Uranium’s role in global power generation is:
Uranium is the un-substitutable fuel source for 10% of the world’s electricity. Namibian uranium is, by treaty, used exclusively to produce nuclear power.
Nuclear energy is already the second largest source of carbon-free electricity in the world today (after hydropower) but has a far greater role to play in decarbonising power, heating, transportation and industrial processes. Plus nuclear energy offers the most economical production of emissions-free hydrogen through high temperature electrolysis.
Now, more than ever before, the world needs emissions-free baseload power to complement intermittent renewables. Only nuclear energy can provide city-scale power 24/7, in all weather and climatic conditions, with a tiny land-use and environmental footprint.
Wealthy nations demand developing nations adopt low-carbon energy, without full regard for the challenges of urbanisation, economic development or the desire to improve living standards – all of which drive power consumption. Nuclear energy is the best solution for meeting these challenges without carbon.
Small Modular Reactors (SMRs) and next-generation reactors offer incredible technological solutions to new markets, such as flexible generation, community heating, crypto mining, industrial heating, remote/minesite applications and portable power. All these solutions are emissions free and incredibly safe.
An investment in uranium offers an attractive, asymmetric risk profile
Global demand for nuclear power (and therefore uranium) is growing steadily, in particular for conventional reactors in China, India and Russia. SMRs and next generation reactors offer numerous new market penetration opportunities. Decarbonisation imperatives are expected to further boost future uranium demand.
Political and social constraints have limited new mine development, plus a long-term bear market has stunted investment in exploration and development. Long development timeframes and political hurdles are also expected to slow the availability of new supply as prices improve.
Current spot and term pricing is below the cost of production for a substantial proportion of mines. Mid-cost miners have relied on long term contract pricing – and been forced into suspension once those contracts end. Mine supply is depleting as ore bodies are exhausted, however current prices do not incentivise new production. The sector is in deficit requiring unsustainable inventory draw-down by end-users.
The sector is extremely concentrated, with an acute need for geopolitical and commercial diversification. More than 80% of the world’s uranium is produced in only five countries, and ten companies control more than 90% of this supply. Uranium is vital to the national interest of the US, China and Russia, plus a host of other nations.
As uranium emerges from a long bear market, investors are recognising its attractive potential for price growth and are comforted by perceived limited downside risks. Increasing flows of capital into vehicles holding physical uranium is generating additional secondary demand into an increasingly tight, deficit market.