World digs uranium

Published in Mid-Canada Forestry & Mining:
The most populous country in the world is expanding its nuclear power capacity, and our country is ready to help.
China’s plan to build more nuclear power plants is one reason why executives at Canadian uranium companies are smiling these days.
The Asian giant’s government approved a plan in 2007 to quintuple its nuclear power generation capacity to 40,000 megawatts by 2020. As of last year, China has 11 nuclear reactors in operation and another eight units under construction. Most of China’s present electricity generation is via fossil fuels.
For uranium companies, the China plan was a significant part of an encouraging year which saw the spot price of yellowcake soar to about US$138 a pound in June. That number fell in the ensuing months, but was still $85 in September with the long-term price used by utilities for bulk buying steady at more than $90. Those numbers were way up from 2006 prices.
That June price jump was simply a matter of “a lack of material and a whole bunch of buyers,” Uranium Participation Corporation president E. Peter Farmer says from Toronto. Uranium Participation is a trading company managed (but not owned) by Denison Mines, one of Canada’s largest mining companies.
“You have to remember that the spot market is a small portion of the total market,” he continues. “It’s the tail-end market. And we had a whole bunch of buyers out, including a number of producers, who were out to get material in the first half of the year.
“The belief at the time was – and it was absolutely true – was that in order to get it you had to bid above market. So every time some material came out for bid it pushed the market up.
“There is a constant demand. What happened in June was, some of the producers were short of material that they had to get material and at least one if not more utilities felt they had to get material, and they went out to get it. And of course you had traders involved on top of that. It was kind of an alignment of the planets, really.”
After that, he says, buyers notched down their demand for yellowcake and “the normal kind of market has returned.” ...

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