The value of uranium stocks surely took a tumble after the nuclear power plant accident in Fukushima, Japan. The incident also prompted other countries who were considering building up their nuclear power capabilities to abandon expansion plans. Other countries that are not yet on the nuclear power plant bandwagon but have already started the plans to build their own nuclear power plants, have also scrapped those plans.
Uranium commodity prices spiraled down to the $40s per pound right after the Hiroshima disaster. That price point was a far cry from the $130s price per pound around 8 years ago. Those were certainly the glory days for uranium companies. That price is also far below the $70 break-even point for the uranium mining companies. Those companies can only profit beyond that break-even point. Uranium mining companies all over the world will have to close their operations if uranium commodity prices do not go back up beyond $70 per pound.
But, that projection and the uranium investors’ jaded outlook will come to an end soon. Analysts predicted that 2014 will be a good year for the uranium industry. Commodity traders even predict that uranium supplies will go up to a new high of $138 per pound in the short-term.
That projection is based on the fact that a deal that involves Russia supplying leftover nuclear warhead to the United States for energy soon will end soon. This will cause a large gap in the supply of uranium that will cause the increase in uranium prices.
The reduction of uranium supply available to the United States will also be exacerbated by the fact that India and China will soon be embracing nuclear energy to reduce their coal pollution. Both countries need a source of clean energy. Coal pollution in India kills an alarming number of people every year. This has also prompted the Chinese government to push for the reduction of their smog emissions.
This projected supply construction and upsurge in demand will prompt the comeback of uranium’s heydays in the commodities market. Today’s nuclear plants utilize 65 thousand tonnes of uranium a year. Today’s uranium mining companies, however, can only supply 65,000 tonnes of uranium a year. The over-all global demand for power will reportedly increase by 75 percent by the year 2035 due to the increase in demand from many developing nations.
Japan would not abandon its nuclear power, as well, despite the nuclear disaster. Japan’s Prime Minster Shinzo Abe hit back at the critics of the nation’s nuclear base, defending the need to have clean energy. Japan do not have other major source of energy to take the place of nuclear power albeit moves to develop alternative energy sources.
Good thing, as well, that Canada is friendly towards uranium mining lest we find our way on a run-away spiking uranium commodities price would also be detrimental to the worldwide economy. Canada’s increasing supply of uranium will help close the demand-supply gap. Canada currently provides sixteen percent of the world’s supply of uranium from its Athabasca basin. The area is expected to double its production by 2020. There are currently uranium mining companies who are also bidding for land in Western Canada.