Developed nation demand support uranium prices

Uranium prices are seen rising in the short term on a supply shortage and demand will remain strong from developed nations that have no alternative to nuclear power for significant portions of electricity output, John Borshoff, the Chief Executive of uranium miner Paladin Energy said on Sunday.

But the current market volatility amid Japan's nuclear crisis will make it more difficult for junior miners to raise funds, presenting some opportunities for bigger players, Borshoff told Australian broadcaster ABC.

"I think that the position of all sensible people is that the industry will learn and it will become even safer, and if you think Japan is going to give up its nuclear generating, well, I don't know what's going to replace that," Borshoff said on Inside Business.

He added that many developed countries who rely nuclear power for as much as 20 percent of their electricity needs will have no other option but to stick with their generators.

"All of these (countries) just can't do away with a fuel mix that includes nuclear," Borshoff said. "Those reactors will keep on burning fuel, and they're making money, they're making huge amount of electricity safely, and these will keep burning uranium for the next 60 years."

"I believe the uranium prices will increase over the next three months; the shortages that are there cannot be discounted," he said.

But investors have been less confident, sending shares of Paladin, which mines in Namibia and Malawi, down by a quarter since Japan's devastating earthquake on fears that many countries will reconsider their nuclear strategy and either shut

generators or stop building new ones.

Germany became one of the first to take concrete steps when Chancellor Angela Merkel said she aimed to accelerate the country's move away from nuclear energy and backtracked on an unpopular decision to extend the life of ageing nuclear

stations.

"A skittish financial market that doesn't quite understand this complicated way in which uranium is sold (will) make it difficult for the juniors without a profile in the business to get to raise enough funds," Borshoff said.

And volatility has been high with shares of Cameco down by a fifth, Uranium One down by a third and Rio Tinto unit Energy Resources of Australia down 15%.

"Our strategy is to strengthen ourselves as an independent, which we're the only one in the business, and I think the juniors will suffer quite a bit and for the few remaining good projects that are around, I think it does make a good opportunity," Borshoff said.

However, when asked if Paladin was looking to increase its stake in explorer Deep Yellow in which Paladin holds almost 20%, Borshoff said he was happy with the status quo.