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Why uranium could become tomorrow’s gold

Source: Atlantico

Uranium has the same value today as gold ten years ago. According to some experts, the price to be multiplied by four to six in the next decade.

A pound of uranium is currently traded on the spot market at $ 42 a pound, which is ridiculously low. The price may rebound. I had a long discussion with two leading experts uranium last week. They worked on uranium in both the private sector as in the public sector since the 1970s. They attended all the twists and turns of history.

Both specialists have strong arguments to suggest that the uranium price increase this year and in the future. “The uranium ore,” remarked one of them, “Today is where gold was 10 years ago. We expect prices four to six times higher in the years to come. “

If this statement is proven – we would reach $ 150 to $ 250 a pound – this is great news for producers of uranium. You know, the guys who already produce this metal.

New sources are more expensive …

Begin with the staggering cost to acquire “new” centers of uranium production. When you add the costs of exploration and development, a new uranium mine is between $ 100 and $ 120 per pound. This is almost triple the current spot today. And this is before taking into account the vicissitudes of future tax changes and interest rates higher. After all, it is interesting to build a mine if there is a decent return on investment.

On the other hand, developing existing mines problem. Anyone trying to develop a mine face a serious barrier to the price put on the table. See for example how BHP Billiton has postponed the expansion of giant Olympic Dam site in Australia, where costs amounted to more than $ 20 billion.

Investment level to 10 digits approach the limit of private enterprise in all respects. This is huge, even for the oil industry, not to mention mining companies – even for the largest of the large. We are talking about levels of investment program of major defense or space program more similar difficulties in recruiting, developing technology and programming to make it work a decade or more.

Look at things differently. Who can afford to do this kind of energy investment?Governments, perhaps. Or more likely the partnerships between government and industry.In the future, should be monitored forms of business in which the mining consortium becomes a sort of public service, with all the frills legalists who follow. But without government support, no major energy projects will probably never happen. And thus the supply curve continues its course.

But … the application is ensured

From the demand side, the history of China is “real and becomes even more”, according to my sources. The Chinese need electricity and if they currently burn coal because they have to, not because they want to. Air pollution in China is now a national problem. In the country, major future electricity should all be respectful of the environment to obtain the approval of the State. At least that is what we told the Communist Party.

Also according to my sources, the stories we hear as what Japan is trying to remove its nuclear plants are “tall tales.” After the Fukushima disaster two years ago, Japan was first attempted to move away from nuclear power. It was a purely emotional reaction. “Then came the reality.”

Roughly speaking, Japan has calculated that the bill represented the importation of liquefied natural gas, now around $ 20 per thousand cubic feet. In addition, Japan sees China develop its navy, which threatens the Japanese trade routes and communication essential for imported oil and coal.

The result of all this is that rebuild its nuclear power in Japan gives another reason to pour more concrete, which is a Japanese national pastime as popular as baseball.

 

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