Uranium

The geopolitical foreplay is getting ridiculous. At this point it is quite obvious that virtually everyone involved in the US-Israel-Iran hate triangle is just itching for someone else to pull the trigger. And the latest report out of the IAEA will only precipitate this. Who - remember the IAEA? The same IAEA which did not find nukes in Iraq in 2003 only to be overriden by Dick "WMD" Cheney to "justify" an invasion. As RIA reports:  "The International Atomic Energy Agency officially confirmed that Iran has started enriching uranium to the 20-percent level, which can easily be turned into fissile warhead material. "The IAEA can confirm that Iran has started the production of uranium enriched up to 20 percent using IR-1 centrifuges in the Fordo Fuel Enrichment Plant," the agency said in a statement. However, IAEA Spokeswoman Gill Tudor said that all nuclear materials and operations in the Fordo facility are “under the Agency's containment and surveillance."" Naturally, that leaves the "use of uranium" variable quite subjective and in the hands of political manipulation. Which means at this point it is only a matter of days before the meme that Iran already has nuclear warheads becomes actively adopted by warmongers everywhere.

All you need to know.

For anyone wondering how the abandonment of the dollar reserve status would look like we have a Hollow Men reference: not with a bang, but a whimper... Or in this case a whole series of bilateral agreements that quietly seeks to remove the US currency as an intermediate. Such as these: "World's Second (China) And Third Largest (Japan) Economies To Bypass Dollar, Engage In Direct Currency Trade", "China, Russia Drop Dollar In Bilateral Trade", "China And Iran To Bypass Dollar, Plan Oil Barter System", "India and Japan sign new $15bn currency swap agreement", and now this: "Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says." And ironically, the proposal to dump the greenback did not come from Iran. Per Bloomberg: "Iran and Russia replaced the U.S. dollar with their national currencies in bilateral trade, Iran’s state-run Fars news agency reported, citing Seyed Reza Sajjadi, the Iranian ambassador in Moscow. The proposal to switch to the ruble and the rial was raised by Russian President Dmitry Medvedev at a meeting with his Iranian counterpart, Mahmoud Ahmadinejad, in Astana, Kazakhstan, of the Shanghai Cooperation Organization, the ambassador said." Is Iran gradually becoming the poster child of an energy rich country that just says no to the dollar: "Iran has replaced the dollar in its oil trade with India, China and Japan, Fars reported." Next thing you know China, Russia and Japan will engage in bilateral trade agreements with the Eurozone in exchange for purchasing European or EFSF (which at last check are now forced to give 30% guaranatees) bonds, and bypassing dollars completely. But yes, aside from everyone else, virtually everyone (footnote 1) is still using the dollar as currency of global exchange.

Is idiosyncracy the substitute for a fledgling Sovereign Bond Market?  Including our recommendations for 2012

The political press has been abuzz with over the much anticipated signing of the NDAA by Barack Obama on Saturday: this move was not surprising because Obama had already made it clear he would go ahead and enact the law, even though he added some 'stern' language that is supposed to legitimize what some say is a precursor to the establishment of martial law in the US. To wit: "The fact that I support this bill as a whole does not mean I agree with everything in it. In particular, I have signed this bill despite having serious reservations with certain provisions that regulate the detention, interrogation, and prosecution of suspected terrorists." And yet he signed it (full text of Obama's statement on the NDAA, sent while on vacation in Hawaii, can be found here). Perhaps the reason for that unpopular move were some of the more nuanced contents of the Bill, among which is the decision to fully boycott not only Iran, but any bank, including central bank, and other financial institution found to deal with Iran. Which incidentally means most of Russia and China, and probably half of Europe, as all petrodollars generated by the country's petroleum export industry first have to make their way via the international financial community back into the country. The history buffs out there will realize that this form of couched antagonism is nothing short of the US approach to Japan during World War II, which was essentially provoked into attacking Pearl Harbor - read the details of the October 7, 1940 McCollum Memo here, and especially bullet point 10. And unfortunately, it appears that within 24 hours or so, Iran may have already taken the bait. As Reuters and BBC report, Iran has both test-fired a medium-range SAM during the ongoing wargames exercise previously discussed here, as well as made a formal announcement it has made and tested domestically made nuclear fuel rods: precisely the event that the Israel or US-borne Stuxnet was designed to prevent. So as the tennis match of escalation keeps on growing the ball is now once again in the US' court.

Kazakhstan’s international energy image is now that of one of the world’s rising oil exporters, an extraordinary feat given that, two decades ago its hydrocarbon output was beyond insignificant when the USSR collapsed. The vast Central Asian nation, larger than Western Europe,  has now quietly passed another energy milestone. Kazakhstan produces 33 percent of world’s mined uranium, followed by Canada at 18 percent and Australia, with 11 percent of global output. Kazakhstan contains the world's second-largest uranium reserves, estimated at 1.5 million tons. Until two years ago Kazakhstan was the world's No. 3 uranium miner, following Australia and Canada. Together the trio is responsible for about 62 percent of the world's production of mined uranium.

More nuclear mishaps?

I wrote to radiation expert Dr. Chris Busby to ask him if he thought people living outside of Japan should take any actions to try to reduce their radiation exposure. Here is his response …

My Nuke & BTFD.

With all these sort of ‘gloom & doom’ news items on nuclear energy, it shouldn’t come as a surprise that uranium, the fuel of a nuclear power plant, is in the spotlights. Many pundits all of a sudden start questioning the bright outlook for uranium and fearing a collapse in demand for the commodity. Well, we think that, despite the catastrophe in Japan, the reality is far different. The most recent figures of the World Nuclear Association point to a least 150 new nuclear power plants till 2030, with Asia being the big driver for the future of nuclear energy expansion. China has 13 nuclear plants, with 10.2 GW power capacity, and is currently building 25 new reactors. In 2020, China wants 75 GW installed! India has similar ambitions: the current 22 nuclear power plants are producing 4 GW, which they want to raise to 60 GW by 2030. The reaction from China on Japan’s nuclear horror-scene are unequivocal. China has temporarily suspended approval of nuclear power projects, including those in the preliminary stages of development. But Zhang Lijun, China’s vice minister for environmental protection, already told reporters that there would be no change in China’s nuclear plans. “Some lessons we learn from Japan will be considered in the making of China’s nuclear power plans,” he said. “But China will not change its determination and plan for developing nuclear power.”

Yesterday's statement by Iran's atomic chief Ali Akbar Salehi that the Islamic republic's search for sites for 10 new enrichment facilities is coming to an end, is already generating heavy condemnation by the international community. AFP reports that "France warned on Monday that already serious international concerns over Iran's nuclear programme have deepened after Tehran said it would start building a third uranium enrichment site next year. "This announcement only worsens the international community's serious concerns about Iran's nuclear programme," said foreign ministry spokeswoman Christine Fages. This comes hot on the heels of last week's condemnation by various developed countries, who did not take kindly to the announcement that Russia would supply reactor fuel for the country's first nuclear plant near Busheher, now expected to launch imminently.

One bonus of the global recession is that it wiped a lot of incompetent hedge fund managers and energy speculators from the canyons of Wall Street. As the Gordon Gecko sycophants regroup and look for the next Big Thing, maximizing profit while minimizing risk, the landscape looks very different than it did a year ago. In such a climate, it is uranium, not oil and natural gas that would seem to have the brightest future for one simple, overriding capitalist principle – supply and demand.