URANIUM: Not Another Flood!
Monday, March 12, 2007 at 5:23AM
Uranium Stocks in Other
ranger1


Energy Resources of Australia Limited (ERA) a part of the Rio Tinto Group has suffered an unusual down pour of 750 millimetres of rain in one 72-hour period causing extensive flooding to its Ranger Mine and Processing Operation.

Assessment of the impact of the water level in the operating pit is on going, however production will be impacted in the second half of 2007. ERA has declared force majeure on its sales contracts as the excessive rainfall has impacted on production at the Ranger mine and processing plant. First quarter production is estimated to be between 20 and 30 per cent lower than in the same period last year. Ranger produces about 4 million pounds or 4% of the world’s annual uranium consumption.

This abnormality in the weather pattern clearly demonstrates how precarious the mining business can be. When assessing an investment opportunity the geographical location is one of the considerations. However we would rarely consider Australia to be a particularly difficult or dangerous area for mining. Then along comes a freak cyclone and wreaks everyone’s plans.

We will watch and hope that they can get this operation back into full-scale production as soon as possible with the effects of this cyclone being minimized.

However if they were to experience more freak cyclones then this operation could have a serious knock on affect for the end users. This is a serious incident for the utility companies who have just seen a 13% jump in the price of uranium at a ‘sealed bids auction’ and what of the suppliers? This must be music to their ears; they can now afford to hold out a little longer allowing those who were relying on the production from Ranger to enter the market and jostle for the available meager supply. For investors this is the second flood to hit the uranium industry in a short space of time, so inclement weather has now become a ‘consideration’ when assessing an investment opportunity. For those of us who utilize SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats) then flooding and inclement weather should be considered as a possible threat to your investment.

We may have to wait a little while longer before the next uranium deal is struck as news and rumours will no doubt abound adding confusion to the situation in Australia.

12 March 2007


Article originally appeared on Uranium Stocks (http://www.uranium-stocks.net/).
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