Wednesday, July 12, 2006

State of the Uranium World

Uranium has been heating up on all fronts in the last few weeks. Acquisitions by Mega Uranium (CVE.MGA), Paladin Resources (TSE:PDN), SXR Uranium One (TSE:SXR), and the merger of Bayswater Ventures (CVE:BVE) and Pathfinder Resources (CVE:PHR) reinvigorated uranium stocks while signalling the advent of the merger and acquisition phase of the sector.

In addition, England has thrown its proverbial hat into the uranium game with its just-unveiled Energy Policy:

Blair was speaking on the eve of the publication of a major energy review by his own government, which is expected to endorse greater use of nuclear power.

The establishment of new nuclear powerplants in the United Kingdom has been approved. Industry secretary Alistair Darling says that nuclear power would be a vital part of the mix of energy supply for the UK over the next 40 years.

A reader of my blog asked me about the new English uranium fund

Geiger Counter Limited, a new fund to concentrate on investing in uranium and nuclear power opportunities, launched this week on the London Stock Exchange [LSE:GCL] and Channel Islands Stock Exchange [CISX:GCL], offering investors yet another way into yellowcake.

Finally, uranium has even managed to propel itself to the world stage at the G8 conference. The idea of global nuclear alliance has been bandied around by several nations, although Germany and Italy has been reluctant because of minority acceptance of nuclear power amongst their respective peoples.

One potentially interesting sideshow is the attempt by Russia to alter the agreement with the United States on the sale of uranium.

Russian President Vladimir Putin has said he will urge Bush at this weekend's rich nations' meeting in St. Petersburg to alter two supply agreements in order for Russia to ship more enriched uranium to the United States.

Russia already supplies about half the enriched uranium used by U.S. nuclear power plants and the lawmakers said allowing Russia to "dump" more of the fuel in the U.S. market could scuttle construction of two planned American uranium enrichment facilities.

Additionally, Russian access to the U.S. market at this time is likely to result in market destabilization potentially jeopardizing resurgence of the nuclear-related industry.

Putin said he was against U.S. "discriminatory" restrictions on the sale of Russian nuclear fuel and will raise the issue with Bush when they meet at the G8.

The future outlook of the uranium spot price, and consequently, the entire uranium industry, is ultimately determined by supply and demand and readers would do well to do DD on not only the state of the uranium juniors, but the macroeconomic nuclear picture that is in a constant state of flux presently.



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