The following article, "Connecting the Dots -Basic Reasons for Uranium Investment" was written by Peter Schober who is working as a business consultant in germany and has been researching energy matters for several years.
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Over the next 15 years China alone plans on building 30 new reactors. Without those reactors, the country's environment and economy will face brownouts that will start political unrest and upheavals, the one thing the ruling elite will avoide at all costs. Shortage and price buildup of lead (needed for insulation) gives an indicator of building activity.
"We are at the beginning stages of a massive bidding war in Uranium. China is locking in massive deals in Africa and is now working on ever bigger deals in Kazakhstan which holds the worlds second largest reserves of Uranium after Australia. Note to that China signed a multi billion dollar uranium deal with Australia. China is basically locking up Uranium supplies, which means its taking this uranium out of the market place; this effectively means that there will be even less uranium for the rest of the global world players to go after". Sol Paha "Uranium Wars 1/14/2007
China can run for two days on oil, or it can run for an entire year on uranium – all for the same fuel costs, according to top nuclear analysts. And .. They have all the cash needed to buy what they can get.
Some analysts say Uranium is headed fast to $576 per pound – and even that’s a fair price for the energy, and still much cheaper than coal or oil…Do the math yourself, it doesn´t take more than an spreadsheet.
Today, most of the Soviet weapons-grade uranium is gone. Currently a bare 30 % of secondary supply (around 8.000 tonnes pa) comes from Russian sources.
Russia has decided to start stock piling on uranium after declaring that Uranium is now regarded a strategic resource. It´s a only a matter of time when they will stop exporting. Now (Nov 07) they are demanding higher prices for their material.
Supplies aren't always growing, but are actually declining 2006, partly due to flooding at two of the world's largest mines. Last October workers at Canada's Cigar Lake mine, half owned by Cameco, mistakenly hit water, flooding the mine. CAMECO said, production at the unfinished mine will now be delayed another 3 years and won't come online until 2011, and even this ain`t sure!
2008 will also show, if the gambling of the utilities (not buying at spot market prices in summer the of 2007 to supress prices) has depleted their uranium reserves enough to generate a massive buying impetus.
The U.S., besides France and Japan the largest producer and user of nuclear energy, is nowhere near meeting its own uranium needs. Uranium production should become a national priority of the US but isn`t.
The uranium mining industry is still struggling with the repercussions of 1989. Soon after that Russia decided to sell its 435-million-pound from military sources. Other stockpiles also came into the market, too. Uranium was quickly hammered down to $10 per pound, exploration was curtailed, people set off and know how lost.
2007: However: This year’s global uranium-mine production is forecast to rise 9% to 51,000 t U3O8, driven largely by expected higher production in Kazakhstan (!?), Namibia and South Africa. In 2008, world uranium production is forecast to increase by a further 18% to 60,300 t U3O8 due to increased production in Kazakhstan as a number of uranium mines continue to lift output towards full capacity and new projects commence production.
Worldwide there are 284 research reactors operating as well. Add to that another 220 nuclear power ship and submarine reactors in operation. Most analysts never consider the fuel necessities of these “other users.”
A typical one-gigawatt nuclear reactor requires around 200 tons of natural uranium per year. As of June, there were 442 nuclear plants in operation worldwide. There are 28 others being built, 38 on order, and 115 proposed. And the U.S. and Britain haven’t even started building new nuke plants yet. Assuming there will be 5 new reactors going online per annum and a growth of 7 % in yearly uranium production, production capabilities and use will not meet in the next 10 years.
Not one single ounce of uranium comes from the Middle East. Therefore direct geopolitical risk is not comparable with oil.
The renowned Energy Watch Group estimates that of 300 uranium mines examined, roughly 90% of global uranium resources have ore grades below 1%. With global ore grades at very low levels, the overall supply issue becomes even more of a problem.
One production hurdle is the current shortage of sulphuric acid, used in uranium extraction, which will for example have an effect on Uranium One's 2008 production. The rising costs of the acid will be a specific problem for low grade producers, eventually reducing their earnings or postponing production, waiting for prices that will check these growing costs.
The nuclear reprocessing sites have an annual production capacity of 5500 tonnes. It will take years to enhance the output capacity of these plants. Therefore there will be no short time relief from this side.
It takes seven to 10 years to find and bring an economic uranium discovery into production. Very little supply relief is scheduled to come on line until 2011 or later. Nations who are not building a strategical reserve of Uranium and who are not systematically developing their resources (like the U.S.) will possibly not be able to build enough producing power capacity because they don' t have the fuel for that.
Nuclear energy is one of very few alternatives that has a chance of alleviating the global energy supply crunch. It is safe, clean, and relatively cheap. The injuries and deaths associated with producing and utilizing nuclear power are minuscule in comparison to any other fuel source.
Global warming: Nuclear power is the most obvious solution to this potential catastrophe. Other forms of alternative energy are interesting but are years or decades away from having a significant impact.
As other energy sources are becoming scarce, their prices growing, the role of uranium as a still cheap, affordable and reliant source of energy will be greatly enhanced.
The term “peak oil” means global oil reserves and production are in decline. The planet remains dependent upon oil because we didn’t have the foresight to develop a better energy strategy over the past three decades.
The peak oil theory is going to be put to the test in 2008. Since global oil production has remained flat for the last few years, oil prices could really get out of hand next year as demand continues to rise.
In 2008, we're going to find out which OPEC countries are telling the truth about production capacities and reserves.
Comparing Data of EIA and IEA the best thing to say is that we have a plateau on all liquids and a sinking production of crude oil. But looking only at output amounts is grossly misleading. The reasons of current price spikes is only marginally the popular “speculation activity” but you have to dig deeper finding the real reasons.
Essentially we could say that the energy content of 'a barrel of oil' is less then it was yesterday and it has been going down for decades now. This can easily be seen, when looking at the quality of US imports with a growing part of low quality API crude (Casey: Energy Speculator 11/15/2007 has the graph)
Also, the growing amount of oil consumed directly in the extraction of oil should be stripped out to get actual "net" oil production figure. It appears that this oil production-consumption accounts for an increasing %age of the decline in exports.
The reasons for this are many. As extraction gets more difficult, we use more oil to get less oil from the ground. The oil we get from the ground today is more energy intensive to process.
Overall efficiency of crude oil production should be measured by the "net energy" produced, not the volumes of 'liquids' coming up the well.
The net effect of using Liquids to produce ethanol etc is not accounted for. Regarding the low EROEI of ethanol , the net surplus of these produced liquid is only of marginal significance.
Last but not least. Looking at production numbers only, is misleading, because a growing part of production either stays in producing countries to fulfil their growing demand, or is not made available to the spot market because of bipartisan treaties (eg Angola and PR China).
Regarding disinformation/misinformation on energy reporting: One should skip any article wherein EROEI is not at least mentioned or discussed!
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