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Jerry Grandey, CEO of Cameco (CCJ), made some interesting comments concerning the long term uranium supply/demand balance at the Reuters Global Mining and Steel summit held in New York.
http://seekingalpha.com/article/125858-uranium-producers-worth-a-look
He said that the current lack of uranium supply expansion in the face of the current financial system difficulties coupled with the uncertainty of how Russia will react after the current Megatons to Megawatts deal expires in 2013 is setting up the uranium market for a future supply crunch. He was quoted as saying, “I think the financial crisis is clearly impacting the ability of every supplier to raise capital,” according to Reuters. “When you see project cancellations, you see expansion derail, you see some projects that will just go slower. That is just simply taking away future supply and sowing the seeds of the next spike in the uranium price.”

The current supply of uranium from mines is 115 million pounds per year against a demand of around 180 million pounds per year. Grandey said he expected demand to increase about 2-3% per year.

The deficit between supply and demand has been made up by decommissioning and downblend nuclear warhead material, primarily Russian warheads, under the Megatons to Megawatts program. This program is supposed to end in 2013 and the Russian atomic company Rosatom has been on the record that it does not intend to continue the program after 2013 as it has not been advantageous to Russia. This would be consistent for Russia as it has viewed full control and use of its resources as a cornerstone to a return to superpower status. The blueprint on how they would proceed can be seen by watching how they deal with their current oil and natural gas customers.

The current uranium price of $43.75 per pound is currently insufficient to stimulate sufficient new mine development in a timely enough manner to close the supply/demand gap. Although Cameco has had various problems lately that have impaired the stock price, especially around its Cigar Lake mine, the company still is the 800lb. gorilla in the uranium market. Smaller producers such as Paladin Resources (PALAF.PK), which is in the process of doubling its uranium out put and even Uranium One (SXRZF.PK), which appears to be stabilizing itself after its debacle at its South African uranium mine appear to be worth a look for the long term.

Interesting to see the differences between the Australian Uranium Index and the global uranium share index. It seems that the Australians are leading the charge… perhaps not suprising considering that Australia’s explorers and near term producers have such large resources….

–“World uranium requirements are forecast to increase faster than world supply in 2009,” the agency reports. “As a result, the uranium market is expected to remain in deficit for a sixth consecutive year. Supported by this deficit, spot prices are forecast to recover gradually in 2009 to end the year at around US$62 a pound…In 2010, the spot uranium price is forecast to average around US$70 a pound, an increase of 35 per cent on 2009 prices. Strong consumption growth and a decline in secondary supplies of uranium are forecast to support this price increase.”

The upcoming Queensland elections could become quite interesting when viewed from the question of whether it is right, rational or even  reasonable for the Bligh government to maintain the ban on uranium mining. The Federal labor party is now in favour of uranium mining…. Australia has around 40% of the world’s easily mined uranium and Qld has a fairly large proportion of Australia’s vast holdings.  So, what do you think:  Should Anna Bligh blithely chuck away literally billions of dollars worth of exports and the revenue derived from mining and selling Qld uranium?

Traditional owners continue ban on Koongarra uranium mining
Saturday February 28, 2009, 4:00 pm

Traditional owners in the NT’s Kakadu region have decided to continue a ban on mining at the $5 billion Koongarra uranium deposit.

The French company Areva wants to mine 14,000 tonnes of uranium at the site that is surrounded by Kakadu National Park.

The lucrative deposit sits three kilometres from Nourlangie Rock – a sacred art site and major tourist attraction.

Representatives of traditional owners, the Northern Land Council, Areva and the Territory and Federal governments met in Jabiru and Cooinda this week to discuss the future of the deposit.

Traditional owners decided mining should not go ahead at the site.

By law the matter can be revisited, but the NLC says it has been told by traditional owner Jeffrey Lee that he never wants to discuss the company’s proposal again.

The Land Council also says Mr Lee is still keen for the site to incorporated into Kakadu

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In regard to the mining of uranium I wonder if Namibia has less country risk than Australia.
Several of Australia’s better uranium explorers have either moved to or have projects in Namibia. RIO, PDN, EXT, BMN, DYL all have significant resources of around 100m pounds.

Is it safe to invest there?

Uranium is a chemical element in the periodic table that has the symbol U and atomic number 92. Heavy, silvery-white, toxic, metallic , and naturally- radioactive , uranium belongs to the actinide series and its isotope 235 U is used as the fuel for nuclear reactors and the explosive material for nuclear weapons. Uranium is commonly found in very small amounts in rocks , soil , water , plants , and animals (including humans).

Notable characteristics

When refined, uranium is a silvery white, weakly radioactive metal, which is slightly softer than steel. It is malleable, ductile, and slightly paramagnetic. Uranium metal has very high density , 65% more dense than lead , but slightly less dense than gold. When finely divided, it can react with cold water; in air, uranium metal becomes coated with uranium oxide. Uranium in ores can be extracted and chemically converted into uranium dioxide or other chemical forms usable in industry.