India Invited to the Civilian Nuclear Club & Russia Reveals More on Floating Nuclear Reactor Programme

More Power to India and Russia - and the Uranium Price

Date 09/09/2008

The Right Side

Garry White

This week has seen more bullish news for the uranium price. But the price is static at $64.50 a pound. Now looks like a good time to buy uranium.

India has been invited to fully participate in the civilian nuclear club. And Russia has revealed more details about its floating nuclear reactor programme.

The decision to let India trade in nuclear materials and equipment is partly political and partly business. But the reasons do not matter that much.

What really matters is the billions of dollars the Indian government is about to spend. And the fact that it uranium use is set to soar over the next 10 years.

It’s all down to a decision from the Nuclear Suppliers Group (NSG).

The organisation consists of 45 countries. It was formed in 1974 in response to missile testing by India.

It restricts uranium and nuclear equipment supplies to countries that have not signed the non-proliferation treaty (NPT). Well, it did until now.

India has still not signed the NPT. But it is now allowed to trade in nuclear equipment and materials. This is a global precedent.

The Indian government says its power supply falls 14.8% short of demand at peak times. This is holding back economic growth.

The Asian Development Bank has calculated that lack of proper infrastructure crimps two percentage points off India’s growth each year.

The move will not only boost GDP in India over the long term, but it will boost Western company profits as well. Reactor manufacturers such as General Electric, Alstom and Siemens are eying the $14bn the government now wishes to spend in 2009 alone.

The real reason, however, is politics.

The US is upset about China’s potential domination of Asia. Its government has been doing all it can to make the country a worthy economic and political rival to its foes in Beijing. This deal is all part of this plan.

That’s why the NPT was ignored.

Russia starts a new uranium trend too

More bullish news for the uranium price has also emerged from Russia.

The country has confirmed that the world’s first-ever floating nuclear power plant (FNPP) will be launched in St Petersburg in less than two years’ time.

The FNPP is basically a very large barge. It will look like a small island with an area of between 7.4 and 12.4 acres.

There are some safety concerns, but the Russians proudly note that the reactor is based on the same design as was installed in the Kursk. This submarine slammed into the bottom of the Barents Sea in 2000 - but the reactor was safe. .

The Kursk was disabled by an electrical explosion. When the submarine was raised, the reactor had turned itself off automatically and the reactor was safe and ready to operate.

The FNPP will be around 15 times less powerful than a normal nuclear power plant on land. But it would still be able to supply energy to a city with a population of 100,000 people.

The news from India and Russia shows that the charge to a nuclear future is unstoppable. And readers of my Smart Commodities service are right at the heart of it!

We already have one play in the portfolio that’s set to benefit from a surge in the uranium play. And in my next issue I’ll be recommending another way you can play this exciting commodity.

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Discover more about Smart Commodities right here

Regards,

Garry White
Editor
Smart Commodities UK

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