You hear “uranium”, and immediately you think about nuclear power. Or perhaps you think about terrorist groups obtaining uranium for nuclear bombs. But the truth of the matter is that it’s actually a traded commodity and a number of companies mine and use it. What’s more, it has other applications outside the nuclear industry.
It was discovered way back in 1789, long before the Manhattan Project began. It got its name because the planet Uranus was only discovered 8 years earlier. It was only in 1841 when the first sample of the metal was isolated. More than a century later, it was the uranium-based “Little Boy” atomic bomb that was detonated over Hiroshima, as the one over the Nagasaki used plutonium.
Following WWII, government officials believed that the metal was relatively rare, so they thought they can keep nuclear technology from other governments simply by buying up all the known stocks. But it turned out that large deposits can be found in many regions in the world. Australia has the most at 29% of the world’s supply as of 2013. Kazakhstan comes in at second with 12%, and Russia follows with 9%. The total world production for that year was more than 5.9 million metric tons.
Below is the historical Uranium price per lb.
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Price History of Uranium
The price of this element largely depends on the state of the global nuclear power industry. Basically, if you have more countries that increase its use of nuclear energy, the demand rises accordingly.
After World War II, the price for the element rose due to the worldwide desire to procure nuclear weapons. Then it was used for nuclear power plants, which caused high prices well into the mid-1980s. But then the demand for nuclear weapons abated as the Cold War ended, and the construction of large hydroelectric power stations reduced the demand for nuclear power and energy.
In 2001, uranium prices were so low it reached $7 per pound. Then it rose gradually again, until the uranium bubble of 2007. This caused the stocks of uranium mining and exploration companies to rise, and the price reached as high as $137 per pound. This bubble was caused by the flooding of undeveloped high-grade ore deposits in Saskatchewan, which led to uncertainty about the short-term future of the supply. There was also speculation that demand for the element would increase because of the nuclear power programs in China and India at the time.
The prices went back down due to stability in the supply, but increased demand again gradually raised the price. After dropping to a low of about $40 a pound, the price again went back up to more than $70 a pound in early 2011. But in modern times, price declines are also affected by nuclear power plant disasters. And that’s what happened when the strongest earthquake ever to hit Japan caused tsunamis to hit the Fukushima Daiichi power plant. are
The Japanese reacted to the disaster by closing down all of its nuclear facilities by 2013. Germany and Switzerland also followed suit. This caused a drop in uranium prices, and in mid-2014 it even hit $28.23 a pound. It’s now up a bit to $32.15 a pound as of February 2016.
Uranium as Investment
It’s now actually possible to trade in uranium futures. Then you can buy and trade stocks in companies that rely on the metal for their revenue. Some of these companies focus more on the mining side of the operations, while others concentrate on refining the minerals. You can also invest in companies involved in nuclear energy.
Finally, you can also buy shares in exchange-traded funds that track mining companies and nuclear energy companies.
Purposes Used For
You may be surprised to note that uranium has been in use for thousands of years, though of course the people then had no idea of the material they were using. A 2,000-year old piece of yellow glass was found to contain an oxide of the metal. As UO2, it has been used as yellow and black color in glass and ceramic glazes. An orange powder version (UO3) is used for Fiestaware plates.
It has been used in the gyroscopes of inertial guidance systems and as a counterweight for aircraft control surfaces. It can function as shield against radiation and as a target for X-ray production. The military also uses the metal for special ammo meant to pierce heavy armor.
Still, it’s undeniable that its two main uses are as the main raw material for nuclear bombs and as the principal fuel for nuclear reactors. Many naval ships are powered with nuclear plants, and there’s some interest in marine nuclear propulsion for civilian ships due to the concerns over greenhouse gas emissions.
In any case, if you’re an investor, you only need to read the news about the increased use of nuclear power plants. This will drive up the demand in the world market for uranium.