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The Gold and Silver Index (XAU) is holding steady above 120, having reached a substantial above 156 in January, a level it had not seen since September 18, 1987. The spot uranium price tag is greater than it’s been because January 1980. Crude oil? Filling up your gas tank should remind you that oil rates are nevertheless painfully higher. So all of this should mean mining companies are thrilled with their excellent fortune? WRONG! There’s a snowballing crisis in the mining sector, which has been kept off the typical investor’s radar screen. This new emergency could drive commodity rates to even greater levels over the coming months, and possibly till the end of the decade.

The two-decade extended bear industry drove several geologists out from the mining sector. Drilling companies went bankrupt. Even using the recent explosion of activity inside the mining sector, exploration inside the sector is a lesser amount of than one-third of its peak in 1981, when much more than 5,500 drill rigs were running.

The mining sector’s labor and drill rig shortage has gone past the “we’re inside a crisis” stage. Without having qualified geological staff and drill rigs for exploration and development programs, firms might fail to get their projects on the internet fast adequate to satisfy the worldwide demand for their metals, whether or not it can be gold, silver, copper, or uranium. The Baker Hughes North American rotary rig count can be a great barometer of how strongly the commodities boom has impacted the sector. In 1999, the U.S. and Canadian drill rig count reached its nadir of 488. On March 17th, the quantity stood at 1546 and climbing. Over the past seven many years, the count jumped 316 percent. Compared to a year ago, the North American Rotary Rig Count is up by almost 20 percent.

In the course of the course of our three-month investigation, we found the labor and equipment shortage applied not only to uranium but also to coal, oil and gas, coal bed methane and precious metals exploration. Ed Calvert, who runs Nucor Drilling Inc in Wyoming, exclaimed, “There just aren’t any rigs available within the U.S. You might discover one, but it’s a problem finding the best rig at the best time.” His company began searching to get a drill rig in September for drilling scheduled to commence June 1st. Calvert explained that the big oil businesses had signed up rig contracts so they wouldn’t get caught short, adding, “Whether the rigs are being utilized every day or not, they may be paying the fees to hold them.”

Vancouver-based Max Resources announced in early January of this year they had received permits to drill on their Thomas Mountain uranium prospect in Utah. They hoped to drill in late January, depending upon drill rig availability. Max Resources recently announced it planned to begin drilling on or concerning the middle of March. Norman Burmeister planned a lot more wisely, announcing in mid January Kilgore Minerals would drill the company’s Idaho gold property in July.

The drill rig shortage pales when compared to the frighteningly tight labor market within the mining sector. According for the February 2006 Employment Situation Summary, published by the U.S. Department of Labor, “Mining continued its upward trend in February, adding 5,000 jobs.” Cynthia Pomeroy, Director of Wyoming’s Department of Employment confirmed the crisis, “There is definitely a labor shortage.”

Matt Grant, assistant director with the Wyoming Mining Association adamantly announced, “There are 800 direct job openings in the mining enterprise that could be filled today.” He quickly noted another 2400 indirect jobs to service the mining industry remain empty, begging for bodies to satisfy those positions. Starting geologists make between $35,000 and $50,000 annually. Top geologists command $200,000 and increased. Mining consultants get $800-1000/day. Even day helpers on drill rigs can charge $22/hour or a lot more. Wyoming state and county development associations have attended job fairs in Michigan earnestly trying to fill the growing job vacancy by recruiting laid-off auto workers.

David Michaud, president of TheJobPit.com, finds jobs for geologists, metallurgists and others within the mining sector. A mining engineer and consulting metallurgist, having graduated from Queens University in Kingston, Ontario, and until recently the operations manager for Corriente Resources in Ecuador, he began his internet employment agency for the mining sector because the demand was overwhelming. “Headhunters who are already around for twenty a long time say they’ve never seen a marketplace like this,” Michaud stressed. “For the last ten a long time, the mining industry fed mining graduates for the wolves. Now they will need them. All are busy with no takers to those people far away places.” Michaud lambasted the mining companies for their lack of foresight, “Mining businesses need to anticipate the demand for professionals, such as production geologists, will go up while using price tag of metals. There were no jobs for the past eight a long time.” He added, “It takes two to five a long time to train them.”

For example, Michaud is desperately trying to fill a South American mining company’s job opening for an experienced metallurgist. “Free housing, two cars, four weeks off annually, two plane tickets, basically no living expenses, and a salary starting at US$150, 000,” Michaud sadly explained since no one has jumped at the offer. “In the field of metallurgy, including mill managers, metallurgical engineers, techs and operators, about 150 new jobs are offered every month.” Only about one-half will be filled. Michaud warned the copper mining firms were in particularly dire straits to fill new job openings.

The U.S. Energy Details Administration announced in its most recently published annual statement, “The U.S. uranium production industry initiated a turnaround in 2004. All U.S. uranium drilling, mining, production, and employment activities increased for the very first time since 1998. Much more companies conducted exploration and development drilling than in the prior 2 a long time. Employment inside the U.S. uranium production industry totaled 420 person-years, an improve of 31 percent from the 2003 total. Wyoming accounted for 33 percent of the total 2004 employment, although Colorado and Texas employment almost tripled because 2003. Overall, $86.9 million went to drilling, production, land, exploration, reclamation and restoration activities in 2004.”

Whilst the spot uranium price continues rising, exploration companies may possibly discover it harder to recruit veteran uranium geologists, to sign contracts for drill rigs, and to operate those rigs. Nucor’s Calvert laughed, “Finding and keeping employees is definitely a problem.” Michaud explained, “Finding a metallurgist is hard adequate. Finding one with uranium experience is almost impossible.” David Miller, president of Strathmore Minerals, lamented, “Expertise inside the uranium industry started with geologists who produced discoveries within the late 1940s through the late 1970s. They trained the next generation, which coincided using the 1970s uranium boom. That boom was short lived and fizzled out by 1981. A extremely little quantity of professionals continued in the uranium industry, throughout the twenty-year bear market. Now that the amount of uranium businesses has skyrocketed to much more than 420, there is certainly a potentially catastrophic shortage of uranium expertise.” The generation gap has come to haunt the industry.

What’s the solution? Numerous, for example Michaud, believe, “Retired baby boomers are coming out of retirement to fill the generational gap and ride their last metal rush into the sunset.” Bloomberg News ran a story on December 8th discussing developments inside the oil sector, “U.S. producers and contractors for example Ryder Scott, which assesses drilling projects and oil and natural-gas reserves, are working harder to maintain their oldest employees and recruit college graduates since there aren’t adequate new engineers to go around. Engineers who help find petroleum deposits are in demand…”

Aging talent has found its way back into the uranium sector. Aging geologists for example Dr. Boen Tan, who helped discover two from the Key Lake uranium deposits in Canada’s uranium-rich Athabasca Basin inside the early 1970s, is now helping Forum Development explore for new uranium deposits at its Costigan Lake, Key Lake Road and Maurice Point projects in Athabasca. Uranerz Energy’s entire advisory board consists of former Uranerz professionals, including top geologists, Dr. Franz Dahlkamp and Dr. Gerhard Ruhrmann. Respectively, they’ve 45 and nearly 30 years experience within the sector. Strathmore Minerals geological team includes former Pathfinder Mines employees, a subsidiary of Cogema, including board member Dieter Krewedl, President David Miller, and vice president of technical services, John DeJoia. Some of these companies bring a lot more than 200 years of knowledge, collectively, to their new ventures. But with out sufficient new mining school graduates to mentor under them, long term exploration and development may become stalled.

What is troubling in regards to the uranium industry, in particular, is that the soaring spot uranium price shows no signs of abating. The crisis comes at a time when President Bush announced his nuclear initiative, as more U.S. utilities plan to add to the country’s nuclear fleet, and as China and India clamor to get a reliable source of uranium to fuel their aggressive nuclear energy programs. With out uranium for those people reactors, the power plants won’t produce the electricity required to meet their demand. As an aside, uranium mining could be the stage within the nuclear fuel cycle exactly where the environmentalist fanatics are baring their teeth. This past November, an office manager at Albuquerque’s Southwest Investigation and Details Center, an anti-nuclear activist group reportedly funded by Mott’s Applesauce and Ben & Jerry’s ice cream, told us when we went undercover, “We desire to stop the front end of the nuclear fuel cycle, which is uranium mining.”

Don’t say the warnings weren’t produced properly in advance. At the Globe Nuclear Association (WNA) Symposium in 2004, Dr Moukhtar Dzhakishev, a Russian physicist and a former deputy minister of energy and mineral resources, presented his conclusions, “Firstly, organic uranium mining capacities cannot satisfy reactor requirements. Secondly, accumulated uranium inventories will be exhausted sooner or later. Thirdly, the spot price doesn’t reflect the actual problems and, on the contrary, is capable of misleading all of us about the urgency of investments to be produced in the development of new mining facilities.”

In his speech, Dr. Dzhakishev emphasized towards the WNA, “Judging by these facts, the conclusion is evident: one day nuclear power plants will face a normal uranium shortage and it is not necessary being a prophet to foresee this. It’s clear today that the key for the solution with the major issues from the uranium industry lies using the development of the potential with the uranium producers.”

This past August, Angela Jameson reported inside the on the web version from the London Times, “A GLOBAL shortage of uranium could jeopardise plans to build a new generation of nuclear power stations in Britain… a recent statement by the Asia Pacific Foundation of Canada said that there was likely to become a 45,000-tonne shortage of uranium in the next decade, largely because of growing Chinese demand for the metal.”

The upward spiral with the commodities boom is racing ahead at full speed. Depending upon whom you talk to, the labor and drill rig shortage is either very bad or worse than you are able to possibly imagine. If you will find commodity inventory shortages right now, what happens by the end of this year, or later this decade, if current exploration efforts get grounded because firms lack the trained personnel, the correct equipment and the expertise to explore and/or develop their properties? You can’t run a drill rig should you can’t get your hands on a single. You can’t drill the property should you can’t discover drillers to run the rig. Whilst commodities costs soar to levels not seen in twenty or thirty a long time, the tight labor and equipment market could ratchet rates to very much increased levels. And junior uranium development businesses, with proven pounds-in-the-ground assets, ought to become sought-after acquisition targets by those who have the staff and drill rigs to bring the projects on the web.

For investors, the labor and drill rig shortage has a silver lining. As inventories dwindle reduced, commodity prices will continue rising. For junior uranium investors, this may possibly someday be realized as the “hidden reason” why spot uranium costs continued rising past $40/pound. If you don’t drill for the commodity, you can’t discover it and develop it. This strengthens the case for $50/pound uranium within the near future. Now we understand why Strathmore Minerals’ David Miller warned us in November, “I wouldn’t be surprised to see uranium rates double once again.”

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