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« The China Shakeout | Main | JV in Mali by Delta Exploration and Rockgate Capital »
Tuesday
Feb272007

Reader Comments on China and Uranium

You may have read the paper recently published on Uranium Stocks about Uranium fueling China's Economic advance.

Nuclear power station are the answer to the world energy demands

Here are some comments from one of our readers on the article and our response to these comments.


Your analysis is interesting, but incomplete as it fails to account for the costs to construct nuclear generating infrastructure, technology transfer & training for tens upon thousands of nuclear operator & maintenance personnel not to mention waste storage/disposal. Factoring those costs into the equation puts the cost of uranium to meet Chinese energy needs on par (and perhaps above) that of fossil-based fuels. On a pure fuel vs. fuel basis (variable cost) uranium indeed does look attractive. However, the fixed cost to operate a nuclear plant is greater than its fossil-fired counterpart (particularly when that fossil plant has been fully depreciated, like most Chinese assets). Another key variable to the analysis is any real or perceived environmental benefit through a substantial reduction in fossil fuel emissions. Yet, while this is an important issue when one considers the challenges (and costs) associated with nuclear waste storage & disposal those benefits dissipate rapidly. Uranium generation is certainly an important and essential technology, but fossil fuels will maintain an unchallenged leadership position in the global fuel mix, and China in particular, for the foreseeable future.

This person has raised a very important point. The costs involved in building a new nuclear power plant are indeed very high. But the key issue that the paper was trying to raise was that the fuel cost involved in nuclear power, uranium, is very low. We are of course investing in uranium stocks and not nuclear power companies or utilities. Therefore it is our firm belief that the uranium price is set to go a lot higher than current levels of about $85/lb because at the moment, as a fuel, it appears very cheap.

However one must remember that there are also additional costs involved in running an economy on fossil fuels. China is doing moderately well using coal, as it has large reserves of coal within its borders and it can get its hands on it for a relatively low price. However readers from China have commented that it is very difficult to breath in industrial areas and the local environment is suffering, with severe pollution being a major issue.

Although there are some high additional costs in using uranium as a fuel, there are also large costs in using fossil fuels such as oil. The previous article was written to demonstrate the difference is the cost of each of these fuels, as simply a fuel, not to compare the entire equation of using uranium as a energy source. Therefore the cost of building nuclear power stations or oil refineries and oil power stations were not included in the analysis.

A US Tank in the burning oil fields of Kuwait

The major advantage of using uranium is that it ensures a secure supply of energy. Uranium is primarily found in politically stable countries such as Australia and Canada. Whereas oil is often found in countries that are politically unstable such as Iraq, Iran, Venezuela and Saudi Arabia. If your country gets the majority of its energy from nuclear plants, then you have a secure supply of energy, without having to worry about “extreme” governments cutting off your supplies or blackmailing you for higher prices for their fuels.

For example, the USA depends a lot on oil as an energy resource. In the first Gulf War of the early 1990's, the USA had to invade Kuwait and Iraq with over 500,00 troops to protect oil supplies. How much this did cost the US government? Because they were using oil, they had to go to war, and many believe that they have done the same again in the current occupation of Iraq. These wars cost billions of dollars that are not factored into the cost of using oil. France derives 75% (soon to be 76% as they are building yet another nuclear power station) of its electricity from nuclear energy so they do not have to blow billions of dollars and thousands of lives in wars to protect their energy supply!

If the superpowers of the future, such as China and India, can use nuclear power to provide a significant part of their energy supply, then they will not be drawn into messy wars in foreign lands over fossil fuels. A secure energy supply is a big issue for the government's of today to consider, but it is an even bigger issue for the governments of tomorrow. Nuclear power through uranium is the only way to ensure that a country has a secure supply of energy for the future.

To take advantage of this shift from fossil fuels to uranium, one can invest in some of the flourishing uranium stocks on the market at present. Exercise caution at all times and do not buy simply one stock or any stock that just has the word “uranium” in its name. Recommended uranium stocks can be found at www.uranium-stocks.net for free and you can subscribe to the uranium stocks newsletter free of charge for regular updates on the uranium market.


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Reader Comments (1)

July 3, 2008: I agree with the assessment regarding uranium vs. oil. Once the expense of building nucleur plants is factored in over a long period of time, it will be found to be the most secure and least expensive form of energy to be found. Within the next ten years, the shift from oil and coal to uranium will be dramatic and pollution will diminish dramatically. Maybe uranium fuelled cars? LOL.

July 3, 2008 | Unregistered CommenterRoslyn Ritz

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