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Uranium mining is benefiting from the insatiable appetite for energy on display around the globe. Emerging markets literally represent billions of people eager to increase their standard of living. In addition to basic raw energy demands, there is an ever-increasing fleet of techno-gadgets that require electricity.
Uranium Mining To Supply The Nuclear Energy Staple
At the forefront of China’s power grab is a quest for nuclear power. China intends to have more than sixty nuclear reactors on line by 2020. Accordingly, the country appears to be stockpiling uranium in preparation for this purpose. Indeed, it’s reported that China may be buying around five thousand metric tons of uranium annually. This is far more than it currently uses, but would produce reserves for the future reactor requirements. All told, China could require around 20,000 tons of uranium annually. However, at present there are just about 50,000 tons taken from the earth.
India is the other great, heavily populated nation in the midst of nuclear expansion. The following figures help put into perspective the magnitude of uranium needed to fuel the nuclear power plan. Approximately 400 tons of uranium are needed just to start the typical reactor. The usual reactor would produce about a thousand megawatts of power in return. India is aiming for about twenty gigawatts of power. This would require over 8,000 tons of uranium each year.
Russia is another key player in the nuclear power push. The common perception is that Russia is a major producer, and exporter, of energy. However, the Russian economy has been growing. Russia aims to increase its number of nuclear reactors and use more nuclear power. This is part of a broad plan to export more natural gas to Europe. Russia also factors in because the nuclear weapon reprocessing program is slated to terminate in the year 2013. As a result, that secondary source of uranium will dissipate. So, you not only have increasing demand, but also depleting supply from sources such as this. You can see why these are some of the best stocks to buy now, notwithstanding the Japan incident. The backlash from that is temporary.
Uranium Mining And The Promise Of Canada
When it comes to uranium mining, companies are eager to develop projects in Canada. Canada holds some of the largest uranium deposits in the world. Especially in Saskatchewan, the deposits are not only very large, but also some of the highest quality deposits found anywhere on the globe.
Canada is key because it serves as a vital link between uranium production and its eventual use for power generation. Specifically, Canada makes certain that all uranium sold is used in nuclear power plants to generate electricity. This is precisely why China and India want it. Canada actually goes so far as to police the use of the uranium it sells through a myriad of export restrictions and also international non-proliferation treaties.
Uranium Mining And How Grade Matters
Uranium mining in the Athabasca Basin in Canada, for instance, benefits from particularly rich ore grade. On average, the ore grade is 21% uranium oxide. To put things in perspective, uranium mined just to the south, in the United States, might have just half a percent ore grade. This comparison shows how potent the ore is in select parts of Canada. It also reveals how economically feasible deposits can exist in relatively small areas due to concentration.
Uranium Mining – Some Of The Key Players
Like any other industry, the uranium mining arena has some key players. In the United States, one of the largest uranium power producers is Exelon Corporation. Cameco Corporation is nearly a household name these days. This is a large uranium producer with super high quality, rich ore deposits. High grade deposits makes for lower production costs. This enables such companies to weather the storm of volatile price swings. In other words, a company like Cameco can afford to continue pulling uranium out of the ground at lower prices than companies with less rich deposits.
Some of the most exciting plays are the smaller producers. These companies have the tendency to grow at a faster rate than bigger companies. Accordingly, they can produce some of the largest returns for investors. Take Paladin Energy, for instance. This Canadian company has a mining operation in Africa. They have a notable presence there and the forecast for uranium makes the company an attractive consideration. Even these stories can be a bit stale. The explorers are often some of the most fun stocks to buy.
Uranium mining presents some unique risks that cannot be taken too lightly. Uranium used for nuclear power creates toxic waste. For this reason, it already faces some inherent opposition. There is also the risk of disaster stemming from accidents. A disaster on the order of those that have happened in the past could be enough to really put a damper on the push for more nuclear power. Accordingly, uranium mining stands to take a hit if the price falls below profitable production levels.
