Positive Uranium Fundamentals?
Most people I speak with understand that the need for energy cannot withstand rising fossil fuel prices or growing harmful emissions over the long term. It’s why demand for nuclear energy is re-bounding. This is undeniably true given the 481 new reactors being planned, proposed or under construction globally.
But what is also undeniably true is that the price of uranium continues to slide to less than $30 per pound as discussed in my previous blog.
Against these two contradictory trends what are the positive uranium fundamentals? More importantly, when will we see a reversal of the uranium price that has been in the doldrums for so long?
Firstly, the price issue is characterized by enduring negative short and mid-term drivers versus the positive long-term fundamentals. As stated previously, the negative impacts from the Fukushima disaster on supply and demand, together with negative media and poor market sentiment have caused a major decline in the price of uranium.
Conversely, the long-term fundamentals remain strong, including global power consumption to grow 4% every year to 2020+, 30 nuclear power countries expanding capacity and 45 nuclear-free countries looking to add nuclear power.
Together, there should be a 30% growth in the use of nuclear power by 2020 that is driven by a demand for affordable and clean electricity.
Incidentally, what doesn’t help is the ill-informed commentary by scaremongers such as Claude Walker (@claudedwalker) who recently wrote on The Motley Fool (April 28, 2014).
Walker states, “Even coal powered plants can power up and down more easily [than nuclear plants], and they’re far better for the environment (CO2 is nowhere near as dangerous as radioactive waste – and uranium mines are far more toxic to workers and nearby towns than coal mines are.”
This is complete nonsense. Of course, every death is a tragedy, but significantly more people have died working in the coal and oil industries relative to the nuclear industry (see graph below and related article*).
What is also nonsensical is the comment about nuclear waste. Solid nuclear waste is produced in minuscule amounts relative to other forms of power. In fact, the average, modern Westerner could receive 100% of their power from nuclear energy for an entire lifetime, and require the production of about enough waste to fill a regular355 ml can of Coke. The same energy production calculation for coal gets you numbers ranging from 50 to 80 tons, much of which includes airborne CO2.
In time, the debates about Climate Change and the benefits of nuclear energy will be moot. We will all understand that Climate Change is real and that there will be devastating impacts if we don’t reduce CO2 emissions. Until then, the debates will continue. It takes all kinds!
Please refer to the Legal and Privacy page for information on the Company’s Forward Looking Statements and Disclaimers