Nuclear power and uranium are back in the spotlight.
Uranium futures have already reached a new high of $US62.50 this year, and prices could be set to skyrocket even further.
And that's what I want to talk about today...
For those of you who are unsure, uranium is the basic material used in the development of nuclear technology.
Exploration spending for this sought after commodity has grown from $14million in 2003 to a whopping $75million last year.
It’s a phenomenal rate of growth and it gives you some idea of how much demand there is out there for it.
This is no surprise as supplies of oil and gas are declining, and the greenhouse effect of burning coal is getting worse.
Nuclear technology is the only foreseeable and viable alternative according to tech experts. And to many City investors the only way to tap into and make money from this emerging trend is to pile their cash into companies pioneering the new technology.
And that's why there's an excited hum running through the City...
Australia has the potential to become one of the biggest uranium producers in the world.
But there’s a catch. They're facing major restrictions on what they can do because of their Labour Government's ‘no new mines’ policy.
If this continues to be the case then Australia could miss out on a golden opportunity. In fact unless the restrictions are lifted, Kazakhstan will leap ahead of them in export terms by 2015.
This is crazy, especially when Australia sits on 38% of the world’s uranium – more than any other country.
However, there is hope.
The policy will be reviewed at the party’s national conference in April. The fact that Prime Minister John Howard strongly supports increasing uranium mining and exports will be pretty helpful for the cause.
And I think the ever-increasing price for uranium will have a far greater influence on Australia's future exploration than anything else.
The demand for uranium is set to grow faster than ever, particularly when countries are faced with the steady depletion of their former military stockpiles.
But as with everything, there's a flip side...
Studies have found that cancer cases near Australia’s biggest uranium mine are almost double the normal rate. And since 1981 there have been more than 120 spillages and leaks of contaminated water in and around the mine. There's ongoing health monitoring in all these areas.
Various health officials are sceptical citing that the excess cancers found are not typical of those caused by radiation, but rather people's lifestyle issues such as smoking and diet.
You’ll have to come to your own conclusions on that one!
We already use nuclear power more than you may realise
Remember, there are also massive advantages to employing the use of uranium.
It acts as a brilliant replacement for fossil fuels – and the fact that it can overheat, melt and not explode like an atomic bomb, is reassuring.
In fact, over 16% of the world’s electricity comes from uranium in nuclear reactors, and we in the UK currently receive almost a quarter of our electricity from it.
Nuclear energy has all sorts of other uses too...
In medicinal research it provides diagnostic information about a person’s body and the function of organs. In radiotherapy it is used to treat cancer. It can also be used to sterilise syringes, bandages, surgical equipment etc.
It's used in the preservation of food, helps with the breeding of livestock by producing disease-resistant and weather resistant varieties of crops, and improves the health of animals.
In mining it helps detect leaks, the wear-and-tear of metals and you can even find it in your household smoke alarm.
Nuclear energy is also very useful in powering submarines, particularly in the Russian Arctic where operating conditions are way beyond the capability of conventional icebreakers. The very powerful nuclear-powered vehicles can operate almost all year-round - previously they could only work for two months at a time before refuelling was required.
But there's no need to panic
Uranium is only sold to countries which are signatories of the Nuclear Non-Proliferation Treaty, allowing international inspection to verify that it will only be used for peaceful purposes.
And there are plenty of uranium plays to be found on the AIM market. Some of them may make for some pretty interesting investments.
All the debates around nuclear power generation in the media are creating a bull-run in uranium stocks. But don't jump blindly into these stocks without doing some thorough research into them first.
There's one in particular that's caught my eye, and Tom likes it too. In fact, right now we're preparing a tip for this month's Red Hot Penny Shares, which aims to profit from the uranium story. If you'd like to know what it is, simply click here and claim your three-month no obligation trial to the UK's number penny shares advisory service.
Happy investing,
Melissa Carroll
for The Penny Sleuth
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