Commodity Online
NEW YORK: Yellowcake is a kind of uranium concentrate obtained from leach solutions, in an intermediate step in the processing of uranium ores. Yellowcake concentrates are prepared by various extraction and refining methods, depending on the types of ores. Typically yellowcakes are obtained through the milling and chemical processing of uranium ore forming a coarse powder which is insoluble in water and contains about 80% uranium oxide, which melts at approximately 2878 °C.

A drum of yellowcake is used in the preparation of fuel for nuclear reactors, where it is processed into purified UO2 for use in fuel rods for PHWR and other systems using unenriched uranium.

And, what this yellowcake is doing in a banks locker? That is the question baffling the world now after reports appeared in the media saying that the failed US banking major, Lehman Brothers, is sitting on a huge dump of uranium.

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How come uranium stocks in a bank’s custody? Reports say that the bankrupt Lehman has up to 50,000 pounds of uranium, which can be upgraded to run nuclear plants and make nuclear weapons.

The yellowcake landed in Lehman’s custody when a commodities contract matured and the bank is planning to sell it off when markets improve.

The commodity is traded on several trading platforms, and physical delivery is in the form of a processed version of the radioactive element known as yellowcake. This can be used for fuel rods for power plants or in bombs.

Lehman filed for bankruptcy after the Bush administration refused to bail it out last September.

After bankruptcy, it managed to sell its brokerage business to Barclays, leaving it saddled with $200 billion worth of sub-prime loans and yellowcake worth about $1 billion.

But since the price of uranium has fallen from $65 to $40 because of the global recession, Lehman is holding on to its nuclear stockpile for better returns.

And this is an ironic situation when the US administration is looking for weapons of mass destruction in Iran and squirming over North Korea’s nuclear ambitions, a bank in the US is having enough uranium to make a bomb.


And, the biggest problem with Lehman is that they may not find anybody to buy it. It can’t get rid of the ore, because with the possible exception of North Korea, nobody is willing to cough up the price it wants, because the uranium market has tanked.

The uranium stockpile is said to be lying at several Canadian facilities. Canada accounts for about a third of the world’s total uranium production.