By MoneyMorning.com.au
India is one of three countries in the world that has not signed the nuclear Non-Proliferation Treaty (NPT). And we (Australia) don’t sell our uranium to countries that don’t sign the deal.
But that might be set to change…
Yesterday Julia Gillard said she’ll push to lift the export ban.
This is one of the first things Tony Abbott said he would do if he got in power. So there’s a chance – a good chance – she’ll get the support she needs to push it through.
But this is old news in the US, Russia, France and China. They’ve sold their hot rocks to India since 2008 under the ‘Nuclear Suppliers Group’ deal.
It’s time we caught up. India could give a big boost to our small uranium sector.
There might only be three mines operating in Australia. But last year they exported one sixth of the world’s nuclear fuel. And that brought in $900 million to the Australian economy.
Within the next three years, the Australian Bureau of Agricultural Resources and Economic Sciences [ABARES] expects our exports to jump 40% to reach 14,000 tonnes.
That’s based on demand from our current export partners, like the US and Europe. Not India.
In fact, the Australian Uranium Association reckons sales of uranium could bring $14 billion to the economy by 2030. Not counting India.
So just imagine how selling to India could see the volume and the export value rise. And what that could do to the share price of small uranium miners…
(On yesterday’s news alone, a lot of these miners on the ASX saw gains of 10%… Small caps Deep Yellow [ASX: DYL] and Peninsula Energy [ASX:PEN] leapt by 20%.)
Within 10 years, India will have 12 more nuclear plants. That would see it need 2,000 tonnes of fuel a year – up from 450 tonnes today.
The extra 1,500 tonnes of fuel has to come from somewhere. And if it’s Australia, you – as an investor – could set yourself up for a windfall profit.
So what do you look for?
In the short term, early stage explorers and developers. Why? Well, the developed companies already have contracts to sell the uranium they produce.
In fact, there’s one small miner the Indians have already taken a chance on.
Three years ago, Indian company Reliance Industry pumped $3.45 million into Uranium Exploration Australia Ltd [ASX: UXA]. It did so in the hope that one day Australia would lift the trading ban.
This gamble may be about to pay off.
If the government lifts the ban on exports to India, Reliance Industry won’t be the last company that invests in Aussie uranium.
That’s why now could be a good time to scour the ASX for small uranium stocks…
Shae Smith
Money Morning Australia
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