Uranium Recovery
Uranium recovery has become very important as demand has increased, notable from China and India. Total world uranium usage is increasing, and mine supply stuggles to keep up. Between 2003 and 2006 world uranium prices (U3O8 yellowcake, shown above) have increased from $7/lb to $63 as of December 2006.
Uranium has also become an interesting investment area. Uranium blue chip stocks, such as Cameco, and explorers such as JNR Resources have also done well riding the uranium wave higher. Many environmentalists, concerned about effects of global warming, have begun pushing for the use of nuclear energy since it is free of greenhouse gas emissions.
Problems have occurred with Cameco's Cigar Lake mine which filled with water after the collapse of a freeze barrier. Although work is underway to repair the breach, demand for uranium has continued to outpace supply. Enriched uranium recovery is also much more important as SWU costs are rising.
So, uranium is in an exciting position as global growth continues, and nations seek to provide powers to support their economic expansions. Uranium recovery is of great importance, as is its demand as a commodity for both civilian reactor fuel and as an investment area.
Uranium Supply and the Nuclear Renaissance
One small pellet of enriched uranium, about the size of a fat pencil eraser, contains about the same energy as 3 cords of wood, or 3 barrels of fuel oil.
Uranium is key to a successful nuclear renaissance, on which much as been written. Global warming has caused many environmentalists to throw their support behind nuclear energy, an energy source free of greenhouse emissions present in "fossil fuels' such as coal and oil. The nuclear industry greatly improved its safety record since the Three Mile Island accident decades ago. It has also improved reactor on-line efficiency to over 90%, important for both grid stability and investor return on investment. With coal and oil prices tripling, nuclear energy by many accounts has become the cheapest source of electricity in the United States. New reactors being considered in the U. S. with the application of combined construction and operating licenses, and China alone has plans to build over 30 new nuclear reactors.
Uranium demand has also increased as a result of increased demand for reactors. Uranium fuels the nuclear reactor. It is mined from the ground and refined into "yellowcake", or uranium oxide. The uranium oxide is converted into uranium hexafluoride gas and enriched up to 5% in U-235 for reactors in the U.S. Total world uranium usage is increasing, and mine supply struggles to keep up. Between 2003 and 2006 world uranium prices have increased from $7/lb in 2002 to nearly $70/lb near the end of 2006.
Uranium has also become an interesting investment area. Uranium blue chip stocks, such as Cameco, and uranium explorers such as JNR Resources have also done well riding the uranium wave higher. Problems have occurred with Cameco's Cigar Lake mine recently, which filled with water after the collapse of a freeze barrier. Although work is underway to repair the breach, it has caused prices to increase more quickly. Demand for uranium has continued to outpace supply and complications such as this coupled with Chinese and Indian demand indicated that the fundamental trends of new demand are soundly in place. Enriched uranium recovery is also much more important as enriched uranium at 3% U-235 enrichment is now over $1000/lb.
So, uranium is in an exciting position as global growth continues, and nations seek to provide powers to support their economic expansions. Uranium recovery is of great importance to developing nations, and the investors in the U.S. should seriously look into securing a long-term supply in order to not only profit from the boom but also ensuring a supply of reasonably priced uranium.
Uranium Recovery Converts Swords to Plowshares
Uranium recovery and uranium recycling have both become crucial to the nuclear renaissance. To support the growing demand for uranium, governments have begun releasing supplies of highly enriched uranium. This uranium is enriched in the Uranium-235 (U-235) fissile isotope. The level of enrichment can be 50 to 95%, and is used for navy nuclear reactor fuel and nuclear weapons. This material is called high-enriched uranium (HEU).
There is currently an excess of such material and a downblending pathway now exists which can provide a significant amount of fuel for commercial nuclear reactors. Commercial nuclear reactors use natural uranium and a variety of enrichments from natural to 5% U-235, known as low-enriched uranium (LEU). LEU is typically produced from the uranium hexafluoride (UF6) gas processed through the gaseous diffusion plants that increase the amount of % U-235. The UF6 is derived from yellowcake, or uranium oxide purified from the mining process. The downblending process produces the same commercial LEU but through a different process, from HEU sources instead of natural uranium sources.
Downblending operations are currently underway in the United States. HEU is dissolved with nitric acid and then blended with depleted or natural uranium to bring the enrichment back down to about 5%, resulting in a uranyl nitrate (UNH) LEU solution. The UNH is transported to another facility where it is converted back to uranium oxide in a process known as the ammonium diuranate (ADU) process. The uranium is precipitated from the UNH solution using ammonium hydroxide, and the resulting precipitate is then dried and calcined into a uranium dioxide powder. The powder is formed into pellets, which then go into fuel rods. The fuel rods are then fabricated into fuel bundles that are inserted into nuclear reactors. Each pellet of uranium, about the size of an eraser on a fat pencil, has the incredible energy equivalent of 3 cords of wood, or 3 barrels of fuel oil. Nuclear energy is the only technology capable of adding large quantities of reliable base-load electricity to the grid without the risks and costs associated with greenhouse gas emissions and global warming.
The demand for uranium will continue to increase as China, India, and Russia plan to build new reactors in the next few decades. This is a significant step in nuclear non-proliferation agreements between world powers. The same approach is being used for plutonium, which behaves similarly to U-235. Barring any significant recession or depression in these economies, companies that produce or own uranium will continue to be recommended for investment purposes.
Investment Diversification
As the story goes, ancient Chinese merchants would ship their products down the river to the next town as part of normal trade. Farmers would ship their produce and livestock as well. The problem, however, was that accidents were waiting to happen and could strike any ship at any time. An entire season's harvest could be ruined all at once. Merchants became wise and split their goods between 10 ships. This obviously increased the chances that a ship carrying some of their goods could sink, or be stolen, or ruined somehow. But, the rest of the ships would make it, and the small loss was part of doing business in order to ensure that most of the goods reached their destination. This is insurance in it's basic form. It is also an example of diversification.
Most people have their retirement funds in stocks and bonds. Much is heard about mutual funds as the pathway for diversification. But the stock market, while divided up into different sectors, still consists of stocks. They are part of the stock universe. Some may disagree, and say that a variety of stocks is all you need. At any rate, the entire stock market can fall in the aggregate. Electronic trading can accelerate this, as selling spills over from one sector to another. Some sectors are more stable than others, some more volatile than others. The market can get disturbed easily, and there are numerous examples of very large drops in the stock market, slow and fast, such as occurred in 1929, 1973, 1980, 1987, and 2000. Drops in the 20 - 60% range, which have occurred routinely, correspond to the sinking of 2 to 6 out of 10 boats! After the 1929 crash it took 28 years before the market recovered to its pre-crash high. In 2000, popular stocks inevitably filled the portfolio of popular mutual funds. Stock market 'gurus' led the choir in unison as they sang of the wonders of technology stocks. Fundamentals were ignored. The technology boom of the 1990s, cheered on by stock analysts, ended with wild stock overvaluations and subsequent 80% collapse, especially in the NASDAQ. The ridicule is still fresh in my memory as a few of us had the nerve to warn others of the frothiness in the stock market, and pulled out to greener, safer pastures.
However, let's look at 7 diversification areas. The stock market is one area for your retirement funds or nest egg. This means we need at least 6 more. Ecclesiastes 11:2, written by King Solomon thousands of years ago, says "Divide your wealth into 7 (or 8) portions, because you do not know what risks lie ahead." The verse carries the meaning that we should divide our nest egg into many portions because we do not know what will happen in the world. That would be nice if we could tell the future! Perhaps Warren Buffet is an exception, and is qualified to mock those who diversify as ignorant, but time will tell. Even if we diligently read every annual report, and understood them, there is still a significant amount of information that the individual investor does not have access to, nor is he likely to get it in a timely manner to act. Many markets are interconnected and a crash in one can cascade into others as seen in 1929. At that time the drop in the stock market caused a both bank closures and a real estate price collapse, amid unemployment over 40%. Aside from stocks, 5 other areas to invest in, after due diligence of study, include bonds, real estate, home business, commodities, and insurance. One example of a commodity to invest in, via the stock market, would be uranium.
The 7th investment is a radically different investment area to consider, which is tithing. Why tithing? If we cannot take anything with us, it would be like having all ships sink with nothing to show for our hard work. The ancient book of Malachi, written by Malachi, says in Chapter 3 about tithing: "If you do, says the Lord Almighty, I will open the windows of heaven for you. I will pour out a blessing so great that you won't have enough room to take it in! Try it! Let me prove it to you!" God apparently knows that we are programmed to desire a profit, and this looks like a challenge to invest in Him. There also looks like a big promise of rewards too. Well, the proverbial Hearst never pulled the proverbial U-Haul trailer filled with the belongings of the deceased to the next location, as King Tut found out. So this promised wealth would have to be durable and transportable out of this world, a promise only God could make good on. This author certainly can't make promises like that.
Best wishes for your prosperity.
