Tuesday, September 10, 2013

Virginia Uranium still paying politicians, yet uranium market has collapsed


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Whatever Happened to Virginia Uranium? http://www.baconsrebellion.com/2013/09/whatever-happened-to-virginia-uranium.html By Peter Galuszka , 11 Sept 13, 

A big effort to mine uranium in Southside Virginia seemed stymied when the General Assembly failed to end a moratorium on such activity in the last General Assembly.

It would seem that exploiting a large deposit of ore in Pittsylvania County by a wealthy local family and some obscure Canadian investors had fallen away.

Two developments underline the uncertainty of the venture, which has been wrought with political turmoil involving expenses-paid trips for legislators to Paris and allies of Gov. Robert F. McDonnell making late night phone calls to twist local arms for the project.

First, Virginia Uranium keeps giving donations. According to the Virginia Public Access Project, the firm has given $53,500 to state politicians this year. It is part of a whopping $324,650 in donations the firm has given since it ramped up in 2008.

The other noteworthy item is a story in today’s Wall street Journal that paints a very bad picture for the future of nuclear power. Uranium prices are at their lowest levels in eight years, trading at about $34 a pound Tuesday. For the Virginia project to work, they have to be well above $65 a pound.

What’s more, the Journal says, the market for the fuel hasn’t recovered since the 2011 Fukushima disaster in Japan, which is still causing trouble.

In the U.S., cheap and plentiful shale gas from fracking has priced nukes out. Germany is shutting its off by 2022 and even nuke-happy France plans on reducing its nuke load from 80 to 50 percent.

So, one might ask, why is Virginia Uranium still doling out dough?


Uranium sinks as fallout continues        
URANIUM prices are at their lowest level in nearly eight years, as investors and utilities give up hopes for a quick revival for nuclear power.
The market for the radioactive fuel hasn't recovered from the 2011 earthquake and tsunami that devastated Japan's Fukushima Daiichi power plant. Due to safety concerns following the disaster, only two of Japan's 50 reactors are running today, while Germany and France are reducing their reliance on nuclear power. In the US, some utilities have abandoned plans for new nuclear plants.
Spot uranium prices are down 22 per cent this year. They traded at $US34 a pound on Tuesday, their lowest level since November 2005. The Dow Jones-UBS Commodity Index, which tracks 20 commodities, is down 9 per cent. The radioactive fuel is trading at multi-year lows as it faces the double whammy of weak commodities prices overall and government resistance to nuclear power following the Fukushima disaster.
As the slump in commodities gathered pace late last year, some investors sought solace in uranium, a small market where futures are traded mainly by utilities and miners but the price can be traded by proxy through stocks or exchange-traded funds. Hopes were high that Japan, a major consumer of uranium, would get its nuclear reactors running again and demand for the fuel would accelerate.
Instead, as slowing global economic growth has hit prices for everything from copper to coal to corn, uranium has suffered because struggling economies require less electricity. But uranium's losses have been sharper than those of many other raw materials, as the fuel also faces anti-nuclear politics, which is expected to hurt demand even if economic activity picks up.
"You're not dealing with a commodity like copper or gold," said Jeff Wright, a managing director of equity research with HC Wainwright & Co. "This is not only an extremely volatile commodity but a volatile business. It only takes one headline, somewhere in the world, and 15 years of work is gone down the drain."
Investors trade uranium mainly through exchange-traded funds, such as the $US125 million Global X Uranium ETF, or the stocks of mining companies such as Cameco Corp, Uranium One and Paladin Energy, which have a combined market value of about $US11 billion.
The Global X Uranium ETF, which launched four months before the 2011 Japanese earthquake and tracks the price movements of nearly 20 listed miners and explorers, is down 18 per cent this year, compared with an 18 per cent gain in the S&P 500 index. The fund's price has fallen about 75 per cent since the earthquake.
After shutting down all of its nuclear reactors in 2011, Japan was expected to start powering up many of the plants this year. Instead, utilities have asked for permission to restart just 12, beyond the two that are already running. The approval process is likely to be slow.
In North America, the shale boom has given utilities building power plants the option of relying on cheap natural gas instead of uranium. In Europe, political opposition to nuclear energy has grown. Germany has pledged to shut down its nuclear reactors by 2022, while France plans to lower its reliance on nuclear energy from up to 80 per cent to 50 per cent by 2020.
Malcolm Gissen, president of San Francisco-based investment advisory firm Malcolm H. Gissen & Associates and co-manager of the Encompass Fund, which invests in global resources companies, has this year reduced his holdings of uranium mining stocks.
He called uranium's decline "an aberration" sparked by one-time events such as Fukushima, but added: "The price is unlikely to jump quickly."
Investors point to rising uranium stockpiles as a reason for prices to remain low. Miners are sitting on piles of unsold uranium, with global supply exceeding demand by about 25 million pounds, according to Ux Consulting, a nuclear research firm. The market was in balance before Fukushima, according to Ux senior vice-president Jonathan Hinze.