Merryn on Money: Nuclear energy

Which brings us to the main thing you need to make nuclear energy: uranium. France alone uses up about 10,000 tonnes yet global production is a mere 50,000 a year – enough to meet about 60% of global demand.

So far the other 40% or so has come from stockpiles and odds and ends lying around in decommissioned postCold War weaponry. Today these stockpiles are not as big as they were. It is possible to recycle some uranium from spent fuel rods but the upshot is that the long-term supply simply isn’t there to meet the demand.
Given this it should be no surprise that the uranium price has already risen roughly fourteen-fold in the past six years, making fortunes for the entrepreneurs and investors who got into the story early along the way (I did write about this back in July 2006, so I hope that includes some readers).

That said, the price did rise rather too fast – reactors take a long time to build, so while there is a lot of demand it isn’t all with us yet. And while stockpiles are being run down, they aren’t gone yet.

It is an exciting market, but maybe not yet one that justifies uranium at the $138 a pound level it hit last June. In the past nine months or so the market has begun to recognise this and the price of a pound of uranium has come off sharply.

By January a pound would have cost you $90 and by the end of the month just $78. Today it’s more like $73. So is it a buy now?

The Times