Uranium Enters Bull Market Amid Russian Sanctions, Strike – by Ben Sharples and Heesu Lee Bloomberg News – September 16, 2014)

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Uranium entered a bull market amid new sanctions against Russia over its conflict with Ukraine and a labor strike at the world’s biggest mine in Canada.

The atomic fuel has advanced 21 percent in New York from a May 20 low of $28 a pound, according to data from Ux Consulting Co. in Roswell, Georgia, which provides research on the nuclear industry. Prices closed 1.8 percent higher at $34 yesterday and have averaged $31.87 in 2014.

The U.S. and European Union stepped up their sanctions last week on Russia, which provides enrichment services to western utilities, stoking concern the Ukraine crisis may deepen. In Canada, the United Steelworkers union said Sept. 12 that it had reached a “tentative” agreement with Cameco (CCO) Corp. to end a two-week strike at McArthur River.

“The market may need some more time to digest the recent announcements about McArthur River and additional Russian sanctions to determine any additional impacts on price,” Ux Consulting said in a note dated Sept. 15.

Uranium declined as much as 60 percent since March 2011 when an earthquake and tsunami caused the meltdown of Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant and led to the shutdown of Japan’s nuclear fleet. The nation is seeking to restart reactors as it conducts safety checks, while producers from Kazakhstan to Australia cancel projects and close mines.

Russian Sanctions

The U.S. on Sept. 12 expanded sanctions against Russia to include OAO Sberbank, the country’s largest bank, because of the fighting in eastern Ukraine. The EU added 15 companies such as Gazprom Neft and OAO Rosneft, and 24 people to its own list of those affected by its restrictions.

In Canada, voting on Cameco’s new labor agreement will happen once workers are back on the job, the United Steelworkers said Sept. 12. The Saskatoon, Saskatchewan-based producer said Aug. 27 it had started shutting down the mine after receiving a strike notice from the union.

An agreement to end the strike will be negative for the uranium sector, Rob Chang, the head of metals and mining at Cantor Fitzgerald in Toronto, said in a Sept. 12 note. The brief shutdown may affect about 900,000 pounds of supply, he said.

Uranium prices may average $32.50 a pound during the fourth quarter, according to the median estimate of five banks compiled by Bloomberg since May.

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