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Uranium prices soar as nuclear power makes gains
Kyodo News
Uranium prices have shot up on the world market to levels more than 10 times those in late 2000 as high crude oil prices and energy demand surges have led India and China in particular to push nuclear power generation projects more actively, according to industry officials.

The leading price index for uranium oxide concentrate procured on a short-term basis -- compiled by the Roswell, Ga.-based Ux Consulting Co. -- soared into the $ 72 level per pound, or 450 grams, for the first time in mid-December, 10.1 times the low of $ 7.10 set in late 2000.

The officials also traced the surge to shifts in the energy policies of Japan and some other countries, which are seeking to put greater emphasis on nuclear plant construction to lessen dependence on oil-based power generation.

This is stoking competition among countries to secure stable supplies of uranium, they said.

Uranium prices "will go on rising for the time being," one of the industry officials said.

An official at an electric utility also said, "We will monitor uranium prices' direction following their upsurge, although the higher prices will not be passed on to electricity fees immediately, because uranium procurement contracts are usually concluded on a long-term basis."

The $ 7.10 level was the lowest since uranium prices took a beating from an accident at the Three Mile Island reactor in Pennsylvania on March 28, 1979. Various countries moved to freeze plans to build nuclear plants after the accident.

Uranium prices thus kept falling until the U.S. government reviewed its policy in 2001, moving to restart construction of nuclear plants.

Following the U.S. shift, uranium prices began rising. Upward momentum was further stoked by a flood in October at a large underground uranium mine in Saskatchewan.

There are not many countries with large uranium deposits. Among nations with large reserves are Australia, Kazakhstan and Canada.

The worldwide annual supply is limited to some 60 percent of demand. Uranium-consuming nations are digging into inventories to make up for the shortages, industry officials said.

But China says it is planning to quadruple the volume of electricity generated at its nuclear plants over the 2004 level by 2020. India envisages hiking its volume of power generated at nuclear plants sevenfold.

Japan has stepped up efforts to secure stable supply sources of the radioactive metal.

In August, then Prime Minister Junichiro Koizumi visited Kazakhstan and secured a Kazakh promise to develop more uranium mines.

"The percentage of uranium costs to the overall costs of nuclear power plant electricity generation is small, so the uranium price surge will not cause higher electricity prices," said a senior official at the Natural Resources and Energy Agency said.

But an informed source in the United States said, "Speculative money from hedge funds has begun streaming into the uranium market."