Uranium Wars

By: Sol Palha | Wed, Nov 14, 2007
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"When I was a boy I used to do what my father wanted. Now I have to do what my boy wants. My problem is: When am I going to do what I want?" ~ Samuel Levenson

We have spoken several times in regards to this issue over the course of the last few years. China has already lead the assault on a covert basis but soon they will move to an overt basis and now India will be forced to join them not because they think they might have to but because they desperately need too. The excerpt below will explain our point quite clearly.

Faced with an acute shortage of uranium to run existing power stations, the Nuclear Power Corporation of India Ltd has advanced its maintenance schedule and started shutting down individual power units. Usually, these units are shut down in a staggered manner but this time they have been bunched together so that authorities get time to arrange for uranium supplies.

Over the past few weeks, as many as five units amounting to 1000 MW of the total 4000 MW were shut down on account of upkeep of plants: two units from Tarapur (Maharashtra) and one each from Kaiga (Karnataka), Kalpakkam (Tamil Nadu) and Kakrapar (Gujarat).

Already, most of the plants that were running at 90-95 per cent capacity until last year are now down to 50-70 per cent reflecting the serious uranium crisis facing the country.

Acknowledging that there is a fuel supply "mismatch" due to further delays in the commissioning of the milling system in Jharkhand mines, one of the main sources of domestic fuel supply, authorities are having to innovate on their maintenance schedule. Hoping that the fuel situation may ease a bit in the next month or so, sources said, the NPCIL felt that this period could be used for maintenance which anyhow requires shutting down a reactor for about 20 days. Full Story

Known Recoverable Resources of Uranium
  Tonnes U % of world
Australia 1,143,000 24%
Kazakhstan 816,000 17%
Canada 444,000 9%
USA 342,000 7%
South Africa 341,000 7%
Namibia 282,000 6%
Brazil 279,000 6%
Niger 225,000 5%
Russian Fed. 172,000 4%
Uzbekistan 116,000 2%
Ukraine 90,000 2%
Jordan 79,000 2%
India 67,000 1%
China 60,000 1%
Other 287,000 6%
World total 4,743,000  

Now just imagine a country such as France had to go through the same situation; total chaos would reign as 80% of France's electricity comes from nuclear power plants. We are not stating that France is in any danger we are just trying to illustrate a point here. For that matter imagine the US had to go through the same situation it would still cause chaos as over 20% of our electricity is generated from nuclear power plants. Actually one has to applaud the French for being so astute as to have had the foresight to continue to develop nuclear technology and move away from coal and natural gas; today the French are one of the leaders in Nuclear power plant technology a position once held by the United States.

We are at the beginning stages of a massive bidding war in Uranium. China is locking in massive deals in Africa and is now working on ever bigger deals in Kazakhstan which holds the worlds second largest reserves of Uranium after Australia. Note to that China signed a multi billion dollar uranium deal with Australia. China is basically locking up Uranium supplies, which means its taking this uranium out of the market place; this effectively means that there will be even less uranium for the rest of the global world players to go after. Now this development alone is bad enough but the situation worsens; Russia which has more than enough uranium has decided to start stock piling on uranium too. They have done this after declaring that Uranium is now a strategic resource and will only be exported in limited quantities. Once again the following news story will best illustrate our point.

"This new agreement will allow the supply of Australian uranium for use in Russia's civil nuclear power industry and provide a framework for broader cooperation on peaceful nuclear-related activities," he said. Both Howard and Putin dismissed concerns that Russia would sell Australian uranium to third countries such as Iran.

"I simply don't understand what people are talking about," Putin said, pointing out that Russia already exports large quantities of enriched uranium for military use, including 30 tonnes a year to the United States. "We are buying uranium from Australia for purely economic reasons," he said. Full Story

Purely economic reasons and why not; Putin is a smart man he knows that in the future nations will be desperately begging for this valuable commodity and he also knows that he who controls the keys to the energy market controls the world. One other thing to note here is that Russia supplies the US with over 30 tonnes a year of uranium; Russia could cut these supplies on a moments notice especially now that the relationship between these two former cold war enemies has turned rather frosty as of late.

Bottom line is the Uranium bull is one that is going to be driven by the two most powerful forces in the universe and such a development is very rare and provides the astute investor with a window of opportunity that usually presents itself only once in a persons life time. The two forces are fear and greed; usually one of them is enough to produce massive moves but in the near future both of them will be working in unison instead of against each other. This is one of the main reasons why it's almost impossible to predict how high uranium prices could eventually trade at. Right now the uranium sector has been beaten down and many individuals have given up on this sector as some stocks have truly taken a massive beating. Remember at TI we view disaster as opportunity waiting to be discovered and thus our advice to all our subscribers is to make sure you hold positions in all the various uranium plays that are listed in our portfolios and hold them through thick and thin or until we advise you to unload them. Those that do so will be handsomely rewarded and those that don't well in the years to come they will most likely shed tears of blood as they wonder what possessed them to let such a wonderful opportunity pass them by. Do not let this opportunity slip by you.

Futures players with deep pockets could start examining the possibility of going long Uranium futures; do so with the mindset that the next leg up will not begin tomorrow.

"Who then is free? The wise man who can govern himself." ~ Horace BC 65-8, Italian Poet

 


 

Sol Palha

Author: Sol Palha

Sol Palha
TacticalInvestor.com

Sol Palha is a market analyst and educator who uses Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the right side of the market. He and his partners are on the web at www.tacticalinvestor.com.

The information contained herein is deemed reliable but no guarantee is made about its completeness or accuracy. The reader accepts this information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author/publisher of this letter is not a qualified financial advisor & is not acting as such in this publication. Investors are urged to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.

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