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Top Stories This Week: Uranium’s East/West Divide Heats Up, Central Banks Eye Gold
Jun. 21, 2024 12:00PM PST
Niger has taken away Orano's mining permit for the Imouraren uranium project as Russia eyes the company's assets. Meanwhile, the gold price nearly reached US$2,370 before pulling back.
The gold price rose as high as US$2,366 per ounce on Thursday (June 20), but had fallen back to the US$2,325 level by Friday (June 21) morning, looking set to end the week relatively flat.
Its price increase came as US jobless claims fell by 5,000 to reach 238,000 in the week ended June 15; meanwhile, single-family housing starts fell by 5.2 percent in May. The data has boosted interest rate cut expectations for the fall.
Central bank buying has provided major support for the gold price in recent months and years, and a new survey from the World Gold Council (WGC) indicates that 29 percent of the 70 central banks that responded intend to increase their gold reserves in the next 12 months — that's the highest level seen since the survey began in 2018.
The WGC notes that the main reasons central banks hold gold are as a long-term store of value or inflation hedge, for its performance during times of crisis, as an effective portfolio diversifier and because it has no default risk.
In previous years, gold's historical position has been a bigger driver of their purchases.
The WGC's survey doesn't include specific information on China, which until recently has been a major buyer of the yellow metal. News that the nation didn't add any gold to its reserves in May has raised questions about its strategy.
Bullet briefing — Orano loses uranium permit, Canada blocks rare earths sale
Orano loses Imouraren mining permit
French nuclear fuel cycle company Orano said in a press release on Thursday that the Niger government has taken away its mining permit for the Imouraren uranium project in the country.
Orano currently produces the energy fuel at the Somair mine in Niger, which is one of the largest uranium mines in the world. With reserves of over 174,000 tons of uranium, Imouraren is among the biggest uranium deposits.
Work to bring Imouraren into production was suspended in 2015 due to unfavorable market conditions, but with uranium prices now much higher, Niger warned it would remove Orano's permit if development work hadn't started by Wednesday (June 19). Orano said in its statement that it recently submitted a concrete technical proposal to enable development "as quickly as possible," with infrastructure at the site reopening on June 4.
The move doesn't seem to have satisfied Niger. Since a coup changed its government last July, the country has been strengthening its ties to Russia, which is reportedly looking to take control of Orano's assets in Niger. Still, Orano has said it wants to "keep all channels of communication open with the Niger authorities."
Canada blocks sale of rare earths to China
ASX-listed Vital Metals (ASX:VML) announced on Monday (June 17) that it will sell stockpiled rare earths material from its project in Canada's Northwest Territories to the Saskatchewan Research Council. The C$3 million sale replaces a previous agreement with a Chinese company that was announced this past December.
Natural Resources Canada facilitated the new deal, reinforcing the Trudeau government's efforts to stop Chinese firms from getting too deeply involved in Canada's critical minerals sector. China is the largest producer of rare earths by far, and its dominance of the industry has pushed other countries to diversify their supply chains.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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