Tuesday, April 10, 2007

New High for uranium

April 9 (Bloomberg) -- Uranium prices rose 19 percent to a record $113 a pound at a U.S. auction because of increasing demand for the fuel used in nuclear power plants, industry consultant TradeTech LLC said.

Mestena Uranium LLC, a uranium producer based in Corpus Christi, Texas, offered 100,000 pounds of yellowcake at last week's auction, TradeTech said. Yellowcake is the concentrated oxide of uranium, formed in the milling of uranium ore.

``The competition between utilities, traders and funds has increased,'' Peter Wood, a TradeTech representative based in London, said in a telephone interview today. The percentage jump, from $95 a pound a week earlier, was the biggest since prices were first reported in 1968, Denver-based TradeTech said in its weekly Nuclear Market Review.

Uranium prices have surged 57 percent this year, according to TradeTech. That's more than any of the industrial metals traded on the London Metal Exchange, such as nickel, or precious metals, including gold. Concerns that the use of fossil fuels is increasing global warming and the potential scarcity of oil and natural gas is spurring international demand for nuclear power.

``Last year, the uranium price increased by approximately 70 U.S. cents a week,'' Greg Barnes, an analyst at TD Newcrest Inc. in Toronto, said today in a note to clients. ``So far this year, the spot price has increased by $2.73 a week.''

Privately held Mestena Uranium, which has a mine in Texas, produces about 1 million pounds a year of the radioactive metal, according to the U.S. Energy Information Administration.

Supply Disruptions

Potential disruptions in uranium supplies have helped raise prices. Energy Resources of Australia Ltd., which produces more than 10 percent of the world's uranium, said on April 2 that its Ranger mine may have as much as a third less output next year because of heavy rainfall.

Cameco Corp., the world's biggest uranium miner, has said that a flood in October at its Cigar Lake uranium project will delay production from the unfinished Canadian mine until 2010, two years later than expected.

Shares of Saskatoon, Saskatchewan-based Cameco rose 95 cents, or 1.8 percent, to C$54.06 on the Toronto Stock Exchange. They have gained 25 percent in the past year.

Shares of USEC Inc., a seller of uranium fuel enrichment services, rose $1.08, or 6.2 percent, to $18.61 in New York Stock Exchange composite trading, the highest closing price since the Bethesda, Maryland-based company first sold shares to the public in 1998. The shares have risen 47 percent in the past year.

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