Uranium spot prices break through the $50/pound mark: TradeTech

Uranium spot prices break through the $50/pound mark: TradeTech

Washington (Platts)--1Sep2006

The price of uranium hit all-time high this week, crashing through the
$50/pound-U3O8 level. According to the price-reporting firm TradeTech, the
spot price on September 1 was $52/lb, a rise of $4.50/lb from the price at the
end of July.

TradeTech apparently based its price, at least in part, on the results of
a sale by the US Department of Energy of 700 metric tons of uranium as uranium
hexafluoride (UF6), or about 1.8 million lb U3O8-equivalent. DOE, which
announced the sale results August 31, said two companies will pay a total of
$99.97 million for the UF6. Canadian uranium producer Cameco will buy four
100-mt lots for $57.87 million, and Lido Park LLC, a Delaware company, will
pay $42.106 million for three 100-mt lots. Cameco agreed to pay
$147.60/kilogram uranium as UF6 for lot 7. The equivalent U3O8 price for lot 7
was $52/lb U3O8 (assuming a price of $11.75/kgU for the services needed to
convert the U3O8 to UF6.)

The price of uranium has fluctuated over the past 36 years. In late 1970,
the price, according to TradeTech data, was $6.15/lb U3O8. By July 1978, the
price had risen to $43.40/lb, but by the end of 2000, the price had dropped to
$6.40/lb.

The rapid rise in the price has raised some concern that today's high
prices for uranium might have some impact on utility decisions on whether to
build new plants.

But speaking at a Platts Energy Podium press event August 30 in
Washington, NRC Chairman Dale Klein said that as the price of uranium rises,
more people will begin uranium exploration, and more will be found. Also,
given that nuclear generating costs are "not as dependent on fuel prices" as
fossil-fired capacity, the price of uranium could double without significantly
increasing the price of electricity from nuclear power compared to that
generated with natural gas, Klein said.

This renewed interest in US uranium properties was confirmed at an NRC
Fuel Cycle Information Exchange August 30. Joseph Giitter of the Office of
Nuclear Material Safety and Safeguards said eight companies have expressed
interest in submitting applications for mining and milling operations, and
three restarts have been proposed.

--Michael Knapik, mike_knapik@platts.com

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