Uranium Price Declines to $133/lb – But instability increases in Niger
Sunday, July 8, 2007 at 8:59AM
Uranium Stocks in Uranium
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.
Article originally appeared on Uranium Stocks (http://www.uranium-stocks.net/).
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