Uranium: Still too hot to handle

As a fall in the share price of Rio Tinto-controlled ERA shows, the commodity is a high-risk adventure.

Summary: ERA’s share price collapsed last week after majority owner Rio Tinto failed to support the expansion of a Northern Territory mine. Waiting for uranium to deliver on its promise has been a frustrating experience, although investors can be attracted by the view that the commodity will one day be a key element in meeting demand for carbon-pollution free electricity. The uranium price is too low to justify investment in most new mines and small companies face high costs associated with security and environmental protection.

Key take-out: Uranium promoters believe the commodity’s future is just beginning, but the failure of most uranium developments to deliver reasonable profits makes investing in the commodity a high-risk adventure.

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