Tuesday February 05, 2008

US nuclear power plants to get more Russia uranium

news.yahoo.com :

US nuclear power reactors will be able to obtain more supplies of Russian enriched uranium for fuel, under a trade deal signed by the two countries late on Friday [1 Feb 2008]. For years, the U.S. government has restricted Russian uranium shipments, fearing Russia would dump uranium in the U.S. market and financially hurt the major American uranium supplier, USEC Inc. A spokesman for the Russia's Atomic Energy Agency said with the new trade deal "the volumes of direct deliveries of uranium enrichment services may total 20% of the market."

Under the deal, Russian uranium exports to the United States would increase slowly over a 10-year period, beginning in 2011, when shipments would be allowed to reach 16,559 tons. Exports would then increase about 50% annually over the next two years and increase more than tenfold from 41,398 tons in 2013, when the current "Megatons to Megawatts" program expires, to 485,279 tons the next year. Under the "Megatons to Megawatts" program, enriched uranium from dismantled Russian nuclear weapons is imported by USEC and processed into fuel to run American nuclear power reactors.

- In the short term, this would depress the uranium price which has in fact dropped 42% from $135 per pound in Jun 2007 to $78 per pound. In the longer term, this move removes a long-running artificial constraint on the market and will allow for better price discovery. With over 100 new nuclear power plants planned worldwide, the markets will in time discover what the true price of uranium is supposed to be.

I am long NLR - the Nuclear Energy ETF, and six other uranium junior mining companies. Both NLR and the uranium juniors have taken a hit together with the credit-crisis induced stock market plunge in recent months. They have also rebounded somewhat since then. I continue to be long and have actually added to my positions. As long as the world demands more energy, fossil fuels continue to run out, and there continues to be few other proven alternatives for large-scale, base-load electricity generation, the long-term picture for nuclear power remains intact.

(2008-02-05 00:16:58 SGT) [Energy] Permalink

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