Uranium [Prices] May Fall on Possible U.S. Disposal, Rio Says

Let's go over this one more time...there is no shortage of U, especially in the US. And according to this, if the US unloads its surplus (the opposite of shortage, you know) prices will drop world-wide. It gonna be one HUGE dump to have that effect! But that's the amount of surplus U the US has. Sooo...VUI, listen up: we don't need your uranium and you're not going to make much money from it anyway. Let's just leave it where it is.

By Anna Stablum and Edmond Lococo

Sept. 10 (Bloomberg) -- A U.S. government sale of uranium may drive prices lower over the next few years, said Clark Beyer, managing director of Rio Tinto Uranium Ltd.

A possible U.S. Department of Energy sale “is weighing on everybody’s mind,” Beyer said in an interview in London today. “If they are going to push a large volume into the spot market in the next year or two, then prices will go lower.” Rio Tinto Group is the world’s largest uranium producer.

The uranium market will have a surplus next year for the first time in at least three years as producers increase output faster than demand rises for the nuclear fuel, the London-based World Nuclear Association said in a report today. Secondary sources such as stockpiles will supply 18,711 metric tons in 2010 compared with 17,620 tons this year, the report showed.

“The Department of Energy has from time to time used uranium barter arrangements to fund cleanup work,” Jen Stutsman, a department spokeswoman, said today in an e-mail. “In order to avoid undue market disruption, DOE intends to stay within the 10 percent limit on domestic uranium sales or exchanges as laid out in the Department’s Uranium Management Plan.”

The sale or transfer of U.S. stockpiles to USEC Inc., the biggest domestic supplier of enriched uranium, may add 10 percent to U.S. fuel supplies in 2009 and next year, Max Layton, an analyst at Macquarie Bank Group Ltd. in London, said in an Aug. 10 report. The Department of Energy in July denied a loan guarantee to complete construction of the American Centrifuge plant in Ohio.

Sales Options

“The DOE has been talking about selling uranium and using it as payment for decommission services,” Beyer said, adding one possible plan would be to sell a fixed dollar amount of uranium every quarter. “It would be much better if the DOE appointed a marketing manager who could sell the material on a long-term basis.”

Uranium prices will fall 25 percent this year to an average of $48 a pound and slide as low as $40 by December, Layton said yesterday. The metal for immediate delivery was at $45 a pound as of Sept. 7, according to Roswell, Georgia-based Ux Consulting Co. Uranium rose to a record $136 in July 2007.

Projects in Africa and other “high-cost areas” may have “difficulties getting into production,” Beyer said. He declined to say a price needed to encourage new supply, saying it depended on each particular project.

To contact the reporters on this story: Anna Stablum in London at astablum@bloomberg.net; Edmond Lococo in Boston at elococo@bloomberg.net.

Last Updated: September 10, 2009 18:10 EDT

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