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uranium price may rise 25% as supply falls, new re, page-5

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    uranium prices to soar as stocks dip Reuters
    January 11, 2005

    Increased demand and a supply-side crunch will combine to push uranium prices up to historic highs over the next few years, industry officials said overnight.

    Last year the spot price for uranium hit 20-year-highs of $20 per lb, having in 2002 broken above $10 per pound (lb) ($24 per lb) where it had hovered since the late 1980s, according to figures from the industry consultancy group Nuclear International.

    "Right now the industry does not see prices weakening, the question is how much more will they go up," Dustin Garrow, president of consultancy Nuclear International, said in a speech to a uranium mining conference in London.

    Processed uranium is mainly used to create nuclear energy which supporters say is an environmentally friendly alternative to fossil fuels as it does not emit the greenhouse gases blamed by many scientists for global warming.

    But ecologists and anti-nuclear campaigners worry about the safety of nuclear storage and waste.

    Nuclear power produces some 16 percent of world electricity while coal, oil and gas account for two thirds.

    Governments are divided. Countries such as the United States, Finland and energy-hungry China are developing their nuclear power programmes, while others such as Germany are phasing it out.

    Nuclear International estimates that current uranium consumption tops 173 million lbs a year and will rise to over 200 million lbs by 2020.

    In the 1980s and 1990s world uranium mining dropped off as companies abandoned mines and failed to exploit reserves as the price of uranium bottomed out. The industry relied instead on stockpiles and reprocessed uranium from the military.

    Now those supplies have shrunk and old mines and undeveloped uranium ore deposits across the world are beginning to look attractive once more.

    Strathmore Minerals Corp, bought a series of discarded uranium deposits at discount prices in Canada and the US in the mid-1990s.

    "For years you felt like the red haired step-daughter in the family, but that has now changed," Dev Randhawa, chief executive officer of the uranium exploration company, said in a speech.

    Strathmore now wants to wait until the contract price of uranium between miners and processors reaches around $50 per lb before signing supply deals.

    Canada's International Uranium Corp also plans to expand, saying it is looking into reopening uranium mines in the United States, as well as exploring in Mongolia for further deposits.

    "The market needs a $20 a lb contract price to sustain it," Ron Hochstein, the company's chief executive, told Reuters.

    ``And in the long-term I think the contract price will remain above $20 a lb.''

    The predictions come amidst a bitter battle for control of one of the world's largest uranium producers, Australian's WMC Resource.

    In November, WMC, which is the subject of a $7.4 billion takeover bid by Swiss-based Xstrata, increased its long-term uranium forecast to $US30 per lb, saying that its Olympic Dam deposit in South Austalia could become the world's biggest uranium mine if a $4-billion expansion is approved.

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