Uranium prices to hit US$160 per pound by end of 2008
TORONTO, April 17 /CNW/ - CIBC (CM: TSX; NYSE) - Concerns over greenhouse
gas emissions from coal-fired electricity plants will see a rebirth of nuclear
energy in North America and continue to drive the price of uranium to record
highs, finds a new report by CIBC World Markets.
CIBC World Markets' April Monthly Indicators report notes that
environmental opposition has already forced TXU, the largest utility in Texas,
to scrap some 6,000 megawatts of planned new coal-fired capacity in favour of
building as many as five new nuclear facilities. Aside from refurbished plants
in Ontario, they will be the first new nuclear stations started in North
America in over 25 years.
"If you can't get coal-fired generating capacity licensed in Texas these
days, where can you get coal plants built?" notes Jeff Rubin, Chief Economist
and Chief Strategist at CIBC World Markets. "Coal-fired utilities find
themselves the primary target of a tidal wave of greenhouse gas (GHG)
legislation that is sweeping across state legislatures. Weaning American power
consumers off cheap and abundant domestic coal supply is rapidly shaping up to
be the frontline battleground of the carbon wars in North America."
The report notes that nuclear power accounts for only 16 per cent of
global power generation today but that it has a huge upside in a carbon-
constrained world. Unlike other green power alternatives like wind and solar,
nuclear facilities provide efficient and reliable base load power at an
increasingly competitive price to coal once the costs of carbon emission are
While only in the initial stages of rebirth in North America, nuclear
power is already riding an expansionary wave from explosive power demand
growth in Asia where 21 new reactors will come into service by the end of the
decade and twice that many slated for operation by the end of the next decade.
With this rapid growth, Mr. Rubin states that finding enough uranium to
power all those reactors is already becoming an issue. "Prices have more than
doubled over the last six months and with utilities still needing to contract
roughly a third of their uranium fuel requirements over the next five years,
more and more are scrambling to lock in supplies." As a result, he predicts
uranium oxide prices will hit US$140 per pound this year and US$160 per pound
by late 2008 - more than triple the price of uranium last fall.
The report also notes that uranium mines will only be able to supply
little more than 60 per cent of global demand until at least the end of the
decade, and possibly longer depending on when new production begins at the
Cigar Lake mine in Saskatchewan and the Olympic Dam mine in Australia.
Secondary supply sources, such as inventories held by utilities, mines,
other fuel cycle companies and governments; reprocessed reactor fuels; diluted
enriched materials from military programs; and the contents of depleted
uranium stockpiles, will have to supply the balance. The report notes that
secondary sources have played an important role in recent years, supplying as
much as half of the fuel needs of U.S. reactors. However, these sources are
ultimately finite and likely to decline, potentially quite rapidly, in coming
The full CIBC World Markets Monthly Indicators report is available at
CIBC World Markets is the wholesale and corporate banking arm of CIBC,
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For further information:
For further information: Jeff Rubin, Chief Economist and Chief
Strategist, Managing Director, CIBC World Markets at (416) 594-7357,
firstname.lastname@example.org or Kevin Dove, Communications and Public Affairs at
(416) 980-8835, email@example.com