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By Melissa Pistilli-Exclusive to Uranium Investing News

Despite the spot price of uranium dropping yet another dollar to $45 per pound, recent reports from the World Nuclear Association (WNA), the International Atomic Energy Association (IAEA) and industry consultant UxC show that uranium demand is set to outpace uranium supply in the coming decade.

China and India will be the main drivers behind rising demand levels as together they have 28 reactors currently operating, 22 under construction and 58 new reactors expected to come on line over the next eight years, according to the WNA.

The WNA’s latest report, The Global Nuclear Fuel Market Supply and Demand 2009-2030, sees a best case scenario of a 558 GWe in world nuclear capacity by 2020 and 818 GWe by 2030.

Uranium mine production has fallen below western demand since the mid-1980’s, says World Nuclear News, but so far, secondary supplies from inventories, stockpile drawdowns and recycled materials have made up the difference. But as demand increases in energy hungry nations like China and India, primary production from mines needs to pick up the pace dramatically.

“Uranium production needs to increase dramatically from its current level,” said Cameco’s Penny Buye, co-chair of the WNA report’s drafting group.

The IAEA has also updated its annual projections for global nuclear power capacity. Both its low and high end forecasts for 2030 are much higher than last year’s projections. At the low end, the agency sees worldwide nuclear capacity at about 510 GWe and the high projection is at 810 GWe.

Ux Consulting has also published a report forecasting worldwide nuclear growth through 2030. The Nuclear Power Outlook (NPO) report highlights “dramatic growth” in nuclear power usage in China, India, Russia and other regions over the next twenty years.

According to the NPO, there are currently 435 reactors with a capacity of 370 GWe in 31 countries and 55 reactors are now under construction in 12 countries. By 2015, Ux forecasts a total of 492 reactors (428 GWe total capacity) in 31 countries, 568 reactors (517 GWe) in 42 countries by 2020 and 697 reactors (702 GWe) in 52 countries by 2030.

The report also projects a 78 per cent growth in annual uranium demand over the two decades from today’s level of 183 million pounds to 325 million by 2030.

When one considers that 2008 primary mine production only totaled 114 million pounds, says Ux, the “critical need for increased global uranium production” becomes clear.

While several miners are working to bring new mines into production, this is a process that takes many years from the exploration and development stages to acquiring licensing and commencing production.

No doubt this disconnect between supply and demand will have an impact on future price trends, notes the report. Hence, demand is likely to outstrip supply making $40 per pound uranium a thing of the past.

Uranium Miners Making News

Paladin Energy Ltd.

Uranium producer Paladin Energy [TSX: PDN] has raised US$360 million in a share sale to fund acquisitions and exploration. “The whole uranium space is going through consolidation and revision, of which Paladin will hopefully be one of the architects,” said Managing Director John Borshoff. “We want a war chest. We’re going out to play with a pocketful of money, not sitting there waiting for someone to shout us.”

Paladin will use the funds to expand its Langer Heinrich uranium mine in Namibia as well as exploration and pre-development programs in Australia.

On Thursday, Paladin shares on the TSX were trading at $4.37, up 3.8 per cent week to date.

Energy Metals Ltd.

Energy Metals [ASX: EME] agreed to a A$83.6 million proportional takeover and rights issue from China Guangdong Nuclear Power this week. The deal would give the state-owned Chinese company a 70 per cent stake in Energy Metals and the junior miner would gain the backing needed to move from explorer to producer.

Paladin owns a 42 per cent stake in the joint venture Bigryli uranium project with Energy Metals’ (54 per cent) and news that Paladin is building up its war chest sparked rumours that perhaps it might counter-bid for Energy Metals.

“You can understand the view Paladin would be looking at it because they have a common asset,” said Peter Chapman, an analyst at Southern Cross Equities.

The idea of a bidding war spurred uranium stocks higher Wednesday. However, Paladin has made no indications that a counter-bid is in the making.

On Thursday, Energy Metals shares on the ASX were trading at $1.10, up 28 per cent week to date.

Hathor Exploration Ltd.

On Wednesday, shares in Hathor Exploration [TSX-V: HAT] rose over 22 per cent after the company announced the discovery of a new area of high-grade uranium mineralization at its 90 per cent owned Midwest Northeast property in the Athabasca Basin.

“Finding what may be an eastern extension of the Roughrider Zone, or perhaps a second, large high-grade zone, shows that we are executing the right decisions in the exploration of this robust, mineralized system. This new discovery could add very significant uranium resources at Midwest NorthEast,” said the company’s senior project geologist Alistair McCready.

On Thursday, Hathor shares on the TSX-V were trading at $1.81, up 20.7 per cent week to date.

Uranerz Energy Corp.

Uranerz Energy [TSX: URZ] has been rated a “buy” with a target price of $2.50 according to the Globe and Mail. The company is developing two properties in the Powder River Basin area of Wyoming. Combined they have the potential to produce up to 600,000 pounds to 800,000 pounds of U308 concentrate a year.

On Thursday, Uranerz shares on the TSX were trading at $2.11, up 3.9 per cent week to date.

Denison Mines Corporation

Denison Mines [TSX: DML] is set to commence construction of a $118 million uranium mine in Zambia in 2010. The company is awaiting mining rights approval from the Environmental Council of Zambia (ECZ).

“Since they have done the required environmental impact assessment report and applied for mining rights, we should be granting them a mining licence,” said Mines Minister Maxwell Mwale.

According to Mwale, the property is located in a region with known uranium deposits. Denison is planning to extract 18.8 tonnes of ore and process it into U308. The mines annual operating costs are expected to be around $38 million.

On Thursday, Denison shares on the TSX were trading at $1.66, up 4.2 per cent week to date.