Commodities | Mar 13 2009
By Rudi Filapek-Vandyck
The combined global credit squeeze and economic downturn are likely to result in too little uranium available for too much demand later down the track. At least, that’s the news Jerry Grandey, CEO of the world’s number one producer of yellow cake – Cameco Corp – delivered at the Reuters Global Mining and Steel Summit in New York this week.
As you would expect, the announcement is now widely being commented upon by market watchers and securities analysts across the globe. The Cameco CEO also threw in “uncertainty about Russia’s plans for its decommissioned nuclear arsenal” as a third major factor that could contribute to the upcoming “uranium supply crunch”. This crunch, said the Cameco CEO, “could be around the corner”.
Analysts at Canada-based Salman Partners already responded with a loud “yes, and we fully agree”. Say the analysts: “a crunch does appear to be ‘around the corner’. But how far away is that corner?”
Salman believes uranium shortages could become pronounced “before the end of next year”.
Grandey reportedly also announced Cameco has the intention to “take advantage” of the present low valuations for uranium miners (read: the company plans to make acquisitions).
According to Reuters he clarified this by stating a big deal was a possibility, “worth $1 billion to $2 billion or a little more”.
So far this year spot uranium prices have fallen further from already depressed pricing levels last year. Industry consultants TradeTech and Ux Consulting lowered their weekly spot price benchmarks to US$43/lb and US$43.50 respectively in the week past. Their respective longer term pricing benchmarks currently stand at US$69/lb and US$70/lb.
