Uranium has hit the headlines once again this week as prices rocketed to their highest levels ever…
Hedge funds ploughed into the market taking massive bets on prices rising even further.
Analysts reckon the average price in 2007 will reach $100 a pound – it’s no surprise that the price shot up $10 to $85 as buyers clambered to get their hands on what they could.
Uranium certainly looks set to become the next market craze – for one, demand hugely outstrips supply – in fact there are 442 nuclear plants operating in the world which require 180m pounds of uranium a year, but mines supply only 100m. To date the extra has come from releases of national stock-piles, and the decommissioning of nuclear weapons – the problem is that this extra supply isn’t finite.
Production from existing mines is gradually declining. And in Australia, which holds one of the biggest sources in the world of uranium – the opening of new mines is causing a great deal of political controversy. You may remember my penny sleuth a few months back, where I highlighted this case.
Andrew Ferguson, manager of uranium fund Geiger Counter said “We have hedge funds competing in the market for the first time against the utility companies who are the normal buyers”. This will add further fuel to uranium’s soaring price.
The renewed interest in building nuclear power plants has come from the worries over climate change – so in an effort to stop one crisis, we are probably creating another. Countries are responding accordingly – China has plans to build 60, and America has given outline permission for the construction of a new generation of nuclear reactors.
Greenpeace has managed to so far scupper the UK’s attempt to resume building nuclear power stations – for the time being, although Whitehall sources still expect a parliamentary vote on the issue in the autumn.
The sharp jump in prices this week was probably caused by hedge funds trying to get involved in an auction on Tuesday by a US provider of a source of fixed-price uranium – they will bet on the future movement of the price but need to tie it down first.
Until tomorrow,
Melissa Carroll
for The Penny Sleuth
