Let’s start with an admission, uranium has been severely depressed for more than 5 years, and every recovery prediction over that period has been proven wrong. Are you thinking that I’m clearly mad to write about a pending recovery, nothing has really changed and better times is simply a dream? Well, maybe not, so read on.
My optimism comes not from one event but from a number of smaller but significant goings-on in uranium and the nuclear power industry in general.
Consider the following:
Time – the negativity from the Fukushima accident has steadily declined. The largely unjustified fear driven negative sentiment is losing steam. Denied by those against nuclear power, there were no acute radiation injuries or deaths among the workers or the public due to exposure to radiation resulting from the accident1. Compare that to the many thousands that die annually (directly and indirectly) from the mining and burning of fossil fuels!
Fundamentally Necessary – firstly, climate change is real - see my Blog of October 19, 2015. Delivering safe, clean energy to so many of the world’s population without access (1.2 billion people) remains a challenge that requires power from many sources including nuclear.
Demand / Supply Squeeze – this is what happens when there are a significant number of new nuclear reactors under construction and the uranium price is depressed for a long period. In other words, supply goes down and demand goes north and this is exactly what is forecast to happen in the future. Today there are some 440 power reactors operating in 31 countries, with a combined capacity of over 385 GWe. Over 60 reactors are currently being constructed in 13 countries and another 172 planned and 337 proposed, do the math!
Investment – major transactions have been few and far between but acquisitions and selected project financing news is being reported with larger value transactions and greater frequency. Generally driven by smart money and a forerunner to price increases.
Predicting when all this will happen remains fraught with risk and I don’t forecast uranium price movements as this is best left to the analysts whose job it is to predict the future (good luck with that!). There are bullish views, even predicting that the uranium price will double in 20182 which sounds great, but a brave call.
As always, please let me know if you feel strongly one way or the other.
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1. http://www.who.int/ionizing_radiation/a_e/fukushima/faqs-fukushima/en/ WHO page and links to reports.