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Investing in Uranium

uranium commodity

Uranium occurs naturally all over the planet. It is found in low levels in most rocks, soil and water. Number 92 on the periodic table, it is the last element on the chart that is found naturally in nature. All elements above it on the table are formed through various chemical or nuclear reactions. Not only is Uranium radioactive, it is one of the densest metals on the planet, 70% more dense than lead. Only gold and tungsten have higher densities.

Uranium in its natural form is found primarily as uranium-238. This is the most stable form (99.284%) of uranium, though there are five other isotopes. The form that is used in nuclear reactors is uranium-235. This is because this isotope is fissile, able to sustain a neutron chain reaction with low energy neutrons. Through a process called isotope separation, uranium-235 is extracted, or enriched. Reactor grade uranium contains 3-4% uranium-235. Weapons grade uranium contains 90% uranium-235.

Uranium in History

Use of uranium oxides to color glass and to glaze pottery has been traced back as far as 79 AD. Glass containing this element have been found in archeological digs in Italy. In the late middle ages, Bohemian glassmakers near the Habsburg silver mines began using uranium pitchblende to color their glasswares.

It wasn't until 1789 that uranium was separated from silver as a unique element for the first time by Martin Klaproth, a German scientist. Its radioactive properties would not be observed until 1896. By this time, its use as a colorant in glass and in pottery glazes had already been firmly established.

Almost all orange and bright red glazes produced in the U.S. during the 1930s used uranium oxide as the primary colorant in their glaze. One line of dinnerware, Fiestaware, became known as the most radioactive commercial product on the market. Uranium oxides produced the red-orange glaze.

Used in glass, uranium tends to produce a range of colors from yellow to green. The level of oxidation in the uranium determines the color. In most glass items, only 2% by weight of uranium was added to the glass before melting, thought some pieced produced in the 1800s contain as much as 25% uranium. Glass containing uranium glows under UV light.

Uranium rose to prominence in 1898, when Marie Curie discovered radium in uranium ore. It took tonnes of uranium to produce less than a gram of this new element, which sold for as high as $75,000 per ounce until it's reputed cancer curing properties failed to pass the test of time. Interest in radioactivity expanded rapidly after Curie's discovery. The first proven nuclear fission took place in 1939 in Otto Hahn's German laboratory. Around the same time, surrounded by extreme secrecy, Enrico Fermi began building the first nuclear reactor at the University of Chicago. They succeeding in achieving the first controlled nuclear reaction in 1942.

World War II was in full swing by this time. Knowing of Germany's interest in developing an atomic weapon, the Manhattan Project strived to reach that goal first. The first nuclear test explosion took place in New Mexico on July 16, 1945 under the code name "Trinity." The bomb detonated used highly enriched uranium.

The first nuclear reactor designed for continuous operation was built in Oak Ridge, Tenn. This was followed by the first electricity generating nuclear reactor in Arco, Idaho. On the first test run on December 20, 1951, the reactor only generated enough electricity to power four 150-watt light bulbs. Soon the town of Arco was the first town to have all of its electrical needs met by nuclear power.

Current Sources of Uranium

Uranium is one of the most common elements on the earth's surface. It if found in low concentrations everywhere. Concentrated deposits are spread out across the entire planet.

Australia has the largest uranium deposits, an estimated 23%. Kazakhstan also has large deposits. These two countries are followed by the Russian Federation, South Africa, Canada, and the United States. Brazil is known to have deposits, along with Niger and Namibia.

Canada is the only country where the uranium is high-grade, naturally. In the remaining deposits, the ore must be refined in order to reach reactor grade.

How Uranium is Being Used Today

Uranium is used in both the civilian and military sectors. The primary use for uranium today in the civilian sector is as the fuel source for nuclear power plants.

Depleted uranium continues to be used in uranium glass and glazes. In the military sector, uranium finds several uses. The U.S. Navy uses highly enriched uranium fuel in its nuclear submarine reactors.

Because it is so dense, depleted uranium is used in tank armor. Those inside the tank are protected from the residual radiation still present by sandwiching the uranium sheets between sheets of steel. The armored plating is more resistant to penetration.

The density of depleted uranium also makes it attractive for use in weapons production, especially for high-density penetrators. This type of ammunition is designed to use the combination of density and hardness, and flammability and high impact speed to tear through heavily armored defenses.

Even though depleted uranium is till radioactive, it is the preferred shielding material for containers in which strong sources of radiation, such as radium, are transported. This is because depleted uranium is still better at stopping radioactive penetration than lead, the most commonly used metal for shielding humans and the environment from radium.

While uranium salts are no longer used in photographic chemicals, two uranium salts continue to assist scientists using transmission electron microscopy. Uranyl acetate and uranyl formate create electron-dense stains which help increase contrast in ultrathin biological specimens. These two salts also help to isolate cell organelles and macromolecules. Their ability to stain viruses negatively are important.

Uranium is also used as a way to date the age of the earth. Scientists postulate that the various isotopes decay at a certain rate, making it possible to evaluate how old a mineral deposit is.

Economic Value of Uranium

Uranium is valued in two ways. First there is what is known as spot pricing which is based on the value of material that has already been mined and shows up in the inventory of processing centers around the globe. This pricing shows what the economic value of uranium concentrates will be worth over the next one to six months.

Long-term pricing of uranium predicts what pricing will be in anywhere from one year to 20 years. The long-term outlook for uranium is good, as the increasing need for energy that does not contribute to greenhouse gases is driving a renewed interest in nuclear power plants. Spot prices have not reached the projections of some who predicted in 2007 that prices as high as were in the near future. Prices did peak at over $125.00/lb. in 2007 but have slid back down toward $40 - 50.00 over the last three years.

This isn't a reason to become disinterested in uranium investments. Once the stocks of weapon's grade uranium are depleted, uranium prices will rise again. Like other metal markets, uranium values fluctuate according to news in the market. Many consultants across the investment industry predict a long-term price of around $95/lb. This modest forecast is built on the number of existing nuclear power plants. As more plants come into production, demand will increase. The risk of uranium dropping significantly below current prices appears to be relatively low.

How to Invest in Uranium

There are many companies that are involved in uranium. Some focus on existing production, others focus on near-term production, while yet other companies focus on development and exploration. There are only a few strong players in the market, with many aspiring exploration and development companies hoping to profit as the balance of supply to demand tips toward a shortage.

Uranium, unlike other metals, has been traded directly between buyers and sellers in the past. Investing in uranium as a commodity requires entering into standardized, exchange-traded contracts. In this agreement the buyer of the contract agrees to take delivery of a specific amount of uranium at a certain price at some date set in the future. When the date arrives the seller delivers the uranium at the agreed upon price.

Futures trading does involve a certain amount of risk, so it is not the best way for someone who needs the keep their risk low to invest. Investing in the companies that have established mines is one of the safer ways to benefit from the rising value of uranium. As the value of the product the company mines goes up, the value of the company will also rise.

Another investment choice is to invest in the companies that process the uranium. Some companies specialize in enriching uranium so its U235 concentration is enhanced to nuclear reactor grade. Other companies specialize in reprocessing spent uranium. There are also other companies that producing low-enriched uranium.

Yet another option is to invest in companies developing uranium deposits. While the risk is higher with this type of investment as compared to an established mining operation, if you look for companies that are moving past the exploration stage and into the development stage, your risk level will drop.

Future demand for Uranium

The area in which uranium will grow is in the area of nuclear power. While there has been some negativity toward nuclear power because of issues with spent fuel disposal in the U.S. and Canada, Asia is showing a serious interest using nuclear power. China has already announced plans to more than double its nuclear power capacity by 2020.

Demand may begin to outstrip supply in 2013, when Russia will complete the conversion process of its stores of weapon's grade plutonium to reactor grade. Predictions are that by 2020 the deficit may be more than 100 million pounds.

How to Locate Mining Stock to Invest In Uranium

The following list of mining companies and one of the stock exchanges they are traded on is the beginning of entering the world of uranium mining investments. This list has been narrowed down to companies that mine uranium, though they may also mine other metals as well.

Acclaim Exploration NL (AEX.AX)
Aldershot Resources Ltd (TSXV: ALZ)
Anglo Canadian Uranium Corp (TSXV: URA)
Aurora Energy Resources Inc (TSX: AXU)
Azimut Exploration Inc (TSXV: AZM)
Bannerman Resources Ltd (BMN.AX)
Bayswater Uranium Corp (TSX.V: BAY)
Belmont Resources Inc (TSXV: BEA)
Benton Resources Corp (TSXV: BTC)
Berkeley Resources Ltd (BKY.AX)
Bitterroot Resources Ltd (TSX.V: BTT)
Bluerock Resources Ltd (TSXV: BRD)
Calypso Uranium Corp (TSX.V: CLP)
Cameco Corp (TSX: CCO)
CanAlaska Uranium Ltd (TSXV: CVV, OTC: CVVUF)
Cazaly Resources Ltd (CAZ.AX)
Consolidated Abaddon Resources Inc (TSXV: ABN)
Cooper Minerals Inc (TSXV: CQ)
Crosshair Exploration and Mining Corp (TSXV: CXX)
Curnamona Energy Ltd (CUY.AX)
Deep Yellow Ltd (DYL.AX)
Denison Mines Inc (TSX: DEN)
Dios Exploration Inc (TSX: DOS)
Eagle Plains Resources Ltd (TSX: EPL)
Energy Fuels (TSXV: EFR)
Energy Resources of Australia Ltd (ERA.AX)
Entourage Mining Ltd. (OTCBB: ENMGF)
ESO Uranium Corp (TSXV: ESO)
First Uranium Corporation (TSX: FIU)
Formation Capital Corp (TSX: FCO)
Forsys Metals Corp (TSXV: FSY)
Forum Uranium Corp (TSX.V: FDC)
Global Uranium Corp (TSXV: GU)
Globe Uranium Ltd (GBE.AX)
Globex Mining Enterprises Inc (TSX: GMX)
Hathor Exploration Ltd (TSXV: HAT)
Hindmarsh Resources Ltd (HMR.AX)
International KRL Resources Corp (TSXV: IRK)
International Montoro Resources Inc (TSXV: IMT)
JNR Resources Inc. (TSXV: JNN)
Kalahari Minerals (LSE: KAH)
Khan Resources (TSX: KRI)
Kodiak Exploration Ltd (TSXV: KXL)
Landmark Minerals Inc (TSX.V: LML)
Laramide Resources Ltd (TSX: LAM)
Latin American Minerals Inc (TSXV: LAT)
Logan Resources Ltd (TSXV: LGR)
Magnum Uranium Corp (TSXV: MM)
Marathon Resources Ltd (MTN.AX)
Matamec Explorations Inc (TSXV: MAT)
Maximus Resources Ltd (MXR.AX)
Mega Uranium Ltd (TSX: MGA)
Mesa Uranium Corp (TSXV: MZU)
Mexivada Mining Corp (TSX.V: MNV)
Mindax Ltd (MDX.AX)
Monaro Mining NL (MRO.AX)
Monax Mining Limited (MOX.AX)
Newera Uranium Ltd (NRU.AX)
North Atlantic Resources Ltd (TSX: NAC)
Nuinsco Resources Ltd (TSX: NWI)
Pacific Ridge Exploration Ltd (TSXV: PEX)
Pele Mountain Resources Inc (TSXV: GEM)
Peninsula Minerals Ltd (PEN.AX)
PepinNini Minerals Ltd (PNN.AX)
Pitchstone Exploration Ltd (TSXV: PXP)
Powertech Uranium Corp (TSXV: PWE)
Purepoint Uranium Group Inc (TSXV: PTU)
Richmond Minerals Inc (TSXV: RMD)
Rockgate Capital Corp (TSXV: RGT)
Santoy Resources Ltd (TSXV: SAN)
Scimitar Resources Limited (SIM.AX)
Solex Resources Corp (TSXV: SOX)
Solomon Resources Ltd (TSXV: SRB)
Star Uranium Corp (TSXV: SUV)
Starfire Minerals Inc (TSXV: SFR)
Stellar Resources Ltd (SRZ.AX)
Strateco Resources Inc (TSXV: RSC)
Strategic Minerals Corporation NL (SMC.AX)
Strathmore Minerals Corp (TSXV: STM)
Summit Resources Ltd (SMM.AX)
Temex Resources Corp (TSXV: TME)
Terra Ventures Inc (TSXV: TAS)
Thelon Ventures Ltd (TSXV: THV)
Titan Uranium Inc (TSXV: TUE)
Tournigan Gold Corp (TSXV: TVC)
Triex Minerals Corp (TSXV: TXM)
U3O8 Corp (TSXV: UWE)
UEX Corporation (UEX.TO)
Universal Uranium Ltd (TSXV: UUL)
Ur-Energy (TSXV: URE)
Uracan Resources Ltd (TSXV: URC)
Uranerz Energy Corp (URZ)
Uranex NL (UNX.AX)
Uranium Energy Corp (OTC: URME)
Uranium North Resource Corp (TSXV: UNR)
Uranium Oil and Gas Limited (UOG.AX)
Uranium One Inc. (TSX: UUU)
Uranium Participation Corp (TSX: U)
Uranium Power Corp (TSXV: UPC)
Uranium Resources Inc. (OTC: URIX)
Uranium Resources (LSE: URA)
Uranium FPO (USA.AX)
Uravan Minerals Inc (TSXV: UNV)
Urex Energy Corp (OTC: URXE)
U.S. Energy Corp (NASDAQ: USEG)
Vane Minerals (LSE: VML)
Vena Resources (TSXV: VEM)
Waseco Resources Inc (TSXV: WRI)
Wealth Minerals Ltd (OTC: WMLLF)
Western Uranium Corporation (TSXV: WUC)
Xemplar Energy Corp (TSXV: XE)

Uranium Quick Facts

  • » One kilogram (2.2 lbs.) of uranium can produce the same amount of power as 3000 tonnes (3307 U.S. tons) of coal.
  • » During World War II, the U.S. government confiscated all of Homer Laughlin China Company's uranium stores, forcing them to drop the red-orange Fiestaware color from their product line.
  • » Scientists are studying the ability of certain organisms to absorb up 300 times the uranium than is present in their environment. These organisms may be useful for decontamination efforts or in bioremediation.
  • » Depleted uranium weighs so much that it only takes 706 cylinders to weigh as much as a Nimitz-class aircraft carrier.
  • » One pound of uranium is about the size of a large "super ball" only 1.3 inches (3.3 cm) across.

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