LONDON (Commodity Online): With BHP Billiton Ltd announcing a shutdown in uranium production, shares of uranium producers are surging higher.

BHP Billiton owns world’s largest uranium mines. Industry giant Cameco Corp enjoyed gains of as much as 9.3 per cent on the Toronto Stock Exchange after Australian press reports said BHP Billiton Ltd. declared force majeure on uranium and copper deliveries from its Olympic Dam mine following a shaft accident.

Olympic Dam produced about 8.6-million pounds of uranium last year, accounting for between 8 per cent and 9 per cent of the global supply.
 
In addition to Cameco’s gains, shares of smaller uranium producers including Paladin Energy Ltd climbed more than 9 per cent. Uranium One Inc, which produces uranium concentrate called yellowcake at operations in Kazakhstan jumped 9.4 per cent, while Denison Mines Corp added more than 7 per cent.

BHP has reportedly told suppliers that Olympic Dam will be out of commission for at least a month but analysts believe the shutdown could last for more than half a year.

The tight uranium market has been subject to wild price increases in the past due to unexpected supply disruptions. A massive flood that has delayed production at Cameco’s Cigar Lake mine in Saskatchewan was one of the factors that drove the price of uranium to a record spot price above $130 a pound in 2007.

The spot uranium price has increased 11 per cent to $47.75 a pound since BHP announced the shaft problem two weeks ago.