Uranium for Plowshares: Another Hot Commodity

Uranium. Each uranium atom nucleus is overly burdened by 92 positively charged protons. Even though over 140 uncharged neutrons separate these charged protons, the two isotopes of uranium,(U-235, and U-238), cannot tolerate the enormously concentrated positive nuclear charge, and both isotopes of uranium are unstable. That is, uranium is radioactive. In fact, uranium has the most proton-laden nucleus of ANY naturally occurring chemical element (we say that it has the highest 'atomic number'). However, uranium's isotopes are SLOWLY radioactive, so a significant amount of the uranium that was present on the Earth at the time of the planet's formation is still here. [More introductory level technical info here].

Geology and Use. uranium is a minable metal that's radioactive, and can be used as an energy resource (the energy is released as the unstable nuclei fall apart). We can almost literally mine its radioactivity; we then concentrate the most radioactive isotope (U-235), and use it to heat and boil water, with the expanding steam driving turbines.

The ore minerals include uraninite [picture] and its impure form, pitchblende. The geology of uranium is too complex to go into here; suffice it to say that some uranium ore forms under volcanoes, with most forming by deep flow of cool underground water (cool relative to volcanic waters). However, the most important geological note is that one large Australian deposit has associated copper and gold (vide infra), and the Colorado USA deposits have associated vanadium (the latter used for steel-making). Can you say Value-Added?

Price. The price of uranium oxide is now up in the vicinity of $22 a pound [graph] from around $10 in 2002 as China and India built new nuclear reactors to create electricity (AND WE haven't; we generate only about 20% 0f our electricity from nuclear; but I digress). Morgan Stanley thinks the price of uranium can double again by next year.

What are the pressures pushing the uranium price up? Broadly, it is the expansion of the great growing Asian economies (mentioned above), and, in the West, the fear of global warming (Nuclear Energy produces no carbon dioxide waste). Of course, there are issues related to nuclear waste disposal, but almost 80% of France's electricity comes from nuclear. But that is a subject for another post. Further, decomissioning of old Russian nuclear weapons has been a source of uranium recently, but now the low uranium inventories are being felt: primary uranium supply from mining is only 75 million pounds a year, compared to the 170 million pounds of annual demand. This structural shortage is now coming home to roost.

Mining and Stock. Three uranium-vanadium mines in Colorado, closed since the mid-1980s, reopened in the past two years. Another is set to re-open this year (These properties are owned by the Cotter Corporation, a division of General Atomics, which is not publically traded). But most of the action will be outside the U.S. The giant Olympic Dam copper-uranium-gold deposit, owned by WMC (NYSE:WMC) , is located in the dry, dessicated Australian state of South Australia [countryside photo]. Olympic Dam is a huge mine (Individ has been underground there) that comprises one of the largest uranium reserves in the world. BHP Billiton (NYSE: BHP), the largest mining company in the world, is looking to buy WMC, and Rio Tinto (NYSE: RTP), also would like to do that. Meanwhile, Cameco (NYSE: CCJ), the world's largest uranium producer, owns 50% of Cigar Lake, which is also a world class uranium deposit that is projected to come on line in 2007. Go to Yahoo Finance, and place any of the above stock symbols in search bar.

Incentives. I think the American people will follow the basic laws of economics: they will respond to incentives. Oil prices are going up, and may be on a long term upward trajectory, according to some projections. So, first, we need to, and will, loosen up our permitting process for building nuclear reactors (and for mining uranium), then, second, our industry needs to, and will, innovate in the direction of hydrogen fuels cells, powered by nuclear energy. Then, we can drive around on uranium.

Individ