Spot Uranium Prices on the Rise

- July 6th, 2010

The uranium demand surge is attributed to a number of buyers believing that the market price has reached the bottom and endeavoring to acquire material in anticipation of a future price increase.

By Dave Brown – Exclusive to Uranium Investing News

uranium-price-advanceTradeTech’s spot uranium price increased $0.25 to $41.00 per pound following several weeks of inactivity.  The weekly spot price for the yellow metal on UXC also demonstrates buyers returning to the market as the price has surged $1.00 to $41.75 this week.

The strong demand activity is attributed to a number of buyers believing that the market price has reached the bottom and endeavoring to acquire material in anticipation of future price increases. Confirmation of this view was reinforced by the announcement that China has moved to obtain long-term contracts with primary suppliers. Although many market participants have extensively pointed to China’s nuclear program as the impetus for future demand growth, the recent announcements validate opinions that the country is taking action now to secure future supplies.

The rush in buying interest comes just as the US Department of Energy (DOE) enters the market to sell the final lot of inventory being sold in 2010 to fund cleanup efforts at the Portsmouth enrichment facility.

Growing South Asian Nuclear Tensions

Less than 2 weeks after the Prime Ministers of Canada and India signed a civil nuclear cooperation agreement, China and Pakistan are threatening to disrupt India’s nuclear aspirations by increasing their own partnership, a  consideration that has raised international misgivings and revived apprehension about the wisdom of making a special exemption for India.

The origins of these conditions trace back to a 2008 civilian nuclear energy pact between the United States and India, terminating a 34-year embargo on nuclear trade despite New Delhi’s longstanding weapons program.  The policy objectives for the United States were to unlock the energy-starved country’s nuclear industry market, estimated at $150 billion, and to implicitly enable India to serve as a regional counterweight to the Chinese threat to security.  This decision seemed to make more sense at the time, as nuclear power was demonstrating a global renaissance as a more environment-friendly alternative to fossil fuels, such as coal, oil and gas.  While Russia, France and Britain strongly backed nuclear transfers to India, several countries such as Australia, Ireland, Austria and New Zealand had protested against  special treatment.

Under the terms of the agreement from 2008, India has been provided with access to U.S. nuclear technology and fuel in return for complying with international inspections of some of its facilities.  New plants built to generate power and fourteen of India’s twenty-two existing reactors will be opened for inspections by the International Atomic Energy Agency (IAEA); however, military facilities and stockpiles of nuclear fuel that it has produced up until now will be exempt from inspections or safeguards.

With the potential of tremendous  energy demand developing in this region, security controls threatening resources should not be taken lightly.  As of June, the countries with the largest number of planned and proposed new nuclear reactors are: China 154; India 60; Russia 44; USA 32; South Africa 27 (mostly smaller modular reactors); and Ukraine 22. Since last December the largest increases in announced planned and proposed new nuclear reactors are in India, taking its total from 38 to 60 for an increase of 58 percent; and China taking its total from 125 to 154 for an increase of 23 percent.

India and Pakistan have both refused to sign the Nuclear Non-Proliferation Treaty (NPT) that bars nuclear trade with states that have developed weapons technology. Washington-based Arms Control Association suggests both countries have built modest nuclear arsenals with India believed to possess approximately 100 warheads and Pakistan 70 to 80.  It is thought that India uses plutonium for its weapons, while Pakistan likely employs the uranium alternative.

In mid June, a letter was sent by a prestigious and broad array of more than 40 experts and nongovernmental organizations (NGOs) from 14 countries, to the 46-member states of the Nuclear Suppliers Group (NSG), urging that these nations “reiterate to the Chinese government that it must not engage in nuclear trade with Pakistan in a way that violates nonproliferation obligations and norms.”  In the letter, the experts and NGOs note that “The provision of uranium and/or nuclear fuel to Pakistan or India for safeguarded reactors can have the effect of increasing their respective capacity to produce enriched uranium or plutonium for weapons purposes in unsafeguarded facilities.”

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4 responses to “Spot Uranium Prices on the Rise

  1. Excellent questions Keith.

    Some of the security issues are certainly not in my area of core competency and I will elect to refrain from speculating on some of these concerns.

    The Energy Department has 59,000 tonnes of inventories of natural uranium built up for military purposes during the Cold War and is releasing the stocks gradually over about 25 years. Although I am unaware of any specific disclosure of the uranium grade according to my research, the Department of Energy (DOE) has been downblending, or converting, highly enriched uranium (HEU) from stockpiles to low enriched uranium (LEU) since 1996. In this LEU form, the material is unsuitable for use in nuclear weapons and can be used as commercial nuclear reactor fuel.

    The DOE works through the National Nuclear Security Administration (NNSA), to enhance national security through the military application of nuclear energy. The NNSA also maintains and enhances the safety, reliability, and performance of the United States nuclear weapons stockpile, including the ability to design, produce, and test, in order to meet national security requirements.

    NNSA has four missions with regard to National Security:
    • To provide the United States Navy with safe, militarily effective nuclear propulsion plants and to ensure the safe and reliable operation of those plants.
    • To promote international nuclear safety and nonproliferation.
    • To reduce global danger from weapons of mass destruction.
    • To support United States leadership in science and technology.

    According to the NNSA, dismantling nuclear weapons involve a lengthy process that requires almost all of the facilities in the nuclear weapons complex. Once the weapon is retired and designated for dismantlement, it is brought to the Pantex Plant where the high explosives are removed from the special nuclear material, and non-nuclear components are either processed on site or are sent to other facilities within the complex. The Y-12 National Security Complex then dismantles the uranium components.

    Any new plants built in India to generate power will be subject to inspections by the International Atomic Energy Agency (IAEA). This will also apply to fourteen of India’s twenty-two existing reactors; however, military facilities and stockpiles of nuclear fuel that it has produced up until now will be exempt from inspections or safeguards.

  2. Excellent questions Keith.

    Some of the security issues are certainly not in my area of core competency and I will elect to refrain from speculating on some of these concerns.

    The Energy Department has 59,000 tonnes of inventories of natural uranium built up for military purposes during the Cold War and is releasing the stocks gradually over about 25 years. Although I am unaware of any specific disclosure of the uranium grade according to my research, the Department of Energy (DOE) has been downblending, or converting, highly enriched uranium (HEU) from stockpiles to low enriched uranium (LEU) since 1996. In this LEU form, the material is unsuitable for use in nuclear weapons and can be used as commercial nuclear reactor fuel.

    The DOE works through the National Nuclear Security Administration (NNSA), to enhance national security through the military application of nuclear energy. The NNSA also maintains and enhances the safety, reliability, and performance of the United States nuclear weapons stockpile, including the ability to design, produce, and test, in order to meet national security requirements.

    NNSA has four missions with regard to National Security:
    • To provide the United States Navy with safe, militarily effective nuclear propulsion plants and to ensure the safe and reliable operation of those plants.
    • To promote international nuclear safety and nonproliferation.
    • To reduce global danger from weapons of mass destruction.
    • To support United States leadership in science and technology.

    According to the NNSA, dismantling nuclear weapons involve a lengthy process that requires almost all of the facilities in the nuclear weapons complex. Once the weapon is retired and designated for dismantlement, it is brought to the Pantex Plant where the high explosives are removed from the special nuclear material, and non-nuclear components are either processed on site or are sent to other facilities within the complex. The Y-12 National Security Complex then dismantles the uranium components.

    Any new plants built in India to generate power will be subject to inspections by the International Atomic Energy Agency (IAEA). This will also apply to fourteen of India’s twenty-two existing reactors; however, military facilities and stockpiles of nuclear fuel that it has produced up until now will be exempt from inspections or safeguards.

  3. Sir,

    I just read your Tuesday, 2010.07.06th “Spot Uranium Process on the Rise”. Two quick questions:

    1.) You make mention of US Department of Energy (DOE) selling off inventory. Are you referring to weapon – grade uranium or reactor – grade uranium? How much inventory does DOE still have on hand & what is the project time period for its release?

    2.) In the murky world of nuclear arms control, how does the U.S. & its allies in the Arms Control Association and the Nuclear Suppliers Group plan to control India’s military and uranium stock piles? What happens if they can’t?

    Signed,
    Yours truly,
    Keith William Steeves
    Pres. & CEO
    A.P.S.E. Inc.
    Vancouver, BC

  4. Sir,

    I just read your Tuesday, 2010.07.06th “Spot Uranium Process on the Rise”. Two quick questions:

    1.) You make mention of US Department of Energy (DOE) selling off inventory. Are you referring to weapon – grade uranium or reactor – grade uranium? How much inventory does DOE still have on hand & what is the project time period for its release?

    2.) In the murky world of nuclear arms control, how does the U.S. & its allies in the Arms Control Association and the Nuclear Suppliers Group plan to control India’s military and uranium stock piles? What happens if they can’t?

    Signed,
    Yours truly,
    Keith William Steeves
    Pres. & CEO
    A.P.S.E. Inc.
    Vancouver, BC

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