Could Spot Uranium Prices Reach $100/pound?
Energy Guru Bill Powers Forecasts Uranium Shortfall in Three Years. Bill Powers focuses on investment opportunities in the Canadian energy sector, mainly independent oil & gas companies and now uranium companies. We talked with him and he thinks uranium could reach $100/pound this decade. Interviewer: A lot of newsletters cover oil and gas, but you picked uranium, which hardly anyone was covering until recently? Bill Powers: I feel the uranium market right now is the world’s most unbalanced commodity market. In a sense, the world, through the nuclear power industry, consumes approximately 172 million pounds of uranium per year, and the world only produces about 92 million pounds of uranium per year. The supply deficit is made up through above-ground inventories, which are being worked down pretty quickly.
Those numbers were supplied by Uranium Information Center. A lot of my information comes from the U. Department of Energy (DOE) or the Nuclear Regulatory Commission. For example, I discovered from them that the U.
produced, through the 1980s, about 43.7 million pounds of uranium. And by 2002, the U. only produced about 2.34 million pounds of uranium. Interviewer: Where is uranium being produced in the United States? Bill Powers: Wyoming. There is also a uranium facility in Nebraska. I think there are two in-situ leach plants in Wyoming and another one in Nebraska.
There are a couple of phosphate farmers in Florida who produce uranium. I believe there is a facility in Texas that also produces uranium. For the most part, the uranium industry in New Mexico has just about been wiped out. The very low prices that we’ve seen, for about twenty years, have pretty much wiped out the entire U. uranium industry. To go from over 43 million pounds to less than 2.5 million pounds, it has really only allowed the most productive, highest margin and most efficient mines in the country to continue operating in that environment. Interviewer: So that makes the U. a net importer of uranium? Bill Powers: Absolutely. According to the DOE, US imports have gone from 3.6 million pounds per year in 1980 to 52.7 million pounds per year in 2002. A lot of it comes from Canada, but a significant amount is coming from the Russians, through a program called HEU (highly enriched uranium): the megatons to megawatts program. It’s where the United States Enrichment Corporation, as well as its partner in Russia, took highly enriched uranium and broke it down into lower grade uranium that could be marketed to nuclear power companies throughout North America and around the world. This has been one of the reasons we’ve had lower prices. All of this uranium has cluttered the market the past few years. And the US Enrichment Corporation has a lot to do with why we’ve seen low uranium prices here in the States. I had a conversation with them about the fact that since 1998, when they became a public company (after being a company that was owned by the U.
government), their long-term inventories of uranium had declined. When they became a private corporation, the U. government gave them 7,000 tons of enriched uranium and 50 tons of highly enriched uranium. They have been selling about 6 million pounds of uranium into the marketplace every year since 1998. According to my conversation with them, they have about three to four more years of selling. It’s because the US Enrichment Corporation wants to get out of the uranium storage business, and they want to be in the processing business. Interviewer: How long will it be, do you think, before USEC is going to stop being a factor on the selling price pressure of uranium? Bill Powers: I would probably say in about three years.
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