By Melissa Pistilli-Exclusive to Uranium Investing News
Both TradeTech and Ux Consulting have raised their weekly uranium spot price from $50 per pound to $52 and $53 per pound, respectively. The two industry consultants have left their long term price indicator at $65 per pound despite increased buyer interest.
Uranium One Update
Uranium One [TSX: UUU], the Canadian miner embroiled in the recent alleged fraud scandal out of Kazakhstan, has announced a purchase agreement with Russia’s state-owned uranium miner, ARMZ Uranium Holding Co. ( a unit of Russia’s nuclear energy holding, Rosatom Corp.).
Uranium One will get a 50 per cent stake in ARMZ’s Karatau deposit in Kazakhstan in exchange for $90 million and 17 per cent share in UUU. ARMZ will also have the option to increase its holdings to 20 per cent. The deal also grants Uranium One access to Russian conversion and enrichment facilities.
The Karatau deposit has 29 million pounds of uranium in indicated resources and 2 million in inferred resources. In 2008, the Karatau mine produced 1.7 million pounds of uranium. Uranium One’s CEO Jean Nortier expects the mine to produce 3.3 million pounds in 2009 and 5.2 million pounds per year by 2011.
Mitigating Political Risk
Developing and implementing strategies for managing political risk is crucial for mining companies, especially uranium miners operating in regions of the world notorious for strained political relations. One strategy: create alliances with a powerful partner.
In aligning with Russia’s ARMZ, Uranium One is not only gaining a partner in the uranium industry, but also helping to mitigate the political risks associated with operating in a post-Soviet era nation like Kazakhstan.
According to ARMZ director general Vadim Zhivov, the Russian company has a “deep history” in the Kazakh mining industry and “strong inter government relationships exist between Russia and Kazakhstan.”
Uranium One’s Japanese Partnership
Zhivov also commented that the partnership with Uranium One provides Russia with increased exposure to the uranium market.
This type of strategic partnership is the second for the uranium miner. In February of this year, Uranium One entered into C$270 million agreement with a group of Japanese companies that included the Tokyo Electric Power Co., Toshiba and Japan Bank for International Co-operation.
“With the closing of (both deals), Uranium One will be a link between the governments of Japan and Russia for uranium mining,” said Nortier.
On Tuesday, shares of Uranium One on the TSX closed at $2.80.
Securing Uranium Supply Lines
Uranium One’s dealings with Japanese and Russian uranium and energy companies is just part of a rising trend amongst nuclear-dependent nations seeking to secure uranium supply lines by entering into partnerships with uranium miners.
The World Nuclear Association anticipates uranium demand to rise from the current 65,000 tonnes a year to 74,000 tonnes by 2015.
“With the nuclear drive worldwide, demand is expected to spike,” said Deutsche Securities Inc. analyst, Tomohiro Jikihara. “Securing the resource is a step toward increasing nuclear generation.”
Underwater Uranium Farms
Here’s an interesting example of the lengths to which nuclear energy-dependent nations are willing to go to insure direct uranium supplies: government-funded scientists in Japan are developing the means to extract uranium from the sea.
Japan is the world’s third biggest nuclear generator, consuming roughly 9,800 tonnes of uranium in 2008. Currently, Japan relies on uranium imports from Canada and Australia to fuel its nuclear reactors.
Dr. Masao Tanada (Japan Atomic Energy Agency) has created a fabric made mostly of irradiated polyethylene that acts like a sponge, soaking up uranium from the surrounding seawater. The fabric can be placed on the seabed to create “uranium farms” that Dr. Tanada says would allow Japan’s nuclear power industry to extract its annual uranium needs from the Kuroshio Current flowing along Japan’s eastern seaboard.
Dr. Tanada is looking to garner funding to build an approximately 400 square mile underwater uranium farm. This one farm would provide Japan with as much as 16 per cent of its annual uranium demand, he said.
“Other countries are conducting similar research but none are as advanced as we are,” commented Dr. Tanada. “We need to conduct more development research and be able to produce the adsorbent material on a large scale, but we could achieve this within five years.”
Sounds crazy, eh? But when one considers that an estimated 4.5 billion tonnes of uranium (about 1,000 times the amount known in mines) is floating around in the earth’s oceans (at about 3.3 parts per billion), it begins to seem like an option worth pursuing.
If such technology can be perfected and put to use, how will this affect the spot price of uranium on the open market? The share price of uranium miners?
Whether or not this technology gets off the ground is yet to be seen, but the very idea of its consideration reflects the increasing demand for nuclear power fuel and the continuation of uranium’s rise as one of the world’s most desired energy commodities.