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Uranium is in the spotlight this year, industry experts say. The problem is, there may not be enough to go around.
The squeeze on the metal, found in rocks and seawater, has intensified recently after 22 countries, including the United States, recently signed an agreement at the United Nations Climate Change Conference. Triple nuclear power generation capacity by 2050.
“Nuclear energy is the only way to reach net-zero carbon targets,” said Nicole Galloway Worland, managing director of THORF, an exploration company with projects in Utah and Colorado. he said.
Of course, behind all this is a commitment to cleaner energy. However, the rise of EVs and the anticipated power demands of artificial intelligence computing will also cause a tightening of demand for clean power. And unlike oil and coal, nuclear power is seen as a power source without the downside of carbon dioxide emissions.
This means demand for uranium, the basic fuel for nuclear power plants, will increase over the next few years, experts and miners argue.
“Where does that uranium come from?” asked Galloway-Woland. “We don’t have enough to go around. We’re in short supply.”
Earlier this month, Kazatomprom (KAP.IL), the world’s largest uranium miner, warned that it was unlikely to meet its production targets for the next two years due to delays in mine construction and a shortage of sulfuric acid needed to produce uranium. Uranium prices soared this month to 2007 levels, exceeding $106 per pound.
Uranium-related stocks are also rising in value.
Shares in Canadian giant Cameco (CCJ) have risen 83% over the past year. Kazatomprom, which is listed on the London Stock Exchange, has risen more than 60% in the past six months. Shares of U.S.-based Energy Fuels (UUUU) rose about 25% over the same period.
“Uranium is becoming famous”
It’s clear that the psychological shift surrounding nuclear power is fueling the market frenzy.
Nuclear power has been opposed for years. However, the 2011 Fukushima nuclear disaster prompted governments to scale back their plans and shut down reactors. For most of the past decade, there has been little investment in the industry. But climate change has changed the way people think.
Duane Parnham, chairman and CEO of Madison Metals (GREN.CN), told Yahoo Finance that “nuclear energy is now being realized as the new trendy way to provide all of this basic power. “I’m working on it,” he said.
“Uranium is becoming famous,” he added.
For example, Silicon Valley celebrity billionaires We talked about the benefits of nuclear energy. Last year, ChatGPT CEO Sam Altman announced that his special purpose acquisition company would take nuclear energy startup Oklo public. And of course, Tesla (TSLA) CEO Elon Musk agreed. tweeted Last year, I argued that the world should increase its use of nuclear power!
In the United States, the shortage is further complicated by the fact that much of the uranium is imported from Russia. For this reason, the Biden administration is seeking more supplies not only domestically but also from U.S.-friendly states such as Canada, the second-largest producer.
“The United States has abundant underground uranium resources and significant amounts of idle processing capacity. However, over the past several decades the United States has lost ground to our industry as nuclear operators bought cheap uranium from countries such as Russia and Kazakhstan. It has atrophied our infrastructure,” Curtis Moore said. said Energy Fuels’ senior vice president of marketing to Yahoo Finance.
The United States is now trying to catch up. A new uranium mine can take five to 15 years from start to finish, including permitting, said Thor Energy’s Galloway Worland.
“Suddenly exploration is no longer possible, many old mines are reaching the end of their lives, and geopolitical tensions are rising,” Galloway Worland said. “We need to do more exploration and more mines need to come online.”
The Inflation Control Act (IRA), passed last year, includes tax credits to help maintain existing nuclear power plants and tax incentives for advanced reactors. However, the IRA has also allocated $700 million to support the development of a domestic supply chain for high-grade, low-enriched uranium, commonly referred to as HALEU. The funding is intended to eliminate the United States’ dependence on Russia for nuclear fuel supplies.
The question for investors is always whether a surge in demand is a major yellow flag.
“Prices are surging, but we don’t believe this is a bubble because the price increases are based on actual market fundamentals,” Energy Fuels’ Curtis said. He added: “We are likely to see the beginning of a multi-year period of high uranium prices that will continue for several years until large mines around the world are able to begin production.”
But some industry watchers are more cautious.
“We’re in a bit of a bubble in the sense that it’s not realistic to make a commitment to build this capacity. It’s aspirational, but everyone who signs this agreement We are not in a good position to make it happen,” Irina Zuckerman said. , president of market research and geopolitical risk advisory Scarab Rising.
“There could be disruption to this nuclearization process in the future. All that is needed is for one government to change its position and withdraw. That’s it,” she said.
Bubble or not, the United States and other countries are fully committed to nuclear development. Demand for uranium is expected to remain high, at least until supply catches up.
“There are 60 nuclear reactors being built around the world. 100 more are permitted,” VettaFi financial futurist Dave Nadig recently told Yahoo Finance. “From now on, it will be a truly booming era.”
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on Twitter @ines_ferre.
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