Uranium Is Set For A Violent Move Higher

Uranium (Nuclear Minerals) / Exploration, Mining, Marketing, & Acquisitions

Date posted: 08/19/15

Matthew Boesler reports that Cantor Fitzgerald analyst Rob Chang warns clients that uranium is set for a violent move higher in his latest note to the industry. The metal has been on a steady grind lower for most of this year, much like most of the past three years. The reason, according to Chang is that since the earthquake and nuclear disaster at TEPCO Fukushima power plant in April 2011, Japanese reactors have been shut down, and inventories of unused uranium have piled up, weighing on the price. Chang thinks that is all about to change. In his note, he stresses that the marginal cost of current production for uranium is about US$40 per lb and that the minimum incentive price for future supply to match future uranium demand is about US$70 per lb. The reason why the price is as low as it is now is due to excess uranium inventories stemming from material earmarked for the Japan 50 reactors not being consumed for the last two and a half years. With Japan set to restart some reactors soon and early next year, this issue will soon resolve itself - especially since there are more reactors under construction, planned, and proposed now (557) than since before Fukushima (541). Given that it takes 7-10 years for a uranium project to move from discovery to first production, the fact that 2020 is only six years away means that we will already have a deficit no matter what happens to uranium prices and to mine development plans, Chang says. Time for Australia to ramp up the mines...