Uranium Price Rise Spurred by Hedge Funds on Energy Optimism

A 62 percent surge in uranium prices
in the past year has been partly driven by hedge funds as money
managers bet more atomic energy will be generated, the Chief
Executive Officer of the world's biggest uranium producer said.
The price of uranium, used to fuel nuclear reactors, climbed
to $29 per pound from $17.90 per pound a year ago, according to
the Metal Bulletin's Uranium Nuexco Restricted Post Price. About
20 percent of the uranium that powers reactors trades on spot
markets.
``We've seen speculators and hedge funds buy between 5-to-6
million pounds of uranium in the last two years,'' Cameco Corp.
CEO Gerald Grandey said today at a news conference. ``The timing
of their purchases has helped to solidify the market price.''
Hedge funds are driving up prices as countries commit to
building new nuclear power plants. China's planning a six-fold
increase in atomic energy over the next 15 years, the government
has said. Egypt, Indonesia, India, the Philippines and Vietnam
are planning new nuclear installations. Uranium accounts for
about 5 percent of the cost of producing atomic energy.
The price rise is spurring mining companies to step up
uranium exploration to boost stockpiles. Suppliers are selling
users of the radioactive metal, such as utilities, from stocks
developed in the 1970s.
``We've been living on inventories for two decades,'' said
Grandey, speaking at an International Atomic Energy Agency
conference about the uranium market.

Abundant Supply

There's enough untapped uranium in the world to satisfy 2002
nuclear energy demand for up to another 240,000 years, the IAEA's
2004 Nuclear Technology Review reports.
Most uranium can be recycled. Many nuclear power plants can
be converted to use so-called ``fast reactor fuel cycles,'' which
use uranium up to 100-times more efficiently.
``We know that we'll have customers well into the 2030-to-
2040 time period,'' Grandey said. Most of Cameco's customer
agreements are long-term supply contracts, he said, estimating
that the Saskatoon, Canada-based company conducts only 10
transactions each month.
Nuclear missiles in the U.S. and Russia house ``at least''
another 30 years worth of energy, IAEA Deputy Director General
Yury Sokolov said. A 1993 agreement called the ``Megatons to
Megawatts Program'' has disarmed around 9,000 warheads and
shipped their fuel to power plants.
The IAEA in March raised its forecast for nuclear power for
the fourth consecutive year. The equivalent of 127, 1,000-
megawatt plants will be built by 2020, the IAEA said then.
Capacity will rise to 427 gigawatts from 367 gigawatts today. One
gigawatt is a billion watts.

Attractive Economics

Atomic energy is becoming economically more attractive as
the price of oil and natural gas rise. Crude oil prices in New
York have surged 56 percent in the past year.
The Kyoto Protocol is also prompting countries party to the
treaty to consider nuclear energy to reduce the emissions
produced by gas- and coal-fired plants. Public concern about
safety may be easing, polls show.
Asia will drive demand, Alan McDonald, an IAEA economist,
said in April. China now relies on coal and oil for 90 percent of
its fuel. The country plans to get 40 gigawatts of electricity
from nuclear power by 2020, up from 6.5 gigawatts today, he said.
India is building nine reactors and will increase capacity
to 20 gigawatts by 2012 from 2.7 gigawatts currently.

Iran Admits Plutonium Separation Experiments to UN

Iran's government told United
Nations inspectors it continued separating plutonium five years
after declaring an end to the work, the UN nuclear agency said.
The process may be used in the production of an atomic bomb.
The Islamic republic informed the International Atomic
Energy Agency May 25 that it conducted plutonium-separation
experiments until 1998, after previously saying those
activities stopped in 1993, according to a report expected to
be made today to the IAEA board by Deputy Director General
Pierre Goldschmidt. A copy of his remarks was obtained by
Bloomberg News.
``It is evident that Iran has not come clean about its
past, or present nuclear activities,'' said Jackie Sanders,
President George W. Bush's envoy on nuclear non-proliferation,
to the IAEA board. ``It continues to deny requested IAEA access
to people, places and information.''
The discovery that Iran continued to separate plutonium
may follows a dispute over Iran's enrichment of uranium, which
can also be used in a nuclear weapon. Today's U.S. statement
demanded that Iran stop all activities associated with the
nuclear fuel cycle. The Bush administration has said Iran is
using its nuclear power program to disguise weapons
development.
The U.S. State Department last month said it would
recommend that the IAEA refer Iran to the UN Security Council
for sanctions if it re-starts processing uranium. The so-called
EU-3, comprised of French, German and U.K. diplomats, are
negotiating with the Iranians to avoid a Security Council
referral by offering potential trade benefits in exchange for
the Islamic Republic's abandonment of enrichment activities.
``Iran has put forward a comprehensive framework which
incorporates guarantees on all the issues which have been
subject to negotiations,'' Iran's IAEA representative Mohammad
Akhondzadeh said about the country's negations with the EU-3.
The EU-3 is expected to present a proposal to the Iranians next
month, Akhondzadeh said.
The U.S. ``continues to offer its full support to the
ongoing diplomatic efforts,'' Saunders said.

Centrifuge Parts

Iran's lack of documentation about agreements to import
nuclear centrifuge parts is also hampering the UN investigation
to determine whether its atomic technology program is only
intended to generate electricity, according to Goldschmidt's
report to the Vienna-based IAEA's board.
The agency requested documentation outlining a 1994
proposal to supply Iran with nuclear centrifuges, along with
customs documents to learn whether the parts had entered the
country, Goldschmidt wrote. Iran wasn't able to satisfy the
inspectors' requests, according to his report.
Iran, with the world's second-largest oil reserves, is
undergoing IAEA inspections to ensure that its nuclear program
is designed to produce energy and not weapons.
``We wish one day to have the opportunity to welcome back
to the international community an Iran that behaves
constructively and is in compliance with its obligations,''
Saunders said. ``But we will not accept a nuclear weapons-
capable Iran.''
IAEA Director General Mohammed ElBaradei on June 13 told
the agency's board that Iran was making ``progress'' in its
effort to show that its nuclear program isn't violating
international treaties.
``Iran has facilitated agency access, under its safeguards
agreement and additional protocol, to nuclear materials and
facilities,'' ElBaradei said.

Iran Facilitates Nuclear Site Inspections, UN Says

Iran is giving more access to its
nuclear sites and has made ``progress'' in its effort to show
that its program doesn't violate international treaties, the
United Nations nuclear watchdog said.
``Iran has facilitated Agency access under its safeguards
agreement and additional protocol to nuclear materials and
facilities,'' International Atomic Energy Agency Director General
Mohammed ElBaradei told the group's board of governors today in a
statement.
Iran, with the second highest level of oil reserves in the
world, is undergoing IAEA inspections to ensure that its nuclear
program is designed to produce energy and not weapons. The U.S.
has accused the Islamic Republic of harboring a secret program to
build an atomic bomb.
The IAEA called on Iran to continue giving it information.
The agency pinpointed requests that, if satisfied by Iran, could
result in a partial end of its investigation by September. The
IAEA wants more access to research sites at Lavisan-Shian and
Parchin as well as documentation about the country's centrifuge
enrichment program.
``We are inching forward but I'd like to have a more speedy
cooperation,'' ElBaradei, 62, said yesterday after being
appointed to a third four-year term heading the Vienna-based
agency.

Supply Network

The IAEA is trying to identify the international nuclear
supply network that enabled Iran to build its centrifuge program.
The agency is asking Iran to supply information to inspectors
about offers for equipment. Pakistan is cooperating with the
agency to help it determine the extent of its involvement in
Iran's program.
Centrifuges spin at supersonic speeds to enrich uranium
hexafluoride gas into nuclear fuel. Iran wants to enrich its own
fuel using centrifuges while the U.S. wants it to stop enrichment
activities altogether. Iran is negotiating with British, French
and German diplomats in search of a compromise.
Separately, the IAEA sees the ``urgency of finding a
solution to the current situation'' in North Korea, ElBaradei
said. Agency inspectors haven't visited the country since the
government of Kim Jong Il expelled them in December 2002.