heinz44 wrote >>>> " I wonder if the U.S. government has put any thought into acquiring strategic supplies of mineral commodities, seeing most of its suppliers are offshore. Sounds like a great idea to me but, hey, I'm not a politician. " <<<<
Yes. The US government and Department of Defense USED to have massive stockpiles of almost every mineral commodity. They also funded the development of mines of strategic minerals in the US and friendly countries. The Stillwater Platinum mine was about the last to recieve much Defense Department help.
There were also stock of organic materila, like rubber and raw opium. The opium was held Fort Knox, by the way.
Some of these stocks were occasionaly sold off to buy other items, for example selling maganese to buy more tantalum, since we did not expect more battle ships (which use maganese) but might make more electronic stuff (which uses tantalum for capacitors.)
There was considerable complaint from the mining industry that these large mineral stocks inhibit mining investment in the US, since a sell off of the stocks could crash the price of almost any commodity for one to three years. How do you get a banker to loan you money for a mine when your output can become uneconomical overnight, and stay that way for years ?
Foreign governments could put a tariff on imports to protect their mines from this threat.
Additionally, it seemed to the miners that the metal users - US industry - had some influence over stockpiles, and would have metal released when ever a metals price rose. ;-)
See articles on the "silver users association" at Kitco for the full conspiriacy theory.
In the middle 1980s, piece by piece of this strategic metal stockpile was sold off, supposedly to help pay for the Carter- Reagan defense build up.
Note that a number of these metals were produced by the Soviet Union, and putting the stockpile on the market likely reduced the price and the money that the Soviet had to maintain their economy and military spending. This was at the same time the US was urging Saudi Arabia to maximize oil production to lower the price, since this would hit the Soviet Union's main export.
After the collapse of the Soviet Union, and the reduction of the Cold War, shift in US military strategy, etc. much of the need for this stockpile went away and almost everything has been sold off except for a small number of specialized, hard to get items, like 99.999 % metals.
The story for uranium and other atomic energy metals, such as beryllium, is even more complicated and politicized. However, there are strong similarities.
One threat to uranium prices is the large supply of weapons grade material, which has been removed from bombs, and is now in "strategic military stockpiles". Another strategic arme reduction treaty would represent another threat.
The current effort to design a new, more reliable nuclear weapon to replace most of the types of weapons in the US inventory also represents a longer term threat, since more reliable nuclear forces lend themselves to a reduction in warhead numbers, and more material that could be converted for power reactors.
At some point, the electric utility people will start screaming that they are being gouged by the greedy uranium miners and will ask the US government to release some more of this weapons grade material for mix down to fuel rods.
I expect that some utility people are realistic enough to know they need a price of about $50 per pound to get the Uranium mining industry re-started.
Some where beyond $100 per pound - that's about $6.50 per troy ounce, what silver was about 10 years ago.
Since the defense stockpile has the equivalent of millions of pounds of uranium, already enriched, there is some big money here. A few billion dollars to help balance the federal budget, stop green house gases and global warming, and keep the lights on in your Congressman's district.
So my guess is somehwere over $100 the Uranium price will get some push back. |
