Will China s New Five-Year Plan Force U.S. Utilities to Ration Your Electricity

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					Will China’s New Five-Year Plan Force U.S. Utilities to Ration Your
Electricity?

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Short review:
Taking your electrical needs for granted? A new five-year plan announced by the Chinese government may put the reliability of
your electrical supply at risk. China may snap up all the available uranium over the next few years. U.S. utilities depend upon
uranium to power their nuclear reactors, which provide 20% of your electricity.


Article tags:
China, electricity, utilities, uranium, nuclear energy, energy, nuclear power, minerals



According to China’s Ministry of Land Resources, China plans to build up “sufficient reserves” of uranium and other minerals, in a
new five-year government plan. The ministry said it would be stockpiling strategic reserves of uranium, copper, aluminum and
other key minerals because of rising demand for those commodities. The Chinese also wish to avoid supply disruptions by
hoarding uranium and other minerals, over the next few years. Until now, you’ve probably taken for granted a steady, reliable
source of electricity. A large part of your dependable energy came about because of the nuclear energy generated by the 103
nuclear reactors in 30 states. Without a steady supply of uranium to power those nuclear reactors, the U.S. electrical transmission
network suffers a 20 percent loss. China’s new five-year plan to stockpile uranium had better be a Wake-Up Call to U.S. utilities.
If they missed the import of China’s announcement, we are all going to be in a heck of lot of trouble before this decade ends.
Since June 2004, we have warned of supply disruptions for uranium. David Miller, who has since become President and Chief
Operating Officer of Strathmore Minerals, argued at the time, “In my opinion, no one has any extra uranium to sell on the spot
market. There’s just not excess inventory that people are unloading in the spot market.” We interviewed Miller again in November
2005, for an article entitled, “China Demand for Uranium, World Growth in Electricity Demand to Drive Uranium Price Higher.”
Miller warned us, “China is the future wild card… what they are planning for nuclear is probably the most aggressive program in
the world.” Miller added in his explanation, “All the new production is already factored into the future market for uranium. We’re
underwater right now without building one more nuclear power plant.” In mid April, during an interview with Sprott Asset
Management Market Strategist Kevin Bambrough, we asked him about the Chinese. He answered, “Why shouldn’t they have
strategic uranium reserves to supply their nuclear reactors? It makes sense to have a good stockpile of uranium considering the
relative cost of nuclear power versus anything else.” And now, the Chinese plan to build up a strategic reserve of uranium for their
aggressive nuclear program. In another interview, also published in April, Gene Clark, CEO of TradeTech LLC warned us, “In
reality, the U.S. utilities, which tend to wait longer to contract, may be the ones on the losing end because the Chinese and the
Indians will contract early. The implication of current group-think is that the Chinese and Indians are not going to be able to find
enough uranium for their new plants. But, they are committing for supplies way out into the future. When the U.S. utilities come to
the market, they’re going to look around say, ‘Oh blankety- blank, what happened? Where’s the uranium?’ They’ll be the ones
that sat around. I think that is what’s going to happen unless things really change in the way contracting is done in the United
States.” U.S. utilities have been cautioned, warned and advised that the Chinese demand for uranium could very well create a
serious energy crisis for the U.S. grid. Nuclear reactors help supply the baseload generation for the U.S. electrical grid. Nuclear
power plants provide stability to the electricity transmission network. About one-fifth of electrical generation is derived from
nuclear power. Nuclear plants are running at more than 89 percent capacity. U.S. utilities are fiddling around like Nero, who
watched Rome burn, hoping that promises of increased uranium production will stem the dramatic uranium price rise. Severe
strains in natural gas supplies, combined with the ongoing uranium supply squeeze, could very well put U.S. consumers on rations
for their electricity. Can’t happen, you say? Ask the Brits about how business was conducted in their country, in late 1973 and
early 1974, during the Arab oil embargo crisis. Or more recently, California’s rolling brownouts. An electrical energy crisis is in
the making, while U.S. utilities are patiently hoping or praying the price of uranium stop climbing. UxC President Jeff Combs
wasn’t kidding when he urged U.S. utilities, during our interview, to “support the expansion of (uranium) production in the United
States.” And if you don’t let your local utility know about the upcoming electrical energy crisis, then perhaps it will be your lights
they may someday be turning out. The irony of ironies: All of those sweet anti-nuclear folks in Vermont, who depend upon nuclear
energy for more than 70 percent of their electricity? They’ll be the first to suffer the most, if U.S. utilities don’t respond to China’s
five-year plan.

				
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posted:7/3/2011
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