Thursday, March 10, 2011

Foreign demand May Jeopardize Uranium furnish for U.S. Utilities

We discussed with the Ux Consulting president from which countries time to come uranium supplies may come, and who is going after those supplies more aggressively. He warns about the risks and rewards of Kazakhstan and Mongolia, looks to Africa for supplies, and talks about Russia's expansion.

StockInterview: How do domestic uranium prospects rate in the eyes of U.S. And foreign utilities?

South Kyrgyzstan

Jeff Combs:
I don't think that utilities expect the U.S. To be a major victualer of uranium. What you're finding with China and other countries, where nuclear power is growing, is that they're right on finding to procure supplies. The Chinese are going to Kazakhstan and also Australia, where there are a lot of uranium reserves, a lot of inherent for growth. I think there's some inherent for increase in the U.S. But if you had a fast growing nuclear power program, I don't think the U.S. Is the first place I'd look. I believe that you can look for some opportunities in the U.S. But in general, the U.S. Utilities are basically in competition with some of these newer entrants into the shop for available supplies. Those are primarily surface of the U.S., as U.S. Utilities also depend on imports for most of their supplies.

StockInterview: It appears many countries are racing to procure uranium supplies surface their borders.

Jeff Combs:
Even Russia, which was a major exporter of uranium in the 1990s, is finding to procure added provide sources, first to Kazakhstan, Kyrgyzstan, and Uzbekistan, previous republics of the of Soviet Union, but also to Africa. Russia has an very ambitious reactor expansion program, as well as a desire to greatly increase its exports of reactors to countries like China and India. As it stands now, most of the increase in nuclear power is startling to take place in China, India, Russia, as well as Korea and Japan to a safe bet extent. All these countries are precisely finding surface their borders for uranium supplies that are going to preserve them for quite a long period in the future. None of them are blessed with very rich and broad uranium deposits.

StockInterview: Is Russian President Vladimir Putin trying to generate something on the order of a Wal-Mart Super center for the nuclear fuel cycle?

Jeff Combs:
Well, you see them doing a joint investment in Kazakhstan. They're trying to do something with Kyrgyzstan. They're right on finding at how they can shore up their provide through imports, in increasing to investing a billion dollars in their own internal production. In this respect, they are trying to draw from their old provide chain arrangements. This is to meet their internal needs, as well as the needs of countries to which they have traditionally supplied reactors and the fuel to run these reactors. As Russia looks to advance its reactor sales to countries that don't have established fuel cycles, they want to be able to provide them with fuel - maybe even lease them the fuel. This means that they have to be prepared to take back the spent fuel. This is due at least in some quantum to nonproliferation concerns, in that you don't want these new entrants construction enrichment or reprocessing plants. While Russia has enrichment capacity and the potential to advance this capacity, they also need uranium to be able to provide these countries with enriched uranium. This is why they're currently focusing on the uranium side of the equation.

StockInterview: Let's talk about some of the target countries, where those with the more ambitious nuclear power programs will want to procure uranium.

Jeff Combs:
We have recently done a series of reports, finding at countries where major output is taking place, or could take place. Of course we've done them on Canada, Australia, Namibia, South Africa, Kazakhstan, and Uzbekistan. I think the next country might be Mongolia because of the exploration and amelioration operation that is taking place there. Mongolia's mining laws are very convenient to foreign companies. Mongolia is also settled in that part of the world where the bulk of nuclear power expansion is taking place. The qoute in Mongolia now is the lack of infrastructure - the location of the exploration sites relative to roads and rail lines, and the potential to associate to the electricity grid and water lines.

StockInterview: There has been so much press and chatter about Kazakhstan. Is there substance in these commentaries, or is it in general hype?

Jeff Combs:
They've got a lot of uranium resources and reserves. They've also got a commitment to increasing output there and a pretty big customer in China. The hype might be associated more as to either they can do it as quickly as they say, as opposed to either they can ultimately get to the levels they're talking about. One of the things that will slow them down is the infrastructure, including the skilled work force, needed to advance at that rate. They have increased production. They right on will continue to increase production, but maybe not at the rates they are advertising. They've produced a lot in the past, in the old Soviet Union days. I think they can get back up to those output levels, but it's going to take some time.

StockInterview: What will be required to get things going in Kazakhstan?

Jeff Combs:
It appears they've been able to attract capital. A large part of it is just the time is takes to build the infrastructure, including training workers. You can have all of the investment in the world, but it still takes time to get things done, especially if the infrastructure isn't well advanced in the first place. If you look at Kazakhstan on the map, it is very close or adjacent to Russia, China, and India, where the major part of nuclear increase is occurring. I don't think there will be any shortage of examine for their output.

StockInterview: Where does Japan fit into the current uranium bull market?

Jeff Combs:
Japan is right on a factor in the market. Their increase might not be as rapid as it once was, or once was startling to be. With Japan you have a country that does not precisely have any indigenous uranium resources to speak of. They precisely need to import uranium. To facilitate this and to procure time to come supplies, Japan has historically advanced dissimilar provide relationships around the world, both by taking positions in uranium mines and by nurturing long-term relationships with producers. I think that it's likely the case that this new price rise caught them somewhat off guard, but recently Japanese utilities have put more effort into shoring up their provide options.

StockInterview: There are countries, which get exiguous media coverage, such as Namibia. How does this country rate?

Jeff Combs:
I think Namibia will right on have an important role in supplying uranium. I don't think it's going to have the expansion inherent of Canada, Australia, or Kazakhstan, but I think South Africa, Niger and Namibia are going to be an important component for uranium provide in the future.

StockInterview: You mentioned Niger, which was the world's third largest uranium producer, and has now fallen to amount four, behind Kazakhstan.

Jeff Combs:
The funny thing about Niger is that in a way it's sort of fallen off the radar screen. It produces, but it just doesn't get the press as other places. If the price increases, it precisely changes how people look at all these dissimilar projects going transmit and a lot of things, which might not have been looked at 20 years ago or so, are being reinvestigated. Obviously, there is uranium in Niger. It's quite important to the economy there. As I said, they haven't precisely been on the radar screen as much as a lot of other regions in the world. maybe this is because output there has been controlled by the French for a long time. There are some Canadian associates exploring in Niger now. Since this operation is fairly recent, it won't likely bear any fruit for five to ten years down the road.

StockInterview: Do you foresee realistic nuclear power expansion in other parts of the world, such as the Middle East?

Jeff Combs:
Frankly, I haven't focused on that very much. I know that Turkey is finding to do something. At some point, I think you would see more nuclear power in the Middle East just because the oil supplies aren't going to last indefinitely. We do a headline news service, and it's packed full of stories on dissimilar countries that are finding at nuclear power. It seems like there is a new country added to the list every day. I know, for instance, that Vietnam is finding pretty seriously at nuclear power. It would not be surprising there would be interest in the Middle East. There is a lot of focus on the problems associated with Iran. Overall, I'm a believer that if you have more nuclear power, then you're going to have fewer problems with power and more economic development, higher standards of living, and that's going to be a big safe bet that will outweigh the negatives in situations like Iran.

StockInterview: Speaking of Iran, what is Washington's sentiment toward nuclear energy, aside from the Bush Administration's endorsement?

Jeff Combs:
I think there is a growing recognition, even among Democrats, that you need nuclear power as part of the power mix. You're not going to get there just by renewable power sources. With the environmental and broad power challenges we're facing now, with higher and higher natural gas and oil prices. From the U.S. Standpoint the vulnerability with respect to procure power supplies, I think there is a growing recognition that nuclear power is part of the solution, and this mental extends surface of the Bush administration. I've talked to people, and they believe that even if a Democratic administration came in that you precisely wouldn't necessarily put a damper on nuclear power.

StockInterview: What about the Hillary Clinton Factor, if she becomes the next U.S. President?

Jeff Combs:
I haven't precisely asked her for her views on nuclear power recently. I think the story for nuclear power is not so much what happens in the United States, which precisely could add more reactors. The rest of the world probably looks to what the U.S. Does to a safe bet extent. I think the real increase in nuclear power, and what's likely to drive the shop in the future, is on the part of the developing countries in the eastern part of the world. These would be China, India, Korea and Russia, where economies are growing a lot more quickly, not the precisely mature economies like in the U.S. And Europe. Although I would expect to see some increase there as well. In this respect, having a Democratic president would not derail what's happening in nuclear power or the uranium market. As mentioned earlier, I think that you see a more normal acceptance of nuclear power over party lines, in Europe as well as the U.S., although there are still some factions that are virulently anti-nuclear.

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Foreign demand May Jeopardize Uranium furnish for U.S. Utilities

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