Everyone’s clearing out for the holidays here at the Old Hat Factory. The pubs in the neighbourhood are open, and full. Which means most offices are closed. We toil on today, although the world’s markets appear ready to take a breather headed into the weekend and the close of the year.
Every year is eventful. This one strikes us as no more or less eventful than any other. Personally, we won’t be sorry to see it go. It’s been a dog of year. We would like to kick it, although that seems cruel.
Next year is the year of the pig, according to the Chinese calendar. Does that mean it’s time to load up on uranium…again? It seems like you’d have to be pig headed to do so, what with the great run uranium has already had. But here’s the thing about energy, there are only so many ways to get it on an industrial scale. Coal, oil, natural gas, and nuclear all do the job nicely.
With the exception of coal—which is dirty and currently unwelcome in the salons of the world’s environmentally conscious—the remaining sources of fuel for industrial growth are all scarce and rising in price. Spot uranium prices are up nearly 10% this week. That’s a US$6.50 gain, taking us to around $72/lb. Can $100 be far away?
Well, if you consider $28 far, then yes. But in percentage terms, a rise to $100 is only a paltry 38%, which should be nothing for a commodity that doubled in 2006 from a base of $36. We can see how locked-in uranium producers here in Australia and in North America are not in any hurry to see new entrants into the uranium mining space.
But sooner rather than later, Kevin Rudd and his buddies in the labor party will have to come up with a very good reason for not expanding uranium mining in Victoria, Queensland, South Australia, and Western Australia. The expansion of uranium mining is separate from the issue of a domestic nuclear power industry. It’s really a question of whether or not Australia wants to profit from the sale of a strategically valuable, globally coveted asset. Or, if there is some strategic cost which outweighs the obvious economic benefit.