Uranium Fundamentals Strong

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"It's quite possible we could see the price of uranium double once again given that the underlying fundamentals for the uranium boom are still strong."

Since the global economic crisis began last September, uranium has surprisingly been one of the few commodities actually performing well in terms of price. Although the spot price is hovering around $47/lb, the majority of uranium sales have come through long-term contracts priced around $70/lb. Still far below the record $138/lb. we saw in 2007, but uranium producers are managing good margins.

It's quite possible we could see the price of uranium double once again given that the underlying fundamentals for the uranium boom are still strong. Supply constraints are imminent since the financial meltdown has put many uranium projects on hold; however, global demand is once again picking up steam as nations look to meet their energy needs.

According to the U.S. Department of Energy, global energy demand is expected to rise 50% by 2030. Nations are already seeking emissions-free energy sources to meet growing demands and nuclear power is quickly becoming the world's answer to fossil fuel dependency.

Today, nuclear power plants generate over 16% of global electricity or 372 GWe. Over the next two decades, The International Atomic Energy Agency forecasts nuclear power will grow to between 509 and 663 GWe as 35 new plants are currently under construction, 91 are in the planning stages, 228 have been proposed and many existing plants will be expanding their current capacity. If plans pan out, this would increase annual uranium demand from 66,500 tonnes to between 94,000 and 122,000 tonnes.

Under the $787 billion stimulus plan, Energy Secretary Steven Chu will have approximately $18.5 billion in loan guarantees to hand out for the construction of the nation's first new nuclear power plants in over three decades. Five new reactors are planned at a cost of $5 billion to $12 billion each.

In addition to the more than 100 reactors that currently produce around 20% of America's electricity, the U.S. Nuclear Regulatory Commission says it expects to receive 34 new construction applications by 2010.

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