Uranium poised for a rebound as reactor construction booms

The uranium industry’s worst year is about to collide with a nuclear construction program in India and China that rivals the ones undertaken during the oil crisis of the 1970s.

The result is likely to be a 58 per cent rebound in uranium to $90 a pound from $57 now, according to Goldman Sachs JBWere Pty and Rio Tinto Group, the third-biggest mining company.
The price of uranium plunged 57 per cent in the past year as an earthquake damaged a Japanese nuclear plant that’s the world’s largest and faults shut down reactors in the U.K. and Germany.

Plans for India and China to end electricity shortages will ripple from northwest Canada to the Australian outback and the flatlands of Kazakhstan, the primary sources of uranium. India will start up three reactors this year, with another six due in 2009, in India, China, Russia, Canada and Japan. Uranium demand worldwide will rise as fast as oil this year, or 0.8 per cent, Deutsche Bank AG forecasts.

“The first wave of growth is going to come from the emerging economies,” said John Wong, fund manager with CQS UK LLP in London, which has $10 billion under management, including $150 million of uranium investments. “People are starting to look at coal, at gas, at oil and seeing the energy prices go up, they wonder about uranium.”

International Herald Tribune