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« Merkel Forced To Accept That Germany Needs Nuclear Power | Main | Uranerz Energy Corporation: Close to a Buy! »
Sunday
Jul082007

Uranium Price Declines to $133/lb – But instability increases in Niger

The uranium price fell further this week, down $2 to $133/lb but the show is not over yet.

The show is just starting in Niger

Although the uranium price is experiencing some short term weakness, the supply and demand scenario remains the same, and with the latest events in Niger, we could be in for yet another uranium supply squeeze.

The flooding at Cigar Lake in Canada and the Ranger mine in Australia, sparked a uranium buying panic. In the short term more catalysts like these will send uranium prices much close to our $200/lb target.

Niger is the world's fourth largest uranium producer, so any negative impact on its uranium mining industry is going to cause a significant shortfall in uranium supply and therefore if this happens we should be prepared for a swing up in uranium prices.

Evidently disgruntled with China, the Tuareg rebels and other nomadic tribes in Niger, have kidnapped deputy general manager Zhang Guohua of China Nuclear International Uranium (Sino-U). The highly trained military leader of the rebels, Aghaly ag Alambo, is rapidly becoming a hero in Niger's nomadic tribes who control the north, coincidently where the world's seventh and eight largest uranium mines are, open pit mine Arlit and the underground uranium mine Akouta. The combined production of these mines is nearly 3500 tonnes per year. In April, armed rebels attacked the Akouta uranium mine, part of the AREVA empire and four people were killed.

So why are the rebels attacking the Chinese companies? Well, they claim China is giving arms to the government in order to have access to Niger's resources, in particular uranium. The government is then using the arms against civilians and so the rebels see China as supplying the corrupt government with the tools to kill the people.

This situation is looking remarkably like the situation in Nigeria with oil, except its in Niger with uranium. Rebels in the Niger Delta in Nigeria have long been attacking foreign companies and their personnel in protest about unfair conditions in the region.

One of the main reasons to switch to nuclear fuel is because it largely comes from politically stable countries, however with this latest incident, that argument is somewhat discredited.

Nonetheless we still think that compared to oil, uranium comes from a lot safer sources and when countries like Australia eventually open up their uranium mining industry, that argument will be re-enforced further.

It remains to be seen if the Niger rebels will be able to seriously disrupt the uranium supply, but we are keeping a close watch on the situation as even a seemingly small incident on one of these large uranium mines, could have big impacts on the uranium price.

Events like these only go further to discouraging investors like ourselves from putting our money into projects in politically unstable areas of the world, which includes nearly all of Africa.

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Reader Comments (5)

The United States has directed chastised China for it's implicit realtiomship with the Government of Sudan and exaserbating the horrors of Darfur. It is not only in Niger's uranium camps where people are rising up against the Chinese. There were riots in the cities as well against Chinese business denaturing large area of greenfields for agricultural exploitation.Several Chinese nationals were killed in the streets.

July 9, 2007 | Unregistered Commenterwayne

I've been invested in Energy Fuels Inc.(EFR)for more than a year now.This little firm has a great management team.They seem to be very near term producers,with a potential partnership with Denison at their White Mesa mill.All this in the 'safe' USA.Have you overlooked this little gem or do you have other opinions.I'd appreciate your reaction,as I,ve done much DD on this one.It's a bargain at these prices!Thanks.

July 9, 2007 | Unregistered CommenterJerry Ganger

Jerry,

We just haven’t got the manpower to get every possible little gem out there. So after some initial research, if we like what we have uncovered we tend to go after it in a proper and hopefully professional manner. However if as you say you have done much Due Diligence on particular stocks then please send it in and we will publish it as an article from you.

We have no wish hog the limelight and extend this invitation to all of our readers. The more quality research that we have the better for us and for our readership. We operate on the basis that the best idea wins and we will go with it. After all it is your and our cash that is going to be placed into these investments and we both want the best returns possible.

So there’s a challenge for you all!

We hope that this site will soon have a number of writers who contribute articles and build up their own following thus the breadth of knowledge would really be something of interest and value.

July 9, 2007 | Unregistered CommenterUranium Stocks

Wayne,

You are bang on. We see this as a difficult political call for China or any other foreign national to make in Africa. If you go into a country and support the current government then you have created an enemy amongst the opposition or rebels.

My own experience in the oil industry suggests that it is not just a straight choice between two sides that are believed to be the most influential. This problem exists from the top governmental decision makers right down to local decision makers in each town and within each tribe. In one instance that I can recall is that negotiations with the local chief of the tribe had been satisfactorily concluded. Only to be scuppered by the Chiefs sons who wanted their ‘piece of the action’ and so it goes on.

China has a lot to learn about doing business in Africa but no doubt she will learn quickly.

July 9, 2007 | Unregistered CommenterUranium Stocks

Jerry G,
You are spot on with your research. EFR is under the radar and not covered by analysts. Hang on in there and you will be well rewarded with this near term producer. Seems like they will produce in late 2007, watch the action then.

July 10, 2007 | Unregistered CommenterPeter J

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