's indicative spot price has fallen US85c to US$52.00/lb.

Indicative term prices remain at US$55/lb (medium) and US$63/lb (long).

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Tokyo Electric Says No Plans To Sell All Uranium Stakes

2011-10-24T02:50:00.000-07:00

Published on Monday October 24 2011 (AEST)

Tokyo Electric Power Co (9501.T) on Monday said it has no plans to sell all the stakes it holds in overseas uranium projects, denying a newspaper report that it would take such a step to raise funds to help victims of the crisis at its Fukushima nuclear plant.

Tokyo Electric is considering selling for a total of several tens of billions of yen its stakes in two uranium mining projects in Kharasan in southern Kazakhstan and the Cigar Lake mine in Canada, the Yomiuri newspaper reported.

The troubled utility, often referred to as Tepco, issued a statement saying it has no plans to sell all the stakes and that acquiring a steady stream of long-term uranium supplies through investments is important in securing stable power output.

When the Kharasan projects reach full production, Tepco should be entitled to obtain a little more than 10 percent of output, or 600 tones of uranium concentrate per year, the report said. That would be nearly 20 percent of the firm's annual needs before the March 11 quake crippled the Fukushima Daiichi nuclear plant, according to the paper.

Tepco has a 5 percent stake in the Cigar Lake project, which would allow it to acquire up to 450 tones of uranium condensate a year.

Tepco is likely to sell the stakes to Japanese firms to help ensure stable energy supplies in Japan, the report added.

(Reporting by Osamu Tsukimori; Editing by Joseph Radford)

The Great Uranium Bubble of 2007

2011-10-21T21:25:00.000-07:00

Published on Saturday October 22 2011 (AEST)

Since the price peak in 2007, it’s been a hard few years for uranium investors.

Check out this uranium price chart:

Source: Cameco

The price peak is called the ‘Uranium Bubble of 2007′.

The bubble started as investors worried about a uranium shortage.

Back then the uranium supply was a problem… 180 million pounds (81,000 tonnes) were required for nuclear power. But only 108 million pounds were mined.

It was only because of the Russian ‘Megatons to Megawatts program’, where old Soviet nuclear warheads were converted into nuclear fuel, that there was enough uranium to meet the demand from nuclear reactors.

But the tight supply wasn’t enough to cause the 2007 price bubble. That was caused by something else.

Andrew Mickey, an investment analyst at Q1 Publishing, blames it on a disaster at uranium miner, Cameco’s [NYSE: CC] Cigar Lake mine…

Cigar Lake is the world’s largest undeveloped high-grade uranium deposit. But in the lead up to 2006, Cameco claimed Cigar Lake would supply 17% of the world’s uranium needs.

So it’s no surprise that what happened next caused the uranium price to take off…

As Mickey wrote in 2008:

‘The uranium bubble was set to deflate slowly. [But] the exact opposite happened. A retaining wall collapsed and the entire mine flooded. Cameco confirmed a single pound of uranium wouldn’t come out of Cigar Lake for at least five years. [So] the bubble grew even larger.’

With no supply from Cigar Lake, the uranium price reached ‘panic’ levels…

…Until the early days of the sub-prime crisis in 2007. That’s when the uranium price began to crash. So that today uranium is less than half the level it was in 2007.

But despite – or perhaps because of – the lower price, there are still supply and demand problems.

In fact, in its most recent commodity report the Australian Bureau of Agriculture and Resource Economics (ABARE) expects worldwide uranium consumption to rise 6% to 86,800 tonnes this year.

And with 72 nuclear reactors set to open by 2016, ABARE estimates more than 107,300 tonnes will be needed for fuel.

So, where will the supply come from?

There are two sources of uranium for the market. The main source is uranium mined from the ground.

The other source includes nuclear weapons. Amazingly, this market meets up to 30% of uranium demand!

However, the agreement with Russia for the ‘Megatons to Megawatts’ program is due to expire in 2013.

So if the program stops, the supply and demand gap for uranium will get worse.

Simply put, there’s not enough uranium to go around. And that could push the uranium price higher.

Dr. Alex Cowie, editor of Diggers & Drillers says, ‘…if uranium continues to creep up, then we may see the uranium sector finally turn a corner and start the next leg up.

‘We have seen the start of come corporate activity, which is another good sign for the sector. For instance, Korea Electric Power Corporation (Kepco) is the biggest power utility in South Korea, and operates dozens of nuclear plants.

‘A few months ago at the Fremantle Uranium Conference, Kepco announced it was looking for acquisitions so it’s good to see this happening. It has just done a deal with Strathmore Minerals [TSE: STM] to fund exploration of one of its uranium assets.’

As you can see, Alex is bullish on the uranium sector. He goes on:

‘Another deal involves global uranium leader, Cameco. It’s bidding for Canada-based Hathor Exploration [TSE: HAT].

‘These merger and acquisition deals should be a clear sign that the sector is alive and well.’

On Thursday Rio Tinto made a cash offer for Hathor of C$578m, 11% above Cameco’s unsolicited offer.

Large energy firms are trying to cash in on uranium deposits while the price is low. Simply because they understand their future energy needs and want to secure a uranium supply now.

This is good news for some Aussie stocks. Right now, Australia is the third largest miner of uranium… and it’s set to expand further.

Growth for the sector is tipped to be 15% per year until 2015. In fact, by then, Australia could produce 17,000 tonnes of uranium… which would be worth almost $3 billion to the Aussie economy.

This growth potential is why Alex is confident uranium is the perfect stock for risk-hungry investors. He says:

‘The charts for most uranium stocks may be ugly, but the fundamentals of the uranium market are strong.

‘There’s a huge opportunity for investors here with enough patience to stick around.’

Uranium Spot Prices Poised For Comeback After Dropping From $74 lb To $51 lb

2011-09-13T13:50:00.000-07:00

Published on Wednesday September 14 2011 (AEST)

BMO Capital Markets in London updates us on the sector s status and offers advice on the best companies to support in the coming months and years.

Companies Mentioned: Bannerman Resources Ltd. BHP Billiton Ltd. Cameco Corp. Extract Resources Ltd. First Uranium Corporation Hathor Exploration Ltd. Kalahari Minerals plc Paladin Energy Ltd. Rio Tinto Uranium One Inc.

The Energy Report: Edward let s quickly sum up 2011 for uranium. Spot prices for yellowcake have fallen from a high of around $74 a pound (lb.) in January to around $51 lb. now. Most of the decline can be attributed to the tsunami in Japan that caused radiation leaks at several reactors there. After the Japanese problems chatter started about substituting thorium for uranium in nuclear reactors. Then negative long term policy decisions started trickling in from Japan Germany Italy and Switzerland. Your long term uranium price of $60 lb. makes you sound less than bullish on the sector. What if anything is going to pick up the uranium sector dust if off and send it upward again?

Edward Sterck: The biggest driver is likely to be the uranium price. I haven t actually changed my uranium price forecast post Fukushima because I had a conservative price estimate previously with a long term price of around $60 lb. in real terms. But in terms of potential positive catalysts the main thing needs to be reinforcement of positive sentiment from China once it announces that its safety review will allow it to continue to license new reactors. I would also like to see some buying picking up in the spot markets from organizations such as China Guangdong Nuclear Power Group and China National Nuclear Corporation. Those are the things that the market needs to see before belief in the uranium space returns to investors minds.

TER: August is typically a slow month for uranium sales but what about September and October?

We usually see volumes pick up in September and October. I think we ll see the same this year as well although a couple of things are overhanging the market at the moment making utility fuel procurement officers a little more cautious on the spot market.

The first is that some Department of Energy material still has to be liquidated into the market. It s not a significant quantity but fuel procurement officers may be waiting to see how that plays out before committing to purchases. There are also fears in the market that Germany or Japan may liquidate inventories. Obviously that would be to fuel procurement officers benefit. That s one of the reasons they could be holding off as well. It s a small market and prone to sentiment. If anything I think Germany and Japan would probably look for bigger buyers rather than just selling piecemeal into the open market potentially through block sales to countries such as China.

TER: You talked about whether China will license new reactors and move forward with its nuclear program. The country wants to boost power output by 45 gigawatts by 2015. Is there any path to that other than nuclear?

ES: China s main electricity generation focus is still fossil fuels coal fired powered generation but it has a big focus on clean energy as well. Nuclear is likely to be a core part of that strategy as well as renewables simply given the amount of airborne pollutants that the coal fired power generation is pumping out into the atmosphere over China. China s general population in certain areas suffers significant respiratory illnesses related to the pollution problem hence the drive for clean energy.

Nuclear power is likely to remain a core part of China s power strategy going forward. You also get advantages with nuclear power in terms of base load power generation in that unlike in coal you can stockpile uranium to the extent that you can actually cover your fuel demands for several years. It gives an element of energy security that other forms of power generation cannot.

TER: China s Sichuan Hanlong Group Co. Ltd. recently made an all cash offer of just a little over $0.51 share for Bannerman Resources Ltd. (BAN:TSX BMN:ASX) which is developing the promising Etango uranium project in Namibia. Earlier this year Kalahari Minerals plc (KAH:LSE KAH:NSX) the major shareholder of Extract Resources Ltd. (EXT:TSX EXT:ASX) which also has a uranium project in Namibia had acquisition discussions with China Guangdong Nuclear Power Group. The Chinese obviously want to secure uranium projects and they want to do it on the cheap. Do you expect that trend to continue?

ES: A number of Chinese power state organizations like Hanlong Group are securing strategic resources for China s future. It is certainly possible that we may see further moves in the uranium space.

In terms of investor friendly strategies we could be looking at things that are a little more marginal like Bannerman for example. The Etango Project has scale but it s low grade and doesn t necessarily make economic sense at current uranium prices. However if you are a Chinese power state organization with effectively a 0% cost of capital then the economics of these projects could look considerably different and you ve obviously got a very different investment timeline to your average investor as well. They re looking at this over a 10 20 30 year time span whereas your average investor is looking for a return in a much shorter time period.

Extract s Husab project has probably got a little more appeal due to its larger scale and higher grade versus Bannerman s Etango project. However despite the fact that CGNP s approach for Kalahari failed it is more digestible than Extract and it is possible that Kalahari may be the way to play the M A side of Husab rather than investing in Extract directly.

TER: Kalahari is the majority shareholder at Extract. Is that a potential takeover target?

ES: I think it is. Its Husab Uranium Project is world class in scale. The share structure does make it rather difficult though with Kalahari in there for 43%. Rio Tinto (NYSE:RIO ASX:RIO) has a pretty significant minority stake in Extract as well and there s also a Korean group in there. That does make it more of a challenge for any potential acquirer to take out. If anything I think Kalahari is possibly the cleaner target and would probably be the first port of call for any company looking to take out Extract or gain a significant stake in the Husab project.

TER: Bannerman was granted environmental clearance for infrastructure required to service its Etango Uranium Project. Does that make it more of a takeover target?

ES: Any piece of licensing or environmental approval that s secured makes the project more appealing for a potential acquirer.

TER: Do you expect larger uranium companies like Cameco Corp. (CCO:TSX CCJ:NYSE) or BHP Billiton Ltd. (BHP:NYSE BHPLF:OTCPK) to acquire smaller uranium explorers or producers while share prices remain in the doldrums?

Cameco has a lot of organic growth internally so it doesn t necessarily need to go out and make acquisitions. That said it did recently launch a hostile bid for Hathor Exploration Ltd. (TSX.V:HAT) that did come as a bit of a surprise. Hathor s primary asset is the Roughrider deposit which is located in the vicinity of Cameco s existing assets in the Athabasca basin and that could demonstrate synergies.

BHP s uranium commitment is focused on the Olympic Dam expansion. The company s criteria for project development is truly world class in scale.

At the moment there is not really anything of significance out there in the uranium space that seems to be available. There are several world class projects but they are largely tied up. Rio Tinto is possibly a bit more likely to be inquisitive in the space but it s going to be very price dependent. Like BHP it is looking for projects with significant scale and there aren t many at the moment. TER: What leads you to those conclusions?

ES: Rio Tinto s been more actively picking up shareholdings in the uranium space than the other two. Cameco s got a lot of organic growth anyway and until now hasn t been that active in the way of picking up listed uranium companies even with its first mover advantage at the beginning of the 2006 2007 uranium boom. In terms of BHP I m really just looking at the approach the company has embodied in other commodities.

TER: In a recent report you suggested that Cameco is greatly undervalued. You have an Outperform rating on Cameco based largely on its hedging strategy and greater uranium sales in the latter half of 2010. But for a long time Cameco has created some doubts among investors due to the instability of its large uranium projects like Cigar Lake. Has Cameco managed to get things under control in the Athabasca Basin?

ES: As far as we can see the situation at Cigar Lake is under control. I m actually going to visit the project in September so I ll have a better idea exactly where Cameco stands after that site visit. But the company appears to be progressing with the project in line with the schedule that it laid out to investors. I m sure it is doing everything in its power to make sure it doesn t run into the same problems again.

With respect to my Outperform recommendation relative to Cameco s own history it does appear somewhat undervalued at the moment. One of the risks to my recommendation is that we could see some erosion of valuation multiples in the market as a result of economic uncertainty combined with a reappraisal of multiples post Fukushima. Of course this would potentially apply to all of the uranium stocks that I cover.

TER: You also said it was based on an increase in forecast prices for the fuel services division. What does that mean?

ES: Long term the cost of fuel conversion services has generally gone up worldwide over the last couple years. That wasn t fully reflected in my forecast so I ve adjusted my forecast to take into account that Cameco cannot effectively charge a higher fee for its fuel conversion services.

TER: You also have an Outperform rating on Uranium One Inc. (UUU:TSX) which recently reported a five fold increase in second quarter profits on higher production and better uranium prices. For 2012 Uranium One has provided production guidance of 12.5 Mlb. 2 Mlb. more than the company is slated to produce this year. Is that a realistic target?

ES: I think it is. Uranium One s assets in Kazakhstan are performing extremely well. The structure there is that the mines are operated by subsidiary companies. At most of those operations the staff has a very good understanding of how to undertake in situ leach mining. Uranium One is the only company in the mid cap peer group that has been consistently hitting (a) its guidance and (b) analysts estimates in terms of both production and earnings. I don t see any reason for that to change in the near term.

TER: Uranium One is 51% owned by Russian interests. Is there any danger there?

ES: It does concern some shareholders. Personally I m quite comfortable with it. Any significant transaction between Uranium One and its 51% shareholder Russian state run ARMZ is subject to minority shareholder approval. So there are controls in place.

In terms of risks associated with Uranium One its operations are largely in Kazakhstan. The Russian interest in Uranium One very much reduces the political risks in Kazakhstan. Obviously Kazakhstan is an independent country. It treads its own path. But it was part of the Soviet Union previously. So I think having Russian governance involved with Uranium One probably alleviates some concerns regarding political risks in Kazakhstan.

TER: Paladin Energy Ltd. (PDN:TSX PDN:ASX) recently cut its 2012 output guidance to between 7.4 Mlb. and 7.9 Mlb. down from the previous forecast of 8.2 Mlb. Most of that is due to the delays at its stage three expansion at the Langer Heinrich Mine in Namibia Africa. Why do you have a market performance rating on that company given its projected shortcomings?

ES: I think Paladin will actually hit the design capacity production targets at both the Langer Heinrich operation and also at its Kayelekera operation in Malawi. The main problem with the company has been that it has overpromised results to the market and under delivered. It does have the technical ability to follow through on its targets but it is simply likely to take longer to get there than it is telling the market. So at present I don t really see any fundamental problems with the company that would suggest tagging it as an Underperform.

TER: Your target for Paladin was $3.50 in June. It s $3 now.

ES: I revised on the fact that the company is taking longer to get there than expected. And then obviously the outlook for nuclear power or the market s perception of nuclear power and uranium has been somewhat reduced post Fukushima. And I think that the market is applying smaller valuation multiples to the uranium companies than it did previously.

TER: Are there some other uranium names that you follow that you would like to discuss?

ES: I d like to mention First Uranium Corporation (FIU:TSX FUM:JSE) which is now primarily a gold stock despite its name. It has had a pretty troubled history and it definitely represents a higher risk and potentially a higher return investment. The problems that it has encountered have been in relation to its underground operation which has been fairly technically challenged. The company is struggling to get it up to the production rate that will alleviate problems with grade control. If it achieves that production rate it should bring costs down to reasonable levels. It s also had a couple of issues at its Mine Waste Solutions tailings retreatment facility which has encountered some regulatory issues that the company has now overcome.

Looking ahead I expect it to eventually get to the production rates that the company is guiding toward. It s just going to be a fairly long and potentially painful process. However being primarily a gold company I think we can ultimately see gold production on the order of 400 000 ounces a year five or six years out which makes it comparable to some of the mid cap gold companies.

TER: First Uranium s earnings share are about negative $0.19 a share in 2011 but you project that to go up to positive $0.05 per share in 2012. Is gold strictly to account for that?

ES: It s a combination. The gold price has obviously been very strong but production has improved as well. Mine Waste Solutions is actually cash flow and earnings positive. It s really just the Ezulwini Mine that s dragging earnings at the moment. Come the third and fourth quarter of the coming fiscal year I expect things to be looking better at that operation. As always however First Uranium remains a higher risk investment and there are certainly some refinancing risks associated with some debt that is due in June of 2012.

TER: Do you have any other thoughts on the uranium sector before we let you go?

ES: I m actually feeling slightly more positive than I was pre Fukushima. The rationale is that the main drivers of growth in nuclear power haven t really changed. The countries that were planning to expand their installed nuclear capacity were countries like China and Russia and India. They re not changing their plans materially as a result of the accident that happened in Japan.

On the other hand if you look at the supply side pre Fukushima everyone was trying to put a uranium mine into production given the great excitement about the outlook for nuclear power. My analysis at the time suggested that we were going to have a significant oversupply of uranium. Now that there s greater uncertainty in the outlook for nuclear power in investors minds and we ve obviously got general economic woes in the world that have pushed markets lower and negatively impacted investor sentiment I think that the financing of new production is likely to be more challenging than it was pre Fukushima.

In summary the supply demand outlook is one in which we re less likely to see an oversupply scenario. We could see tighter markets perhaps. I also think we still need a production expansion going forward to meet expected demand. On that basis to a certain extent this scenario actually plays into the hands of the established producers that are all pretty well capitalized. They are unlikely to need to come back to the market for additional financing and they could benefit from higher uranium prices next year or the year after.

TER: Thank you for your insights.

Courtesy: The Energy Report

Uranium Energy Corp CEO Makes The Case For Nuclear

2011-08-24T03:29:00.000-07:00

Published on Wednesday August 24 2011 (AEST)

The global Uranium mining sector has been plunged into some disarray by the Japanese nuclear disaster at Fukushima resulting from the uranium reactors being hit by the massive earthquake and subsequent tsunami and where the repercussions are likely to continue for many years to come. However, the CEO of the USA's newest uranium producer, Uranium Energy Corp (UEC) reckons the world has already gone too far along the nuclear energy path for uranium demand not to seriously exceed supply, possibly as soon as in the second half of the current decade.

Amir Adnani, CEO of Corpus Christi, Texas-based UEC still sees a big bull market in uranium ahead "Politicians are coming to value nuclear power as an increasingly critical tool in our efforts to minimize carbon and greenhouse gas emissions worldwide," said Mr. Adnani. "Of course, more reliance on nuclear power means more need for new uranium supply"

Although the tragedy in Japan temporarily affected uranium share prices, it drew attention to the array of safety features incorporated in western-designed reactors. "In the US alone, nuclear power plants have shown tremendous improvements in their safety records and operating capacity factors," adds Mr. Adnani. "Safe, green and made in America: US nuclear plants have undergone exhaustive studies and have been declared safe in any number of contingencies. Now the US will learn from Japan to make its plants even more safe."

Even the Fukushima reactors, which were very much old nuclear technology, effectively survived an enormously powerful force 9 earthquake with the major meltdown problems being primarily caused by the associated tsunami knocking out the power supply and thus cutting off the plant's cooling systems. This is a hopefully unique occurrence, and one certainly nuclear regulators around the world will be extremely aware of and will enforce standards to prevent this combination of safety failures occurring anywhere else.

Adnani sees an incredible business opportunity in revitalizing sites across America that formerly produced uranium. "There was a thriving uranium market in the US during the 1950s through the mid-1980s," he says. "Then came the uranium bust, and as a result, there is a significant shortage of uranium for the 104 nuclear power plants safely operating in the US. American power plants consume about 55 million pounds of the metal every year to generate 20% of America's electricity, yet the US produces only 3.5 million pounds, and US production has been falling. We rely on imports for about 70% of our oil but foreign countries supply 95% of our uranium. And some of those suppliers are no more stable than certain OPEC members."

Adnani believes that the uranium sector is facing a severe supply crunch. "Today, primary uranium production only supplies about two-thirds of reactor requirements. The balance is made up for by secondary supplies like the US-Russian HEU Agreement which supplies 13% of worlds or 45% of U.S. annual uranium needs. This agreement expires in 2013, while current forecasts call for greater than 100% increase in uranium demand by 2030," he said.

There is, though, still some major growth in potential new uranium production ahead, and some in countries like Canada and Australia, and perhaps Namibia and Kazakhstan which don't really fall into Adnani's categorisation of unstable suppliers. Fukushima did knock uranium prices back and will most certainly have led to more difficulty in getting some new projects to fruition.

Some of the world's anticipated new nuclear power plants will be delayed or cancelled altogether as a direct result of the Japanese disaster, but one suspects over time the overt worries will gradually dissipate as they did after Three Mile Island and Chernobyl in the past, but it will take quite a long time and some nuclear capacity will probably have been lost forever - but that doesn't necessarily detract from Adnani's premise which is, in part, a call for the U.S. to become more self-sufficient in uranium output - even just to meet existing demand.

Currently the uranium price is sitting at around the $50 a pound mark and probably no sharp move up or down is very likely until the reactor supplies from the nuclear warhead decommissioning agreement come to an end in 2013. From then, assuming supplies from this source cease completely, prices could definitely come under pressure. If the majority of the nuclear power plant building programmes around the world continue, and new mining projects are delayed or cancelled altogether because of the weaker prices currently prevailing, we could be in for a very major supply squeeze - but that is still a few years ahead and the short term outlook probably remains clouded for the uranium mining sector.

China’s Nuclear Power Plans Unfazed By Fukushima Disaster

2011-08-09T16:16:00.000-07:00

Published on Wednesday August 10 2011 (AEST)

In the wake of the Fukushima meltdowns, some nations are looking to move away from nuclear power. But not China, which is proceeding with plans to build 36 reactors over the next decade. Now some experts are questioning whether China can safely operate a host of nuclear plants.

by david biello

Giant rings of prefabricated concrete and steel lower into place at the Sanmen Nuclear Power Station in Zhejiang, China. Inside the rising containment building, a 340-ton chunk of forged steel forms the nuclear reactor’s vessel, which arrived from South Korea late last month. Inside that vessel, if all goes well, uranium fuel rods clad in zirconium alloy will by 2013 begin to fission, heating water to create the steam that will spin a turbine and produce electricity without the heavy greenhouse gas emissions of burning coal.

Workers swarm over the scaffolding of the buildings surrounding this core at the world’s newest nuclear power plant — the first to use a new type of nuclear reactor, the so-called AP 1000 from Westinghouse, though a similar reactor at Haiyang in Shandong Province is not far behind. And those two reactors represent only a fraction of the 20 nuclear power plants — and 36 nuclear reactors — China plans to build in the next decade. Already, Sanmen’s second AP 1000 reactor is under construction and scheduled to be completed in 2014.

In the wake of the meltdowns at the Fukushima Daiichi nuclear power plant in Japan, many nuclear nations have reassessed their fission future.

Japan has cast aside plans to build more nuclear power plants, Germany plans to abandon nuclear power by 2022, and Italy will no longer restart a long moribund nuclear industry. Even nuclear stalwarts such as France — which gets 80 percent of its electricity from nuclear reactors — have begun to analyze what eliminating nuclear might mean as part of a broader energy strategy for 2050, although the French government remains supportive of fission’s role in the energy mix.

But for the world to have any hope of constraining greenhouse gas emissions, nuclear power may have to play a role. The Japanese Environment Ministry notes that shuttering the 18 nuclear power plants in the country would boost CO2 emissions by as much as 210 million metric tons — a rise of nearly 17 percent from current levels. The International Energy Agency suggests that 30 new nuclear reactors must be built each year between now and 2050 to cut CO2 emissions in half.

As a result of such climate change concerns, as well as the need for more power in developing nations, more than 60 reactors are under construction around the world today in countries like India, Russia. and South Korea. Even the U.S. is currently building one new reactor — the second unit at Watts Bar in Tennessee.

But no other country comes close to China, with 26 reactors now under construction — nearly half of all the nuclear reactors being built worldwide, according to the World Nuclear Association. That percentage only looks set to increase as other nations call off nuclear plans. China has also become the world’s living laboratory for new nuclear reactor designs. The country has or is building “evolutionary” pressurized water reactors from France, heavy water reactors from Canada, pebble-bed reactors tested in South Africa, and even experimental reactors that use molten salt for cooling and, potentially, thorium for fuel.

Lynas Corps Rare Earths Mine Opens In WA

2011-08-04T05:03:00.000-07:00

Published on Thursday August 04 2011 (AEST)

A mine that will tap into the richest known deposit of rare earths in the world has been officially opened in Western Australia's Goldfields region by Premier Colin Barnett.

The Mt Weld mine, about 35km south of Laverton, is a $100 million Lynas Corporation project developed over the past 10 years.

The ore will be concentrated at Mount Weld before export to Lynas' advanced materials processing plant in Kuantan, Malaysia, and then sold globally.

Mr Barnett opened the mine on Thursday, saying it was the first significant rare earth mine opened outside of China for many years and added important new capacity to WA's already diverse resources sector.

"As well as directly employing up to 90 people at its full capacity, the mine is expected to contribute at least $17 million in annual royalty payments to the state," he said in a statement.

Rare earths is the term used for 15 metallic elements found within a "cocktail" of elements that need to be separated for commercial use.

They are used in advanced materials, batteries and electronic devices such as computers, high definition televisions, mobile phones and audio devices.

They are also used in advanced electricity generation and control technologies, including hybrid car technologies.

The Mt Weld mine is expected to be in production for 20 years.

China currently supplies about 95 per cent of the global rare earths market, but limits its supply to the rest of the world.

Based on estimates, Lynas could be supplying about eight per cent of the world market in 2012 and about 14 per cent in 2013.

Uranium Spot Prices Increase As Investors Re-Enter Market

2011-08-02T14:06:00.000-07:00

Published on Wednesday August 03 2011 (AEST)

Uranium spot prices rose 1.5 percent, snapping several months of price declines, as Japan’s Fukushima crisis brought new investors into the market, boosting demand, Ux Consulting Co. said.

Uranium-oxide concentrate for immediate delivery was at $52.25 a pound in the seven days through yesterday compared with $51.50 the previous week, Ux said in an e-mailed report today. That’s based on the most competitive offer tracked by the Roswell, Georgia-based company.

The spot price for the nuclear fuel has declined 21 percent since the week before a March 11 earthquake and tsunami damaged Tokyo Electric Power Co.’s Fukushima Dai-Ichi power station. The decline in prices is now attracting investors, Ux said.

“The spot market has rebounded somewhat as new buyers have appeared to take advantage of lower prices, clearing some material from the market,” Ux said. “While deals have taken place, they are generally for relatively small quantities, so it appears that neither buyers nor sellers are willing to commit large amounts at these price levels.”

Nuclear-power utilities buy the bulk of their uranium from mining companies, with the contracts mostly extending beyond 12 months. The market for immediate delivery, or spot market, allows trading for delivery within a year and includes buying and selling by financial investors.

Uranium prices, which rose to a record $136 a pound in 2007 before falling to about $40, started to rebound last year as China increased the use of nuclear power to curb emissions from burning coal. Even after Fukushima, the worst atomic accident since Chernobyl 25 years ago, nations such as China and India have recommitted to a nuclear energy future, which could bolster prices of the nuclear fuel in the longer term.

“Spot uranium market activity has remained at moderate levels over the past several weeks despite a number of participants being on travel or holiday,” Ux said. “To a large extent, the market appears to be stuck in a summer season, post- Fukushima funk. There has not been a lot of positive news to energize demand.”

New South Wales Considers Uranium Mining Return

2011-07-31T13:49:00.000-07:00

Published on Monday August 01 2011 (AEST)

The decades-old ban on uranium exploration and mining in NSW could be overturned, with the state government reportedly in talks with industry leaders.

In May, federal Resources Minister Martin Ferguson called for the Victorian and NSW governments to rethink their long-term bans on uranium mining and exploration.

The NSW Minister for Resources and Energy, Chris Hartcher, then met the chief executive of the Australian Uranium Association, Michael Angwin, in mid-June to discuss overturning the ban, The Sydney Morning Herald reported on Monday.

Mr Angwin has since written to Mr Hartcher "formally asking him ... to permit uranium exploration and mining to take place in NSW", an association spokesman told the newspaper.

The association spokesman said that while the NSW ban made it difficult to estimate the size of deposits, he believed it was "a significant potential royalty source".

A spokeswoman for the NSW government said it believed Mr Ferguson's comments "deserved consideration" and that the matter remained "under consideration by the minister".

Uranium exploration and mining are prohibited in NSW under the Uranium Mining and Nuclear Facilities (Prohibitions) Act of 1986.

LATEST UPDATE

'No Plans' to lift NSW Uranium Ban

Posted August 01, 2011 09:14:07

The New South Wales Government is adamant it has no plans to overturn a state ban on uranium mining and exploration.

China Makes Nuclear Power Breakthrough "Fourth Generation" Nuclear Reactor

2011-07-22T04:45:00.000-07:00

Published on Friday July 22 2011 (AEST)

The experimental fast-neutron reactor is the result of more than 20 years of research and could also help minimize radioactive waste from nuclear energy, the state-run China Institute of Atomic Energy (CIAE) said.

"The Chinese Experimental Fast Reactor is so-named because the neutrons produced in its core are not ‘moderated’ with water like those that generate heat in nearly all commercial nuclear reactors. The faster neutrons can burn down nuclear waste and even generate new fuel, promising a solution to the thorny problem of waste storage as well as energy independence.

China said Friday it had hooked its first so-called "fourth generation" nuclear reactor to the grid, a breakthrough that could eventually reduce its reliance on uranium imports.

China is the ninth country to develop a fast-neutron reactor, which uses uranium 60 times more efficiently than a normal reactor, helping the country to reduce its reliance on imports of the mineral.

Beijing has stepped up investment in nuclear power in an effort to slash its world-leading carbon emissions and scale down the country's heavy reliance on coal, which accounts for 70 percent of its energy needs.

But China's uranium reserves are limited, and it will have to import increasingly large amounts as its civilian nuclear programme gathers speed.

China -- the world's second largest economy -- currently has 14 nuclear reactors and is building more than two dozen others. It aims to get 15 percent of its power from renewable sources by 2020.

According to the World Nuclear Association, it aims to increase nuclear power capacity to 80 gigawatts by 2020 from 10.8 gigawatts in 2010.

The fourth-generation reactor, located just outside Beijing, has a capacity of just 20 megawatts. Other recently launched nuclear reactors in China had a capacity of more than one gigawatt, or 1,000 megawatts.

The latest technological step comes after China succeeded in reprocessing spent nuclear fuel in an experimental reactor in the northwestern province of Gansu in January.

Authorities said this would help extend the lifespan of proven uranium deposits to 3,000 years from the current forecast of 50-70 years.

Beijing has also pledged to improve emergency procedures and construction standards at its nuclear power plants, after Japan's devastating earthquake and ensuing tsunami triggered an atomic crisis.

India Reveals World's Largest Uranium Discovery

2011-07-19T05:35:00.000-07:00

Published on Tuesday July 19 2011 (AEST)

Business News-NEW DELHI, Tuesday

A new mine in south India could contain the largest reserves of uranium in the world, a government official said in remarks reported Tuesday, signaling a major boost for the energy-hungry nation.

The Tumalapalli mine in Andhra Pradesh state could provide up to 150,000 tonnes of uranium, Srikumar Banerjee, secretary of the Department of Atomic Energy, told reporters after a four-year survey of the site was completed.

"It's confirmed that the mine has 49,000 tonnes of ore, and there are indications that the total quantity could be three times that amount," Banerjee was quoted as saying in The Times of India.

"If that be the case, it will become the largest uranium mine in the world," he said.

Previous estimates suggested that only about 15,000 tonnes of uranium would be produced at the mine, which is due to start operating by the end of the year.

S.K. Malhotra, spokesman for the Department of Atomic Energy, told AFP that experts at the Tumalapalli mine were "quite hopeful" that the eventual volume from the mine would reach 150,000 tonnes.

But he warned that "it is not high-grade uranium, it is low-grade uranium. We have not found any high-grade uranium in India to match that found in Australia."

Major exporter Australia has so far rebuffed Indian requests for supplies of the heavy metal, which is refined into nuclear fuel, because the country has not signed the Nuclear Non-Proliferation Treaty.

The government has been seeking new supplies of uranium worldwide and has concluded supply deals with France, Kazakhstan and Russia among others.

"The new findings would only augment the indigenous supply of uranium. There would still be a significant gap. We would still have to import," Banerjee was quoted as saying by The Hindu newspaper.

India's fast-growing economy is heavily dependent on coal, getting less than three percent of its energy from atomic power. It hopes to raise the figure to 25 percent by 2050.

Construction began on Monday of two new indigenously-designed 700-megawatt nuclear plants in the western state of Rajasthan, the government said in a statement.

India currently has 20 nuclear reactors generating 4,780 megawatts of power, plus seven reactors with a capacity of 5,300 megawatts under construction, it said.

New Delhi -- backed by the US -- won a special exemption in 2008 from the Nuclear Suppliers Group (NSG), which governs global nuclear trade, to allow it to buy reactors and fuel from overseas.

The country had been subject to an embargo since 1974 when it first conducted a nuclear weapons test.

Countries are normally required to have signed the nuclear non-proliferation treaty and open their reactors to international scrutiny before they can buy atomic technology and uranium.

Companies from France, Russia, the United States and Japan are competing for a slice of the $175 billion that India plans to spend on nuclear reactors.

Since Japan's Fukushima crisis in March, environmentalists have campaigned to stop construction of new nuclear plants in India but the government has vowed to press ahead with its plans.

Regular protests have been held by residents at Jaitapur on the west coast of India, where a huge six-reactor, 9,900-megawatt plant is scheduled to begin construction in 2013.

China Stays Set On Nuclear Path

2011-07-11T19:14:00.000-07:00

Published on Tuesday July 12 2011 (AEST)

CHINA'S hunger for uranium to underpin the expansion of its nuclear industry has not been curbed by the Fukushima disaster, according to the country's main energy agency.

On the same day that China's Hanlong Mining was outed as the $144 million suitor of WA uranium junior Bannerman Resources, National Energy Commission advisory board chairman Zhang Guobao told the Boao Forum for Asia Perth conference his country's nuclear expansion plans were on track.

''It is no longer feasible to continue to rely on fossil fuels - developing nuclear power is a choice of must,'' he told the gathering of Chinese and Australian political and business leaders.

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He said there were 13 operational nuclear power plants in China with another 28 under construction to take capacity to nearly 40 gigawatts by 2015.

''And we have stayed firm on this plan,'' he said.

Of Japan's Fukushima nuclear crisis, which led many European countries to review their nuclear plans, Mr Zhang said the world ''should not stop eating just because of choking''.

The bullish note struck by some of China's most senior nuclear officials should bode well for Bannerman, which was set in play yesterday after admitting Hanlong's $144 million proposal. Bannerman described the 61.2¢-a-share cash bid as highly conditional and timed to take advantage of weakness in its share price, which it said had been battered by negative sentiment following the Fukushima disaster.

But Bannerman has left the door open to further talks because it still needs project finance or a joint-venture partner to develop its Etango deposit in Namibia.

The target's shares soared 23 per cent to 47.5¢.

Bannerman chairman David Smith said it was understandable that the junior had been targeted.

''Bannerman controls one of the largest undeveloped uranium resources in the world and, despite recent events, there is no doubt that nuclear power will continue to play a key role in meeting the world's growing energy needs, as well as alleviating greenhouse gas emissions,'' he said in a statement.

Rio Tinto chief development officer uranium Andy Lloyd told Boao delegates Fukushima has been a major setback for confidence, particularly in the junior sector. But he was confident on the longer-term outlook. ''I think we can rely on the price signals of the market to pull those projects through,'' he said.

Rio has an indirect stake in the Husab project in Namibia, which is close to Etango, being developed by Extract Resources.

Read more: http://www.smh.com.au/business/china-set-on-nuclear-path-20110711-1hapl.html#ixzz1RqxWzms8

Design Flaw Fueled Fukushima Nuclear Disaster

2011-07-03T15:00:00.000-07:00

Published on Monday July 04 2011 (AEST)

TOKYO—Some senior engineers at Tokyo Electric Power Co. knew for years that five of its nuclear reactors in Fukushima prefecture had a potentially dangerous design flaw, but the company didn't fully upgrade them, dooming them to failure when the earthquake hit, a Wall Street Journal examination of the disaster shows.

The company used two different designs for safeguarding its 10 reactors in Fukushima. When the devastating quake struck on March 11, the five reactors with the newer design withstood the resulting 45-foot tsunami without their vital cooling systems failing. Those reactors shut down safely.

But the cooling systems failed at four reactors with the older design. Backup diesel generators and electrical-switching equipment were swamped by seawater. As a result, fuel melted down at three reactors and there were explosions at several reactor buildings, culminating in the largest release of radiation since Chernobyl.

The tsunami exposed an Achilles heel in the design of some of the plants: the questionable placement of a single kitchen-table-size electric-switching station. At newer plants, the station was in a robust building that also housed the reactor. In others, it stood in a poorly protected outbuilding—a relic of the original design. When the tsunami hit, those switches were knocked out, rendering operating generators useless.

This article is based on interviews with a dozen current and former senior Tokyo Electric Power engineers, including several who were intimately involved when the fateful design decisions were made in the 1970s. Some of them say the company, known as Tepco, had opportunities over the decades to retrofit the oldest reactors. They blame a combination of complacency, cost-cutting pressures and lax regulation for the failure to do so.

"There's no doubt Tepco should have applied new designs" throughout Fukushima, says Masatoshi Toyota, 88 years old, once a top Tepco executive who helped oversee the building of the reactors. He says he blames himself for not noticing the design problems and correcting some of them later.

A spokesman for Tepco declined to comment for this story, citing the Japanese government's ongoing investigation into the cause of the accident.

Japan isn't the only nation grappling with aging nuclear reactors. The U.S. has dozens of reactors that have operated for more than 30 years, and 23 with the same General Electric Co. design as the older Fukushima reactors. Several face fights over relicensing in the next few years. Elsewhere, Germany and Switzerland have decided to phase out their aging plants and drop nuclear power altogether.

All the Fukushima plants, including the newer ones, were based on GE designs. GE maintained lucrative contracts to service GE reactors in Japan and was engaged with partner Hitachi Ltd. in a global campaign to extend the lives of its aging plants.

GE said any flaws at the Fukushima reactors weren't its fault because Tepco was in charge of design changes. "The location of emergency diesel generators at the Fukushima Daiichi plant were reviewed and approved by Tepco and regulatory authorities," said GE spokeswoman Catherine Stengel.

Construction of the oldest Fukushima plants dates to the 1960s. The Fukushima Daiichi nuclear-power station—the source of all the post-quake radiation problems—was the first for Tepco, Japan's largest utility. The facility, located on the Pacific coast, was seen as a learning lab. At that time, barely two decades removed from the devastation of World War II, Japan was incapable of designing its own nuclear-power plants. It imported nuclear technology wholesale from GE, say Japanese engineers.

The early reactors used GE's Mark 1 design. The general contractor was an American engineering firm called Ebasco, which no longer exists. To keep the reactor compact and economical, Ebasco made the reactor building small, said Mr. Toyota, the engineer who helped oversee the construction.

Nuclear-power plants must continuously cool their unstable, radioactive fuel. Those cooling systems run on electricity, which the plants ordinarily pulled from the nation's power grid. If the grid fails, on-site diesel generators kick on to keep the cooling systems running. If they don't, that plant is in danger of melting down.

Because Tepco's first reactor buildings were small, the generators had to go somewhere else. Engineers put them into neighboring structures that house turbines. The reactor buildings were fortress-like, with thick concrete walls and dual sets of sturdy doors. The turbine buildings were far less sturdy, especially their doors.

"Backup power generators are critical safety equipment, and it should've been a no-brainer to put them inside the reactor buildings," Mr. Toyota says. "It's a huge disappointment that nobody at Tepco—including me—was sensitive enough to notice and do something about this discrepancy."

Kiyoshi Kishi, a former Tepco executive in charge of nuclear-plant engineering, says that at the time of the original design, people thought a large tsunami on Fukushima's Pacific coast was "impossible." Later Tepco adjusted some parts of the plant—but not all—to address tsunamis of up to 18.8 feet, less than half the height of the one that hit in March.

Another Tepco engineer who visited the Fukushima Daiichi plant many times starting in the 1970s says the cramped reactor buildings barely allowed room to install a valve during routine work. "It was super-inefficient," this engineer says.

The Tepco engineers say Tepco was so dissatisfied with the Mark I that it decided to switch designs midstream as it was planning the sixth and final reactor at Fukushima Daiichi. An improved GE reactor with a sleeker design—the Mark II—was available. The No. 6 reactor building had enough space for the backup generators to go inside.

Tepco improved its design further when it started building its Fukushima Daini complex about seven miles away in the late 1970s. The four reactors built there, all using the Mark II, had a more "domestic flavor," Tepco engineers say, with specs that better addressed earthquakes and tsunamis.

GE says it made improvements to the Mark I design in the 1980s in the U.S. and Japan as technology evolved. It says the Mark I is safe.

By 1987, Tepco had opened its tenth and final reactor in Fukushima prefecture. Nos. 1 through 5 at Fukushima Daiichi had the old design. The other five had the newer design.

Over the ensuing years, Tepco updated the plants repeatedly, and the Japanese government tightened standards for earthquake preparedness several times. The government gave the turbine buildings that contained the generators for the older reactors a lower earthquake-preparedness rating, Class B, than the reactor buildings that housed the generators at the newer facilities, which were graded Class S.

"Some of us knew all along and were concerned about the inconsistent placements of diesel generators at Fukushima Daiichi between reactor No. 6 and the older reactors 1 through 5, and their potential vulnerability," says one of Tepco's top engineers who has guided the company's nuclear division.

The engineer says that when he was preparing for a regularly scheduled government inspection in 1987, the inconsistent placement of the backup generators "stood out like a sore thumb." He says he asked his colleagues, "Do we need to fix this?"

Another expert, he recalls, said it wasn't necessary because the turbine buildings were more earthquake-resistant than their Class B rating suggested. The engineer says he concluded that "it simply wasn't a must-fix."

Says Mr. Toyota, the former Tepco executive: "Over the years, a lot of engineers have come up with different ideas to improve safety. But my guess is that they couldn't come forward and point that out to management because of the high costs associated with back-fitting older reactors with new designs."

Tepco was criticized during those years for having high electricity rates, and such significant changes would have been difficult, say former company officials.

In 1998, to comply with new regulatory requirements, Tepco decided to give each reactor at Fukushima Daiichi at least two dedicated backup diesel generators, according to executives—something that not all of them had. New backup generators for reactors Nos. 2 and 4 were placed in new buildings located higher on the mountainside next to the reactors. All six reactors were given access to generators housed outside of the vulnerable turbine buildings.

Those were major safety advances, and Tepco was now just one safety-improvement away from ensuring backup power to all of its reactors in the event of a March 11-size tsunami. It involved the switching stations that sent power from the backup generators to the reactors' cooling systems. Japanese engineers call the stations meta-kura—a Japanese pronunciation of "metal-clad," referring to the equipment's covering.

The meta-kura for reactors Nos. 1 through 5 were still in the poorly protected turbine buildings—Class B safety territory—and that's where they stayed. (Because of its more-advanced original design, No. 6's meta-kura was already in the reactor building.)

Katsuya Tomono, a former Tepco executive vice president who in the late 1990s was in charge of nuclear-plant equipment such as backup generators, says he believes that "engineers on the ground took the easy way out and used the switch yard that already existed in the turbine buildings. As far as I know, there was no debate on this matter among engineers who led the move to add backup generators."

In 2001, when the original 30-year operating permit for Fukushima Daiichi's No. 1 reactor was set to expire, Tepco applied for and received a 10-year extension. It got another one earlier this year, just five weeks before the accident. Regulators never reviewed whether the basic blueprint of the older reactors was flawed, the abbreviated minutes of government deliberations show.

"The extension was based on the premise that design reviews were undertaken before the plant was ever built, so there was no discussion of fundamental design and construction specifications," says Katsunobu Aoyama, an inspection official at Japan's regulator, the Nuclear and Industrial Safety Agency. "Our process focused on things like pipes and fittings."

The nuclear agency is part of the industry ministry, which also is responsible for promoting nuclear power. The ministry aimed to raise nuclear power to more than half of Japan's electricity output, from around 30% last year—a goal reaffirmed as recently as June 2010 by Prime Minister Naoto Kan.

At around 3:30 p.m. on March 11, 45 minutes after a magnitude 9.0 earthquake struck, a giant wave hit Fukushima Daiichi. It knocked out the power grid and swamped the backup generators housed in the turbine buildings since the 1970s.

All three of the generators added in the late 1990s, located in the separate hillside buildings, kept working. But they didn't do any good at reactor Nos. 1 through 4 because the meta-kura that delivered power from the generators to the cooling systems got swamped in the lightly protected turbine buildings.

"Once water gets in there, the whole thing is kaput," said Mr. Tomono, the former Tepco executive vice president.

Radioactive fuel began overheating at reactors Nos. 1 through 3. The risk was that the fuel would melt and release radiation. Within hours, fuel at No. 1 was almost completely melted and lying at the bottom of its vessel, according to Tepco.

Over the next few days, explosions at Nos. 1 and 3 severely damaged those reactor buildings. Hydrogen leaking from No. 3 is thought to have triggered a blast at the No. 4 reactor building, and No. 2 probably had an explosion, too. The multiple blasts released radiation into the outside air.

In contrast, reactors No. 5 and 6, and all four reactors at nearby Fukushima Daini, safely reached cold shutdown. At No. 6, two generators located inside the reactor building became inoperable temporarily, perhaps because water got inside through exhaust pipes, according to Tepco officials. But the newest generator housed in a separate building kept working and supplying power through its undamaged meta-kura, secure inside the reactor building. Tepco was able to use that power to keep equipment at neighboring No. 5 running.

The worst-hit reactors are still months away from reaching cold shutdown.

Mr. Kishi, the former Tepco executive in charge of nuclear-plant engineering, watched the nuclear plant he had worked on for decades go up in smoke. He says he believes the discrepancy between the older and newer reactors at Fukushima was "subtle."

But in retrospect, he says, Tepco's inconsistency in applying improved standards was the "basic flaw" that doomed Fukushima and darkened nuclear power's prospects around the world.

Tepco Shareholders Reject Ditching Nuclear Power - Japan

2011-06-28T04:20:00.000-07:00

Published on Tuesday June 28 2011 (AEST)

Tokyo Electric Power Co. shareholders on Tuesday rejected a motion to abandon nuclear power, a proposal that arose during a contentious meeting the drew a record turnout.

The motion had called for a moratorium on building new plants as well as shutting existing ones, in the wake of the radiation crisis at the company’s Fukushima Daiichi power plant in northeast Japan. Fuel rods in three of its reactors melted after the March 11 earthquake and tsunami critically damaged cooling systems at the plant, which is still spewing radiation more than three months later.

Tepco JP:9501 0.00% /quotes/zigman/527598 TKECY +10.90% ,as the company is known, didn’t release the final tally of the votes at its semi-annual general meeting. It also said shareholders approved the appointment of 17 board members and the reappointment of president-elect Toshio Nishizawa, who takes the helm from health problem-plagued Masataka Shimizu.

The reappointment was likely to disappoint those hoping for new leadership at the troubled utility.

“A fundamental structural overhaul is needed at the board level to enable Tepco to rebuild its reputation and recover financially,” corporate governance advisory firm Glass Lewis & Co. said in a statement on its website ahead of the meeting. See Glass Lewis proxy bulletin on Tepco.

More than 9,000 people attended the six-hour meeting, nearly three times as many as last year. One shareholder said Tepco executives should all jump into the reactors, and another suggested they commit ritual suicide to take responsibility, according to news reports.

On June 14, the government came up with a plan to help Tepco pay compensation to radiation victims, which some estimates put at over $100 billion. About 80,000 people evacuated from areas around the plant, and scores of farmers and fishermen have likely permanently lost their livelihoods. The plan hasn’t yet been approved by parliament. Read more on Tepco compensation plan.

In May, Tepco posted a loss of 1.25 trillion yen ($15 billion) for the year that ended in March, compared with a profit of almost ¥134 billion in the previous fiscal year.

Tepco shares ended trading Tuesday unchanged from the previous session at ¥316 — above their lifetime low of ¥148 reached earlier this month, but a far cry from prices above ¥2,000 that the stock fetched just before the disasters.The Nikkei Stock Average /quotes/zigman/715506 JP:NIK +0.74% added 0.7%.

The utility had been Japan’s top corporate issuer, with about ¥5 trillion in bonds outstanding. It had also paid an annual dividend of ¥60, which has been suspended.

Hours before Tuesday’s meeting was to take place, dozens of police gathered around the venue to make sure any protests remained orderly.

Uranium Spot Prices Decline In Wake of Japan Crisis

2011-06-27T21:14:00.000-07:00

Published on Tuesday June 28 2011 (AEST)

Uranium spot prices fell 0.5 percent as demand remained weak amid Japan’s nuclear crisis, Ux Consulting Co. said.

Uranium-oxide concentrate for immediate delivery was at $54.25 a pound in the seven days through June 27, Ux said in an e-mailed report today. That’s based on the most competitive offer tracked by the Roswell, Georgia-based company.

The spot price for the nuclear fuel, which has declined 18 percent since the week before a March 11 earthquake and tsunami damaged Tokyo Electric Power Co.’s Fukushima Dai-Ichi power station, has fallen by $3.25 this month. The nuclear accident, the worst since Chernobyl in 1986, has seen Tokyo Electric attempt to bring damaged reactors under control using outside pumps, after cooling systems were knocked out.

“Buyers see no urgency to buy, as reflected by bids for delivery at the end of this year up only marginally from current levels,” Ux said. “The market is dominated by the aftershocks of Fukushima, specifically the reduction in demand spawned by that accident.”

Nuclear-power utilities buy the bulk of their uranium for processing into fuel from mining companies, with the contracts mostly extending beyond 12 months. The market for immediate delivery, or spot market, allows trading for delivery within a year and includes financial investors. The U.S. government also periodically conducts auctions to reduce stocks.

Germany, which relies on atomic energy for 23 percent of its supplies, may phase out plants as early as 2022, Georg Nuesslein, a lawmaker for Bavaria’s Christian Social Union party, said in May. Chancellor Angela Merkel ordered a halt to the country’s seven oldest reactors in the wake of the Fukushima crisis, removing more than 25 percent of its 20,700 megawatts of capacity, equivalent to the power needed to supply almost 21 million U.S. households.

“There is little reason to expect that the price will increase anytime soon,” Ux said. “The forward price curve is relatively flat, with bids out in the future a little higher than those for more immediate delivery.

Buyers are waiting for news out of Japan and Germany to see what may happen to any excess inventories associated with the nuclear programs in those countries.”

Molycorp Surges On JP. Morgan's Buy Upgrade

2011-06-20T14:48:00.000-07:00

Published on Tuesday June 21 2011 (AEST)

J.P. Morgan is out with a very positive note raising their estimates and price target on the Rare Earths miner. Firm’s new price tag is $105 (prev. $87) to reflect the continued rise in rare earth prices and their belief that MCP can operate significantly below its planned capacity and still realize sharp increases in shareholder value.

In fact, the firm estimates MCP could operate at 50% of capacity and see current spot prices drop 40% and still generate an NPV of $105/share. They think the stock will start to move higher as four misconceptions about MCP and the sector are ultimately dispelled: 1) MCP is struggling to achieve market prices, 2) ramping production from MCP will bring on too much supply post 2014, 3) China will ultimately reverse its production and export tightening measures, and 4) new supply outside of China will chase prices and eventually bring on too much supply.

Raising EPS. JPM is raising their EPS estimates (2012 to $5.93 from $5.25, 2013 to $14.48 from $12.51, and 2014 to $27.01 from $22.45) to reflect the continued increase in rare earth prices. In just the last month, average oxide export prices are up 22% and 195% YTD. In China over the last month, average domestic oxide prices are up 81% and 472% YTD.

- Piper Jaffray is upgrading MCP to Overweight from Neutral with a $73 price target (unch) following the stock’s ~40% correction since early May.

Piper believes the pullback overly discounts the risk that rare earth prices will fall precipitously – which they believe is unlikely to occur over the next 6-12 months. They maintain their $73 price target and view continued restrictive policy actions from China, positive 2Q results, and progress on the funded capital project as potential catalysts for the stock. Less conservative pricing assumptions in our model could present upside north of $100/share.

Recent pullback creates an attractive entry point. MCP remains a highly controversial stock, fueled by the sharp run-up in rare earth pricing over the past year and uncertainty around Chinese policy on quotas and tariffs. Piper fully expects rare earth prices to fall in the future as additional supply comes online – they have incorporated an average price reduction of 60% by 2013 in their model – but looking out over the next 6-12 months, they see little change to industry fundamentals. At current valuations, they believe the market is pricing in 1) more severe price cuts in the 70%+ range AND 2) no additional volume from Phase II of the company’s project plan which will double production capacity in 2014. Piper believes these assumptions are overly pessimistic in at least the near term.

Near-term catalysts present potential for upside. In the next several weeks, China will unveil its quota policy for 2H11. They expect the rare earth quota level for 2H11 to be set consistent with 1H11 levels, which will continue to strain global supply. Piper believes the release of the quota policy will once again revive fears of China’s restrictive policies on rare earths, which will support near-term pricing. Additionally, they believe MCP is poised to report strong 2Q results with production levels showing a healthy q/q increase and pricing expectations on Lanthanum have been set more appropriately following the 1Q confusion.

China's Nuclear Power Plants Pass Safety Inspections

2011-06-15T16:57:00.000-07:00

Published on Thursday June 16 2011 (AEST)

Regulators give country's 13 reactors the all-clear following checks ordered in wake of Fukushima disaster.

The Daya Bay nuclear power station in Guangdong province, south China. Inspectors have given the country's existing reactors the all-clear. Photograph: Adrian Bradshaw/EPA

China has moved a step closer towards resuming its ambitious nuclear power plans after it was revealed that safety inspectors have given the country's 13 reactors the all-clear.

The clean bill of health makes it more likely that Beijing will not follow the example of other countries – most recently German, Italy and Japan – who have promised to scale back or abandon nuclear power in the wake of the meltdown at the Fukushima Dai-ichi plant in March.

China has the world's biggest nuclear expansion plans with a goal of more than 100 reactors by 2020, but it suspended permits for new plants after the tsunami disaster in Japan.

The government said it would not be resumed until existing plants were checked, construction plans reviewed and a new national safety framework put in place.

That process is now well under way, according to a statement by the deputy environment minister, Li Ganjie, posted on a government website. As well as the completed checks for plants in operation, reviews of facilities under construction would be finished by October, he said.

Few analysts expect China to trim or delay targets that were included in the latest five-year economic plan to meet the power demands of a growing economy, while reducing the country's reliance on greenhouse gas-emitting fuel sources.

But critical voices have grown louder. Professor He Zuoxiu, who helped to develop China's first atomic bomb, caused a storm last month when he claimed that plans to ramp up production of nuclear energy twentyfold by 2030 could be as disastrous as the Great Leap Forward.

Writing in the Science Times, he criticised government advisers for failing to disclose the earthquake risks posed to nuclear power plants and said they had overestimated the availability of uranium in the country and the maturity of fission technology.

"Are we really ready for this kind of giddy speed [of nuclear power development]? I think not – we're seriously underprepared, especially on the safety front," wrote the fellow of the Chinese Academy of Sciences.

Nuclear power executives are counting on China to make up for demand that is being lost elsewhere amid the radiation fears prompted by Fukushima.

Japan, Germany and Switzerland have all move to scale back nuclear power as a result of that disaster. China merely put its programme on hold to assess safety concerns.

In the latest setback for the industry, the Italian electorate voted overwhelmingly against proposals to revive the country's nuclear energy programme.

China, however, is still on course to have a nuclear capacity of 200 gigawatts by 2030 and 400GW by 2050 - more than 15% of the national energy supply.

Energy Resources To Restart Ranger Mine Operations

2011-06-14T14:53:00.000-07:00

Published on Wednesday June 15 2011 (AEST)

Energy Resources of Australia (ERA) Ltd (ERA) says it will begin a progressive restart of processing operations at its troubled Ranger uranium mine in the Northern Territory on Wednesday.

ERA, which is 68.4 per cent held by Rio Tinto Ltd, was forced in late January to suspend uranium processing operations at the mine for the remainder of the wet season after heavy rains filled the tailings dam to near capacity.

In a announcement late on Tuesday, the company also said it was revising its 2011 first half loss guidance to be between $20 million and $30 million, from previous guidance of between $30 million to $50 million issued in April.

ERA said good dry season conditions in the Top End had allowed work to restart at Ranger on Wednesday.

"Since late April 2011, typical dry season weather conditions have been experienced," the company said in a statement to the Australian Securities Exchange.

"These weather conditions have reduced the total process water inventory at the Ranger mine to a level that allows ERA to re-commence processing plant operations.

"ERA expects that it will take approximately one month for the processing plant to return to normal production levels."

The company said it was provide further guidance on production for 2011 when it releases its June 2011 Quarter Operations Review.

Shares in ERA have plunged in the past year as production declines at the maturing Ranger mine ahead of its expected closure in 2021.

ERA shares closed down 21 cents, or 4.94 per cent, at $4.04 on Tuesday, prior to the announcement.

The stock was trading at just under $14 one year ago.

Australian Uranium Association Calls For Nuclear Reactor By 2022

2011-06-08T02:40:00.000-07:00

Published on Wednesday June 08 2011 (AEST)

AUSTRALIA should try to get its first electricity generating nuclear reactor up by 2022, despite the Fukushima nuclear plant accident in Japan, the head of the Australian Uranium Association says.

Michael Angwin, chief executive of the AUA, told an International Uranium Conference in perth today he was puzzled why the country was debating a carbon price without talking about energy choices.

But with political debate reaching its ``crescendo'' Mr Angwin said attention could now be given to Australia's future energy sources, including nuclear.

He said although the meltdown of reactor cores at the Fukushima nuclear power plant in March caused nuclear energy to fall out of favour, the various international examinations would address many safety issues and give the community greater assurances over the power source.

``Now is not the time for policy makers to go any softer on nuclear power,'' Mr Angwin said.

``Now is exactly the right time for policy makers to give nuclear power a dispassionate, economic, technological, social and political examination.''

He called for a ``genuine conversation in which the outcome is not pre-determined by political fear and which there's some considered, weighing up of benefits of cost and after which the country makes a genuine choice.''

Mr Angwin called on the Productivity Commission to bring Dr Ziggy Switkowski's 2006 report into nuclear energy up-to-date in light of the Fukushima accident and the current climate change policy debate.

A nuclear energy commission should be established to provide the regulatory framework and identify possible reactor sites, while the government should encourage nuclear business proposals from industry.

``If Australia takes these kinds of initiatives we might be in a position to make a decision about the nuclear industry within five-to-seven years,'' he said.

If that path was followed, Australia could have its first power-generating nuclear reactor by 2022, he said.

Fukushima was not the accident which resolved the nuclear debate in favour of the anti-nuclear side but re-opened the entire debate.

The current debate among global greens groups was no longer about their anti-nuclear tactics but whether nuclear energy was better than fossil fuels.

Demand for electricity in Australia is expected to increase 35 per cent by 2030, which will require high capital investment and be managed with the government's 20 per cent renewable energy target.

Mr Angwin criticised those who argued against nuclear power because solar power was a baseload power source, '' in that they think solar is a consistent and reliable, around-the-clock source of energy''.

``Bear in mind most people's only experience of solar power is likely to have been installing photovoltaic panels in their roof at the expense of other tax payers.''

Uranium Could Reach $80/lb This Year

2011-05-28T16:00:00.000-07:00

Published on Sunday May 29 2011 (AEST)

The uranium spot price could reach $80/lb by the end of the year, beating levels before the Japanese nuclear disaster, NYSE-listed Uranium Energy Corp (UEC) CEO Amir Adnani told Mining Weekly Online on Friday.

“You may see $80/lb late this year or early next year, I think it’s within the next year at the most,” he said.

The price of the nuclear fuel plummeted by about 15% after the Japanese Tsunami caused radioactive leaks at the Fukushima-Daiichi plant, but it has now stabilised at around $57,50, according to US-based Ux Consulting.

The uranium spot price reached a three-year high of $73/lb in February as Chinese utilities started entering the market in earnest to supply their rapidly expanding nuclear reactor fleet.

“I don’t have a crystal ball, but I think that there’s a supply deficit issue that should favour the price moving higher,” Adnani said.

In an earlier presentation, he showed how there could be a 45-million-pound deficit in uranium supply once the Russia-US agreement to convert nuclear warheads into fuel expires in 2013, with demand totaling 175-million pounds yearly.

UEC owns the Hobson uranium plant in Texas, which it bought from Canada’s Uranium One in 2009, and started producing the fuel from nearby orebodies at the start of the year.

Adnani said the company will produce at a rate of one-million pounds a year within the next twelve months, at a cost of around $18/lb.

PRODUCTION GROWTH

UEC will then ramp up production to around 1,5-million pounds a year in the next two-to-three years, through the addition of new orebodies to its Texas operations.

The company produces from relatively small, shallow uranium deposits using so-called in-situ recovery methods, which means it pumps a mixture of oxygen and water into the orebody through wells, dissolving the uranium, which is then pumped back up to the surface in a solution for processing.

The Hobson facility has capacity to produce three-million tons of uranium yearly, and Adnani said this level could be reached by about 2016.

Earlier this month, UEC closed the acquisition of a Paraguayan uranium property, and the company aims to report its first resource statement by the end of the year.

The deposit can also be mined using in-situ methods, said Adnani.

Uranium Energy wasn’t actively chasing further acquisitions, though assets were cheaper as a result of the Japanese crisis.

“We may look at a couple of other things, but it has to fit with what we’re doing. Right now’s a great time to buy, because it’s not going to get any cheaper than this,” commented Adnani.

SUPPLY AGREEMENT

UEC was set to sign its first supply deal within the next two weeks, he added, declining to say who it was with.

“We’re talking to a number of these guys, I’m not sure which will be the first one, it’s just based on some fine details we’re negotiating.”

The company hasn’t sold any of its production yet, as it decided to hold off on signing supply contracts until the dust settled in the wake of the Japanese nuclear disaster.

In other nuclear news, trading company Traxys announced on Thursday that it would buy all the uranium that the US department of energy is using to pay a contractor to clean up a closed uranium enrichment plant.

The deal involved 1 605 tons/y of uranium Hexafluoride, which would have otherwise entered the spot market, putting pressure on prices.

China To Boost Nuclear Power Capacity Eight Fold By 2020

2011-05-23T16:09:00.000-07:00

Published on Tuesday May 24 2011 (AEST)

China’s Nuclear Energy Association said May 12 it will boost atomic capacity as much as eight times by 2020. A day later, India’s Atomic Energy Commission said it will increase production 13-fold by 2030.

Even if Japan develops half of its proposed 19 gigawatts of nuclear power this decade, the country, together with China, India, Russia and South Korea, will add a combined 160 gigawatts by 2020, according to Bloomberg data based on figures from the World Nuclear Association, Sanford C. Bernstein & Co., the Federation of Electric Power Companies of Japan and South Korea’s economy ministry.

South Korea may almost double its nuclear-fired capacity to about 36 gigawatts by 2024, accounting for 48.5 percent of the nation’s power generation up from 31.4 percent today, according to the Ministry of Knowledge Economy. The country may add 10 reactors by 2020 totaling 12.8 gigawatts.

This global nuclear reactor build will require an extra 32,000 metric tons of uranium a year, according to calculations based on data from the World Nuclear Association. Global use will be about 69,000 tons in 2011. So 2020, uranium demand will be about 101,000 tons.

China and India will lead a 46 percent increase in consumption by the world’s five biggest atomic-power developers by 2020.

Uranium Rebound Seen As China’s Nuclear Plans Offset Fukushima

2011-05-22T21:31:00.000-07:00

Published on Monday May 23 2011 (AEST)

The biggest drop in prices of uranium in two years may be ending as China and India plan atomic power developments that will more than double global production even after Japan’s nuclear disaster.

The radioactive metal has slumped 8.7 percent this year, the most since 2009, after tumbling as much as 27 percent as governments reviewed nuclear plants following the Japanese crisis in March, according to prices from MF Global Holdings Inc. China and India will lead a 46 percent increase in consumption by the world’s five biggest atomic-power developers by 2020, according to data compiled by Bloomberg.

Soaring energy demand from the world’s fastest-growing economies is buoying uranium and prospects of miners from Cameco Corp. to Paladin Energy Inc. even after radiation leaks from Japan’s 40-year-old Fukushima Dai-Ichi plant sparked the worst nuclear disaster since Chernobyl in 1986. China’s Nuclear Energy Association said May 12 it will boost atomic capacity as much as eight times by 2020. A day later, India’s Atomic Energy Commission said it will increase production 13-fold by 2030.

“The question is whether what happened in Japan with older-generation reactors justifies not building newer, safer reactors, and to me the answer is no,” Spencer Abraham, a former U.S. energy secretary who is now non-executive chairman of Areva SA, the largest nuclear-equipment producer, said in a May 17 telephone interview from Washington. “China recognizes they can’t satisfy the growth in electricity demand in a single dimension and they really need a diverse group of sources.”

Expanding Capacity

A gigawatt, enough to power about 1 million U.S. homes, requires 200 tons of uranium a year at full operating rates, according to the World Nuclear Association. China, India and South Korea expect to use 262 gigawatts by 2030, more than what the U.S., Japan, Germany and France produce together, according to Bloomberg data.

Nuclear energy was being held out by nations from the U.S. to France and the U.K. as a potential solution to challenges posed by rising oil prices, which reached a record $147 a barrel in July 2008. Unlike fossil fuels, atomic power produces virtually no greenhouse gas emissions, as governments around the world try to cut down on pollution.

Those considerations became secondary after the Japanese disaster showed construction flaws at the Fukushima plant. Tokyo Electric Power Co., the operator of the plant, posted a full- year loss of 1.25 trillion yen ($15 billion) on May 20.

Power Needs

None of that reduces the power requirements of the world’s fastest-growing economies. China’s economy will probably expand 9.5 percent this year, according to the median of 11 forecasts compiled by Bloomberg. India’s gross domestic product may grow as much as 8.5 percent in the current fiscal year, Chakravarthy Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, said on May 3.

“Fukushima has made us pause and rethink some of our projects,” Xu Yuming, vice secretary general of the Nuclear Energy Association, said in a May 12 interview in Beijing. “Of course, the overall plan won’t be changed. China faces power shortages and we need to change our energy mix. To resolve these issues, we must develop nuclear.”

Price Forecasts

That will require an extra 32,000 metric tons of uranium a year, according to calculations based on data from the World Nuclear Association. Global use will be about 69,000 tons in 2011.

Uranium, which trades outside organized exchanges directly between buyers and sellers, fell as low as $49.99 per pound of U308, the tradable form of the metal, in the three trading days after the March 11 earthquake as Germany and Japan announced reviews of nuclear plants. It settled at $57.99 on May 20, according to prices tracked by MF Global.

The metal may rise as high as $65 a pound this year and advance to $75 in 2012, Fletcher Newton, a vice president at Uranium One Inc., a Vancouver-based mining company, said in a May 13 interview. Morgan Stanley forecast it will climb to $64 in 2011 and $65 in 2012.

‘Still on Option’

“Whether we like it or not, nuclear is still an option that’s reliable, low cost and emission free,” said Amir Adnani, chief executive officer of Corpus Christi, Texas-based Uranium Energy Corp., a mining and processing company that is stockpiling the metal in anticipation of higher prices in the second half of the year. “In the next 20 years, the world’s nuclear capacity is going to double.”

A revival in demand may lead to a recovery in stocks of Saskatoon, Saskatchewan-based Cameco, a co-owner of the world’s largest uranium mine, to Subiaco, Australia-based Paladin, according to analysts.

Shares of Cameco may rise to C$37.40 in the next 12 months, said Raymond Goldie, an analyst at Salman Partners Inc. in Toronto whose recommendations on the 13 companies he covers returned 33 percent. The shares closed at C$26.36 on the Toronto Stock Exchange on May 20, down 35 percent this year.

Paladin may climb to A$3.50 in the coming year, after dropping 34 percent this year, according to Martin Stulpner, a Perth, Australia-based analyst at Macquarie Group Ltd. The stock closed at A$3.23 on the Australian Stock Exchange on May 20.

Not High Enough

Uranium prices still aren’t high enough to make it sufficiently profitable to extract, Rio Tinto Uranium Ltd. Managing Director Clark Beyer said at a conference in Beijing on May 13. The metal is at least $10 below the level required to encourage companies to increase production, he said.

Price gains may be held in check as Germany and Japan assess development plans.

Germany, which relies on atomic energy for 23 percent of its supplies, may phase out plants as early as 2022, Georg Nuesslein, a lawmaker for Bavaria’s Christian Social Union party, said in a phone interview on May 4. Chancellor Angela Merkel ordered a halt to the country’s seven oldest reactors on March 15, removing more than 25 percent of its 20,700 megawatts of capacity, equivalent to the power needed to supply almost 21 million U.S. households.

Japan, the third-biggest nuclear-power producer after the U.S. and France, is reconsidering plans to increase the share of atomic energy to 50 percent from 30 percent, Prime Minister Naoto Kan said on May 10. About 13 gigawatts of capacity is currently closed in Japan due to the earthquake, according to Societe Generale SA. No decision has been made on whether to restart the plants.

Global Consumption

“Unless we see a supply shock, it’s difficult to see a situation where we’ll see a dramatic increase in the uranium price, and that’s really the only catalyst that would bring investors back rapidly into the uranium space,” Edward Sterck, a London-based analyst at Bank of Montreal, said in a May 19 telephone interview. The metal will be little changed at $60 a pound this year and in 2012, he said.

Global electricity consumption will rise 75 percent to 35,300 terawatt-hours by 2035 from 2008’s 20,183 terawatt-hours, according to the International Energy Agency.

China’s safety review of its atomic power plants will have little impact on expansion, according to Xu at the Nuclear Energy Association.

India’s capacity will increase to 60 gigawatts by 2030 from 4.8 gigawatts, according to the country’s Planning Commission. South Korea aims to generate 60 percent of its energy from atomic plants by 2030, compared with about 35 percent now, Deputy Minister for Energy and Resource Policy Kim Junggwan said in an interview in Kuwait on April 18.

‘Growing Demand’

“Countries seek diversified sources of energy and security of supply at a time when energy demand is growing rapidly and is essential to an improved standard of living,” Cameco, part owner of McArthur River mine in Canada, the world’s largest deposit of high-grade uranium, said in a filing on May 6.

The U.S. Nuclear Regulatory Commission on April 21 renewed the operating licenses for the Palo Verde Nuclear Generating Station in Arizona, the country’s biggest atomic plant, for an additional 20 years. The U.S., which produces about 27 percent of the world’s nuclear power, had said it will scrutinize license renewals for utilities following the Japanese crisis.

“The right solution is to go forward and build safer, new- generation reactors,” Abraham said. “It will help diversify the fuel mix and contribute to energy independence. Overtime, cooler heads will prevail.”

Uranium Stocks A Bargain Now

2011-05-20T16:30:00.000-07:00

Published on Saturday May 21 2011 (AEST)

The markets reacted with a sharp decline in uranium stocks. Orders were immediately put on hold and mining operations paused as the industry waited to see just what would happen. For investors who were already into uranium, their equities took a hit. However, for those looking to get into the mining industry, the opportunity for bargain shopping is everywhere.

When the devastating tsumani crashed into the Fukushima nuclear plant, world-wide fears of a meltdown, another Chernobyl, caused a panic reaction to shut down nuclear power plants and “rethink” nuclear power strategies in developed countries.

President Obama ordered an evaluation of the US nuclear facilities, most of which were build 40 to 50 years ago. German Chancellor Angela Merkel shut down a number of plants and voice the same concern over nuclear safety. As the uranium rods in Fukushima over-heated and leaked radiation into the Pacific Ocean, fear of a nuclear apocalypse created the typical knee-jerk.

The fact of the matter is that even if uranium production slows as nations figure out their nuclear policies, there really is no other alternative at the moment to supply the world’s power demand. Older forms of energy production like coal and petroleum are not viable alternatives from an environmental impact perspective and quite simply, the world does not have enough coal or petroleum to supply the power.

Wind technology is the best option but there is just not enough of it. Hydro or other naturally generated power does have a negative environmental impact and again, is in too short a supply. For example, British Columbia is a supplier of hydro power yet the government of BC imports power because much of the home grown voltage is sold to California.

There is really no other option for power in the near future, therefore, nuclear facilities will be turned on and uranium will be in demand. The bargain buy right now may be a chance to cash in.

Pakistan Opens Third Nuclear Plant With China's Assistance.

2011-05-17T02:30:00.000-07:00

Published on Tuesday May 17 2011 (AEST)

ISLAMABAD: Prime Minister Yousaf Raza Gilani on Thursday inaugurated a 330-megawatt nuclear power plant built with Chinese assistance.

The plant is at Chashma in Punjab, where a Chinese-aided power plant of similar capacity is already operational.

“Today is a proud day for Pakistan and for Pakistan’s civil nuclear energy programme,” Gilani said as he commissioned the second unit.

“It is yet another illustrious example of the Pakistan-China cooperation in the field of nuclear science and technology,” he said.

Conctruction had begun on December 28, 2005 and was connected to the electricity grid on March 14, 2011.

The IAEA Board of Governors had unanimously approved the Safeguards Agreement between Pakistan and IAEA with respect to the Chashma-2 plant in November 2006.

Pakistan’s two research reactors (PARR-I & PARR2) and two nuclear power plants (KANUPP & CHASHMA-1) are already under the IAEA safeguards.

Chashnupp-2 is part of Pakistan’s “Energy Security Plan”, that envisages an increase in nuclear power generation from the current 425-megawatt to 8800-megawatt by the year 2030 to meet country’s growing energy demands.

Work on the Chashma-3 and Chashma-4 reactors with 300-megawatt each is also under way and will help add 600-megawatt to the grid.

Uranium Output To Quadruple In Two Decades, Says Ferguson

2011-05-15T13:53:00.000-07:00

Published on Monday May 16 2011 (AEST)

Federal Resources Minister Martin Ferguson at a press conference at Parliament House in Canberra. Picture:

AUSTRALIA'S uranium output is expected to double in the next four years and quadruple within 20 years, Resources and Energy Minister Martin Ferguson said today.

Production in recent years has been hampered by wet weather at the Ranger mine in Australia's Northern Territory and a shaft failure at Olympic Dam in South Australia, Mr Ferguson said.

"If production meets predictions, tonnage will double within four years, and quadruple within 20," Mr Ferguson said in speech notes for an industry conference.

Although problems at Japanese nuclear power facilities caused by March's devastating earthquake and tsunami have led some nations to review their nuclear programs, Mr Ferguson said "nuclear power has a future".

"Nuclear is an important part of the energy mix for many countries. It is a cleaner energy option and powers millions of homes and businesses around the world," Mr Ferguson said.

Production from Uranium One's Honeymoon uranium mine in South Australia is expected to start in the "next few months", Mr Ferguson said, adding that BHP Billiton is now considering an expansion of Olympic Dam, which could boost its uranium output eight-fold.