| SUMMARY: TradeTech LLC Chief Executive
| |
| | reached a point where the cheap stuff has
|
| Gene Clark talked with StockInterview
| |
| | been sold. Now, we have to actually spend
|
| about the uranium bull market, where his
| |
| | some money, some capital, to build new
|
| price models show uranium prices heading
| |
| | facilities, new mines and new mills. That
|
| and when to expect the peak of the
| |
| | was, I think, the earliest signal of the
|
| current upward cycle of the bull market.
| |
| | price needing to adjust.StockInterview:
|
| When will "hard" times again hit the
| |
| | Isn't there a ton of hype across all
|
| uranium market, and how long will the
| |
| | media channels about the "nuclear
|
| trough last? And what does the future
| |
| | renaissance" and the demand for more
|
| hold for the uranium price? An industry
| |
| | nuclear energy?Gene Clark:
|
| insider gives us his
| |
| | First of all, all the hype about nuclear
|
| insights.StockInterview: When the
| |
| | renaissance is really in the United
|
| uranium bull market began, did you
| |
| | States. The Chinese have had plans to
|
| foresee $40/pound uranium, now that the
| |
| | expand for a long time. The Japanese have
|
| spot price has risen above this
| |
| | been steadily adding new capacity.
|
| level?Gene Clark: I don't think any of us
| |
| | Koreans have been adding new capacity.
|
| saw $40 per pound coming. We had price
| |
| | Indians have been adding new capacity all
|
| projections at the time that indicated
| |
| | along, all the way through this, even
|
| probably $25 per pound, which would be a
| |
| | before we started this discussion on
|
| long term equilibrium price in constant
| |
| | nuclear renaissance. I think that phrase
|
| dollar terms. But, I think it was a
| |
| | is really focused more in the United
|
| surprise the price went up so high. I
| |
| | States, which really hasn't ordered a
|
| think what's going, the biggest factor
| |
| | plant since 1976 or something like that.
|
| right now, is the advent of the so called
| |
| | There is a boom. Maybe it's the uranium
|
| hedge funds or speculator funds and other
| |
| | renaissance.StockInterview: Is all of
|
| such groups. The price started to go up,
| |
| | what we've been reading just plain
|
| and they came into the market with the
| |
| | hype?Gene Clark: There is some hype, but
|
| express purpose of buying for holding and
| |
| | there is also some substance. A part of
|
| then selling into the market later to
| |
| | it is certainly a change in public
|
| realize the trading profit. In 2005, the
| |
| | attitude about nuclear power. If I was
|
| hedge funds were responsible for
| |
| | riding on an airplane, ten years ago, and
|
| purchasing about 10 million pounds of the
| |
| | someone asked me what I did for a living,
|
| 29 million pounds purchased. I think the
| |
| | I was guaranteed to have a lousy trip,
|
| market is now finally adjusting to the
| |
| | arguing about nuclear power. When I
|
| realities of primary supply and demand.
| |
| | mention it now, I get a positive
|
| It's been a depressed market for 20 or 30
| |
| | response. There's been a marked shift in
|
| years, primarily from the draw down of
| |
| | public attitude about nuclear power. From
|
| excess inventories, and what we call
| |
| | the standpoint of the utilities that
|
| secondary supply.StockInterview: Will
| |
| | would be ordering nuclear plants. To the
|
| the speculators remain active in driving
| |
| | extent that they need new capacity,
|
| the spot uranium price higher?Gene Clark:
| |
| | looking at nuclear now is not off the
|
| I think there is still some room for
| |
| | drawing boards, partly because of public
|
| further speculation activity. Uranium
| |
| | attitude. The industry has been moving
|
| Participation Corporation, for example,
| |
| | through this trough period, preparing
|
| is rumored to be about to come to the
| |
| | itself for a new era. It remains to be
|
| equities market again to raise funds for
| |
| | seen when the first order comes. But
|
| another purchase. They're asking for
| |
| | when the first actual order of a nuclear
|
| authority to buy UF6, as well as U308,
| |
| | power plant, along with the license
|
| and different forms of uranium than they
| |
| | application does come, I think you'll see
|
| were locked into before. Whether it be at
| |
| | several U.S. utilities following,
|
| the 10 million pound level (size of
| |
| | probably five utilities very actively
|
| purchase), I think it kind of depends on
| |
| | involved.StockInterview: When will that
|
| where the market goes. If it tends to
| |
| | actually happen?Gene Clark: I think it
|
| flatten out, then I think there's going
| |
| | will come within the next five years, the
|
| to be obviously less interest on their
| |
| | ordering process. Of course it will be
|
| part. When they were active in the
| |
| | probably another eight years before we
|
| market, they, of course, wanted the price
| |
| | actually see the first power plant from
|
| to go up. Therefore, they weren't too
| |
| | that process. We're talking probably
|
| careful about what they paid for uranium.
| |
| | about 13 years. That's how long it takes.
|
| I think that's a part of it. In the long
| |
| | You can actually construct one in 48
|
| run, it was due for a readjustment to
| |
| | months, but you have to have been through
|
| reflect prices of the cost of new
| |
| | the licensing. If you don't believe the
|
| production facilities. But, the hedge
| |
| | anti-nuclear people are going to be
|
| funds came in and overdrove the market.
| |
| | psyched up to fight the first plant
|
| Eventually, what it's going to wind up
| |
| | coming through, then you'd be very
|
| doing is, if they sell off, it could have
| |
| | naĆÆve. The first one is going to be more
|
| the impact of driving prices back down
| |
| | difficult and take more time, I
|
| below where they would otherwise have
| |
| | think.StockInterview: One anti-nuclear
|
| gone.StockInterview: Did the speculators
| |
| | group told us they do not believe we'll
|
| interfere with the trading efficiency of
| |
| | have more nuclear power plants in the
|
| the uranium market?Gene Clark: In theory,
| |
| | United States.Gene Clark: That's
|
| speculators come in, tend to take the
| |
| | possible, but given the current
|
| risk and smooth out market prices. But,
| |
| | circumstances, my guess is we will have
|
| it never really works out that way. They
| |
| | more nuclear plants. We need the
|
| always come in and only take the risk, if
| |
| | capacity, whether we're going to build
|
| there's an opportunity to make money. So
| |
| | coal plants (or other types of power
|
| some people make a lot of money. It does
| |
| | generating plants). I just came from
|
| tend to upset the market. If you get away
| |
| | California, moved here (to North
|
| from the primary users of uranium and
| |
| | Carolina) six months ago. They were
|
| primary producers of uranium as your
| |
| | talking in California about building
|
| market participants, then you tend to
| |
| | gas-fired plants for base load
|
| introduce more noise than you would
| |
| | generation, which is the most ridiculous
|
| like.StockInterview: With that in mind,
| |
| | thing you can imagine. The plants are
|
| in which direction are your price
| |
| | cheap to build, but the fuel cost is
|
| projections going?Gene Clark: We're
| |
| | exorbitant. I did a speech a couple of
|
| actually updating our uranium price
| |
| | years ago, having looked at the Energy
|
| forecast right now. We haven't decided on
| |
| | Information Administration's projections
|
| a reference case yet. The reference cases
| |
| | of gas demand. All the growth in natural
|
| we're looking at will peak at about $50
| |
| | gas demand is going to be in the electric
|
| to $55 per pound in about three years,
| |
| | utility sector. We are going to be
|
| and will then drop off pretty
| |
| | importing 60 percent of our gas supplies
|
| drastically. It has to do with a selling
| |
| | by 2020. Does that make any sense? No. We
|
| of the speculator reserves, the uranium
| |
| | have a lot of coal, but there are lots of
|
| that's being held (for speculative
| |
| | complaints about coal burning. In our
|
| purposes). I can see it coming back down
| |
| | state of North Carolina, the attorney
|
| to $30, maybe below $30 per pound. Then,
| |
| | general is actually suing the Tennessee
|
| in the long run - out through 2020 -
| |
| | Valley Authority (TVA) for the damage
|
| getting easily back up over $40 per
| |
| | from coal burning of the TVA's power
|
| pound.StockInterview: Are you predicting
| |
| | plants in the adjacent state, in
|
| a down cycle during the course of the
| |
| | Tennessee. There's going to be continued
|
| uranium bull market?Gene Clark: Yes. It's
| |
| | pressure on coal burning. I think nuclear
|
| pretty consistent with everything we're
| |
| | has as good a shot as any in terms of new
|
| doing with the changes in requirements,
| |
| | capacity.StockInterview: Some critics
|
| in different cases of high, low, and
| |
| | have argued China and India will not be
|
| medium demand. Our modeling system is
| |
| | able to afford the massive nuclear power
|
| projecting this. It has to do with the
| |
| | plant build up they've envisioned.Gene
|
| supply and demand balance and the cost on
| |
| | Clark: If you think the Chinese are going
|
| the margin. The way to describe it is
| |
| | to have any problem financing things,
|
| that prices have come to a point now of
| |
| | you'd better think twice. Let's focus on
|
| higher than we would have projected them
| |
| | India. India is a clear case where, and
|
| to be, such that over-supply is going to
| |
| | it is a good rule of thumb, one percent
|
| evolve. The large low cost projects will
| |
| | growth in gross domestic product requires
|
| reach a point where supply then
| |
| | one percent growth in electricity
|
| overshoots demand for a few years, which
| |
| | requirement. For India to grow
|
| causes the price to come back down. Then
| |
| | economically, it needs electric power.
|
| demand growth, in the long run, picks up
| |
| | Where are they going to get it? They have
|
| and puts a lot of pressure on the supply
| |
| | coal plants there, as well. Once you use
|
| market to be able to meet the demand. So
| |
| | up all your hydro capacity, you really
|
| you wind up with pressure toward the end
| |
| | don't have much to choose from, except
|
| of the period.StockInterview: But the
| |
| | coal, natural gas, and nuclear. To the
|
| markets are finicky, filled with
| |
| | extent that they can have economic growth
|
| variables, and can frequently trick price
| |
| | and export income, coming into their
|
| models.Gene Clark: Here's what it would
| |
| | country, they would be able to finance
|
| take to shoot that down: We have a
| |
| | nuclear power plants. My guess is they're
|
| problem with small numbers, and there are
| |
| | going to get the vendors of the nuclear
|
| some very large projects - Cigar Lake,
| |
| | plant to help finance
|
| for example. The expansion of Olympic Dam
| |
| | them.StockInterview: Are you talking
|
| in Australia would be going from about 12
| |
| | about the French?Gene Clark: Framatome -
|
| million pounds of production to over 30
| |
| | the company that constructs the nuclear
|
| million pounds, if they finish. If you
| |
| | plants. Financing is generally part of
|
| shift that out by four or five years, or
| |
| | the package. The first plants in China
|
| if the owner decides, "No, we're not
| |
| | were basically financed by the French
|
| going to expand at all," you have a
| |
| | government. If the French go into India,
|
| drastic effect. Then you would wind up
| |
| | you'll see the same thing. The Russians
|
| with $100 per pound uranium, I
| |
| | have financed plants for developing
|
| think.StockInterview: What are your
| |
| | countries. That's not unusual for them to
|
| estimates on the peak price years and the
| |
| | do. The United States may, or may not,
|
| bottom years?Gene Clark: A lot of things
| |
| | get involved. I think there have been
|
| could change, but here is what we're
| |
| | some types of guarantees in the past, but
|
| looking at. In one case scenario, the
| |
| | not at the same level as the Russians and
|
| speculators are really going to stay out
| |
| | French do it. I think those are the big
|
| of the market and holding onto their
| |
| | choices. I wouldn't be surprised to see
|
| stuff for a long time. If so, then we're
| |
| | the South Koreans involved in the reactor
|
| going to be at the peak by the end of
| |
| | export market. They've pretty much
|
| this year. If they stay active in the
| |
| | developed their own technology now. They
|
| market and buying, then that stretches it
| |
| | have the capability of building 100
|
| out further. Depending on the scenario,
| |
| | percent of a nuclear power plant in South
|
| we see the peak possibly at 2008 or so. I
| |
| | Korea: the pressure vessels, all the
|
| would say we're looking at a trough
| |
| | steel requirements. They can do it all.
|
| around the timeframe of 2011 to 2013.
| |
| | We really haven't seen them export yet,
|
| Then back up after that.StockInterview:
| |
| | because they've used up all their
|
| How do you arrive at your weekly numbers
| |
| | manufacturing capacity for their own
|
| for the spot uranium price?Gene Clark: We
| |
| | program. At some stage, I wouldn't be
|
| get our data from all of the key sources:
| |
| | surprised to see that happen. And I think
|
| the utility fuel managers, sales staff
| |
| | they would be able to finance reactor
|
| and management of uranium producers and
| |
| | export sales.StockInterview: How are the
|
| processors, and uranium traders, brokers
| |
| | U.S. utilities going to fare in getting
|
| and asset managers. Some are, of course,
| |
| | their "share" of uranium to fuel our
|
| more cooperative than others, and whom we
| |
| | domestic nuclear power plants in the
|
| call depends on the type of information
| |
| | context of the apparent overwhelming
|
| we are seeking. Since our price
| |
| | Asian demand?Gene Clark: In reality, the
|
| indicators are a judgment call, we often
| |
| | U.S. utilities, which tend to wait longer
|
| focus on the losers in particular recent
| |
| | to contract, may be the ones on the
|
| transactions, as those will be the next
| |
| | losing end because the Chinese and the
|
| to make offers in the
| |
| | Indians will contract early. The
|
| market.StockInterview: Let's back up a
| |
| | implication of current group-think is
|
| bit. Why has uranium gone up past the
| |
| | that the Chinese and Indians are not
|
| levels of the "cost of production," which
| |
| | going to be able to find enough uranium
|
| would place the spot price between $25
| |
| | for their new plants. But, they are
|
| and $35/pound?Gene Clark: The biggest
| |
| | committing for supplies way out into the
|
| factor, in signaling the market, was when
| |
| | future. When the U.S. utilities come to
|
| utilities went out for long term bid
| |
| | the market, they're going to look around
|
| requests. They found they reached a
| |
| | say, "Oh blankety- blank, what happened?
|
| period in which producers would have to
| |
| | Where's the uranium?" They'll be the ones
|
| build new facilities. Producers building
| |
| | that sat around. I think that is what's
|
| those facilities felt, "I have to make at
| |
| | going to happen unless things really
|
| least enough profit to cover a return on
| |
| | change in the way contracting is done in
|
| the construction costs for these
| |
| | the United States.James Finch contributes
|
| facilities." That was much higher than
| |
| | to and other publications.
|
| the market at the time. Basically, you
| |
| |
|
