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Uranium fundamentals are strong
Brendan Ryan
Posted: Mon, 04 Feb 2008

[miningmx.com] -- While some market commentators describe current movements in the uranium price as a “dead cat bounce” the fundamentals for the commodity remain strong and the price could take off again.

That was the assessment given to delegates at the Mining Indaba by Jeff Combs, president of Ux Consulting LLC.

He described trading volatility in uranium during 2007 as “unprecedented.” The price peaked at $135/lb and then plummeted to $70/lb from which it recovered to $90/lb before dipping once more to sit around $80/lb currently.

Combs said a key factor would be delivery on production forecasts by various companies and pointed out that, so far, uranium production expansions were running behind plan.

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“The response on the production side has so far been pretty anaemic. There is a tremendous amount of growth in uranium output planned from two regions - Kazakhstan and Africa. You have to ask whether it will be delivered as planned.”

Turning to the demand side, Combs said that, during 2007, five new nuclear reactors entered commercial operation while construction started on ten more reactors and orders were place for a further 22 reactors.

Combs added; “China is planning to build two new reactors annually through to 2020 while Russia will build two new reactors annually for the next 15 years.

“Currently there are 31 countries operating 440 reactors while another 55 countries are likely to turn to nuclear energy. Our mid-term case looks for a total of 55 countries to be operating 630 reactors by 2020.”