Yellowcake (U3O8) from mines goes to fuel nuclear power generators after additional refining and processing. Kazakhstan is the world's number one supplier providing 40% of supply, then Canada at 20% followed by Australia, still dogged by new mine environmental resistance, at about 12%. Annual demand of some 172 million pounds includes as much as 20% supplied from secondary sources. According to the World Nuclear Association, 439 nuclear reactors are operable with 66 new ones under construction, including 24 in China, and another 158 planned worldwide. A recent estimate by Cameco (Canada's leading producer and the world's largest public uranium company) put the increase, after closures, at the equivalent of 80 new reactors by 2024. Yellowcake spot prices peaked close to US$140/lb in 2007 and were about US$70/lb before the Fukushima Daiichi nuclear incident in March 2011. After the incident, Japan shuttered all 54 reactors and its 22-million-pound annual yellowcake consumption dropped to zero. Ongoing supply contracts have since created a massive reported 120 million pounds of inventory as they now restart the first two reactors. The Japanese shutdowns and related lower European usage flattened annual demand from 2011 and ushered in a price decline to US$28.75/lb, a level not seen since early 2005. This price is inadequate for new mine developments, except perhaps those with exceptional economics. The spot price is, however, tempered by deflated local currencies in some locations compared to the strong US$, and most also sell through long-term contracts, garnering significantly more than the spot price for each pound sold. Bull market pundits say that a number of factors point to a uranium renaissance: Japanese reactor restarts underway; 80 effectively new reactors on line by 2024; the pressing need to address our fossil fuel carbon footprint, coupled with the worldwide continuing surge in electricity demand; declining availability of secondary uranium sources; and another 158 nuclear plants on the drawing board. They predict that significant growth in demand, notably from China and India, will push spot prices north of US$75/lb. Cameco shares the bulls' view of increasing worldwide demand, expecting 220 million pounds by 2025 – an annual growth of 3%. Cameco also predicts improving demand and a shrinking secondary supply will require 20 million pounds of annual new supply from mines not yet in development. Uranium bears, however cite the ever powerful anti-nuclear lobby, flip-flopping government policy and little Japanese commitment to restart their remaining idled plants. They also expect Japanese inventory to continue to overhang the market and that China has already built inventory in expectation of their increasing requirements and will secure further supply by investing to create captive mines. They believe the net result will be continued flat demand and only producers with good margins today will do well. China is indeed seeking captive supply. Wang Ying, head of China National Nuclear said "the country is seeking miners that have least 30,000 tonnes of uranium resource, cash production no higher than US$25 a pound and total production costs of no more than US$45 a pound", the Financial Post reports. Recently, Fission Uranium Corp. of Canada inked a subscription stake of C$82.2M for 19.9% of the company including an off-take agreement with CGN, part of General Nuclear Power Corp., one of China's two giant nuclear power firms. Whether a bull or bear market going forward, the current yellowcake 10-year spot price low and the depressed uranium equity market warrant investigation for investment opportunities, especially where established producers offer stability and even, potentially, a dividend! (Author: Peter Jones, Executive Vice President, Century Global Commodities Corporation)