Nuclear Industry Faces Looming Uranium Shortage
Source: Reuters, Julie Gordon (3/9/11)
"There are juniors out there with projects that are definitely viable."
An expected surge in demand for uranium to fuel new reactors may go unfilled if new supply does not soon come onstream—meaning a setback for China, the United States and other countries that are increasingly relying on nuclear energy to power their economies.
While a host of uranium explorers promise to bring projects into production before a major supply crunch develops, most are overestimating their ability to deliver on schedule, industry experts say.
That could leave a vacuum for major uranium producers searching for acquisitions as the most efficient way to ramp-up shipments to power utilities that use the radioactive metal to fuel reactors.
"There are juniors out there with projects that are definitely viable," said BMO Capital Markets analyst Edward Sterck. "But I think it'd be fair to say there's an awful lot of juniors who might be challenged to deliver projects on schedule."
At the Prospectors and Developers Conference (PDAC) in Toronto this week, UR-Energy (NYSE.A:URG; TSX:URE), U308 Corp. Inc. and Toro Resources were part of a crowd of juniors touting "near-production" projects.
Toro is in the permitting stage and will need about AUD$265 million ($268 million) to build its Wiluna project in Australia. Managing Director Greg Hall admits the Australian company faces a rough road in getting the mine into production by 2013.
"These things are not fast," said Hall. "Out of those who say they're going to be in production by 2014—let's say there's 40—I reckon seven will make it."
That could leave a supply shortage that would have a ripple effect on the global economy should China, India and other Asian powerhouses fail to secure the uranium they need to meet their targets for electricity generation.