China's Uranium Equivalent to the Strategic Petroleum Reserve

Like every other country that is in the midst of building nuclear reactors, China is scrounging to secure future uranium supplies. Its Commission of Science, Technology and Industry for National Defense just came out with a report that emphasized the need to mine its own uranium oxide.

While China had finalized an agreement with Australia last year in the hopes of securing the latters’ uranium supply, political uncertainty still abounds and the prospects of massive uranium production expansion from new mines in Australia is not likely going to happen. Still, as a testament to how serious China is about securing future supplies, Sinosteel Corporation will buy a 60% stake to manage and operate Australia’s Peppinnini Minerals' exploration licenses.

Closer to home, several areas near the Tibetan and Kazakhstan borders are being recommended as possible exploration targets. Kazakhstan, of course, has ambitious plans to become the world’s biggest uranium producer and is in the enviable position to be geographically bracketed by Russia and China, two of the forerunners in the nuclear renaissance.

Specific companies that could stand to benefit include Urasia Energy (UAEYF.PK), with operations in Kazakhstan, who just merged with sxr Uranium One (SXRFF.PK) to become a global uranium producer. Another company is Khan Resources (KHRIF.PK), with a 58% interest in the Dornod project in Mongolia; they expect to mine 4-5 million lbs of uranium over 10 years, with the results of a pre-feasibility study due in mid-2007.

Uranium Futures

Probably a sign that uranium is progressively getting on peoples’ radars, the New York Mercantile Exchange [NYMEX] is teaming up with Ux Consulting to allow uranium futures to be traded starting May 7. The reasoning behind this move ostensibly was to provide more transparency in uranium prices. Reaction has been mixed, with analysts not really sure one way or the other how this will affect the overall uranium environment.

Disclosure: none