Finding a little energy

Take a walk around and it’s not hard to find someone that’s aware of the big change in the gold market; over the last three years gold has rebounded off a low of US$255.95 per oz. and the general public has been well aware of the recovery. Tap a few people on their shoulders at a mining industry function and they will all happily relate the resurgence in the major base metal markets; the industry waited long enough for good times to return, and is watching with some relish.

But away from the gold fixes and the London Metal Exchange rings, a quiet rebirth is happening in minor-metal markets. We nearly saw US$30-per-lb. cobalt; molybdenum oxide has already brushed US$8 per lb.; vanadium and indium have both reversed long slides. It’s no longer especially perceptive to say that commodities are once again in fashion, but it’s worth noting that almost all the metals are sharing in the improved economic climate.

Which brings us to a quiet and pleasant little surprise. Uranium prices are acting like nuclear energy has a future once more. The Uranium Exchange Company’s price intelligence arm, Ux Consulting Co., recently published a price of US$16.50 per lb. for U3O8, the highest price that’s been seen since the top of the last market in 1996.

One thing that is obviously working on the price is the general increase in U.S.-dollar prices of energy commodities. Crude oil prices, for example, are up about 50% compared with average values through the 1990s. Natural gas prices have more than doubled in the same stretch. Steam-coal prices, flat for years, are edging up. (These are all things, by the way, that will do more to cut emissions and get those clumsy Cadillac Escalades off the road than will a thousand Kyotos.)

And as prices rise for hydrocarbons, the old question of substitution arises. Energy pundits have prosed for years about “renewable” sources, but when consumption’s push meets the market’s shove, only one other source is in the running — nuclear.

Another factor may be concern over reliable power generation in the developed West. It’s sobering for people used to uninterrupted power supplies to encounter summer brownouts, Californian “rolling blackouts,” and all-night shutdowns such as occurred in eastern North America and southern Europe last year. Africans turn on a switch, get nothing, shrug, and fire up their auxiliary generator, if they are prosperous enough to have one. First Worlders, on the other hand, wonder what happened to that flashlight.

Electrical utilities throughout the developed world are projecting power shortages. No surprise: they always do. But when they’re right, the public tends to want the situation fixed, as expediently as possible. So those maligned old nukes are finding a little more respect these days, as common sense begins to win a few rounds over green ideology. Demand for electrical power, when it comes, will beget demand for nuclear fuels.

As and when it comes, that demand will meet some carefully managed supply. That is not entirely the work of the uranium industry; the regulatory hoops uranium mining projects have to jump are the most numerous and demanding anywhere in the mining industry. With public opposition as a shutoff valve on the project pipeline, it is little wonder the uranium market isn’t clogged with producers.

So the stage seems to be set for a tight uranium market over the next few years — yet another hopeful sign for junior mineral exploration.