Last month, shovels hit the ground in a dry corner of western Spain, near the ancient city of Salamanca. Berkeley Energia, a mining company listed in Australia and on London’s junior AIM market, started work on a $100m (£80m) uranium mine. The project hopes to create nearly 500 jobs in a depressed former mining region and tap into future demand for the heavy metal, which powers nuclear reactors. To fund its plans, Berkeley recently raised $30m from a placing of new shares, winning support from funds run by the likes of Blackrock and JP Morgan. When it opens in 2018, the mine will be one of the lowest-cost uranium producers in the world – and the only such mine in Europe, turning out 4.5m pounds a year. But with uranium prices languishing at 13-year lows, the timing would seem curious. Why would anyone bet on a metal that has fallen so far out of favour? Is uranium due to become a hot property once again? Somewhat paradoxically, Atherley is happy for the price to go even lower, because he has his eye on long-term contracts, which command a premium on the spot price. “You have large reactors in the US and Europe coming off supply in 2018 – they will come back into the market,” he says. “China is building 60 reactors. They’re coming into the market at the same time. We’re creating the biggest deficit the uranium market has ever seen.” Canada’s Cameco, the world’s largest listed uranium producer, believes that 500m pounds of uranium that will be needed for reactors in the next 10 years have not yet been purchased.
Telegraph 20th Nov 2016 read more »