Nuclear energy is regaining popularity and will likely help uranium prices rebound further in 2023. Several of the world's most developed countries have announced plans to extend the life of their existing nuclear power plants, with some even expanding their fleets rather than shutting them down as was previously planned.
The result has accelerated the uranium market's robust recovery over the last two years, after nearly a decade of low prices. This has included announcements of new construction and additional incentives and funding from Japan, France, South Korea, India, the UK, the US and most recently Germany, which has always had a love-hate relationship with nuclear energy.
For the last four decades, Germany has always maintained a love-hate relationship with nuclear power. Right now, Germany only has three existing nuclear reactors that produce 6% of the country's power supply, a fraction of the 1990s when there were 19 nuclear power plants that produced about a third of its electricity supply.
However, like many other European nations, Russia’s war is forcing Deutschland to rethink its energy security.
Germany and Russia were significant energy partners up until last year, with the latter supplying the majority of the nation's oil and natural gas. But as winter approaches, Europe and Germany are searching for substitute supplies as a result of the conflict in Russia.
The public is now supporting Germany's decision to reconsider its nuclear phaseout plan. In an August 2022 poll, 41% support extending the operation of German reactors by a few months, while another 41% support the use of nuclear energy in the long term.
Japan decided on a new nuclear policy in December. This policy will restart the country's nuclear fleet, extend the life of old reactors beyond the current 60-year limit, and build new reactors.
Also in December, the Indian government approved five new nuclear plants and announced funding for ten more. This is part of India's plan to build three times as many reactors in the next ten years.
Western governments are also paying more attention to energy security following the December invasion of Ukraine.
However, after so many years in a slump in which mines were closed and most undeveloped projects struggled to move forward, uranium production is confronted with declining reserves and grades.
With uranium commentators estimating that the required incentive price for new supply is more than $90 per pound - a roughly 80% increase over current prices - an exceptional tightening of the already thin uranium market could occur as early as 2025.
Even though there are no official sanctions against Russian uranium, the fact that the country has 27% and 39% of the world's capacity for conversion and enrichment caused prices for conversion and enrichment services to more than double in 2022. According to experts, this upward price pressure could trickle down to the spot price of uranium in 2023 and beyond.
According to a new report from The Oregon Group, this uranium bull market, which is the third one since 1968, could continue for much longer.
The Oregon Group is a go-to resource in the world of finance. This investment firm was founded by independent capital markets professionals Anthony Milewski and Justin Cochrane.
Milewski has worked in the mining industry in various capacities, including consultant, founder, and investor.
The Oregon Group Forecasts a 10-year Uranium Bull Market
Milewski and The Oregon Group believe that the number of uranium-fueled nuclear reactors will increase in the future.
The report, which is titled "The Start of the Uranium Bull Market and the Coming of the Second Atomic Age," explains some of the most critical factors that have contributed to this increase, particularly energy security, decarbonization and the commercialization of compact modular reactor technology.
According to an analysis of the uranium market, there has been a significant decrease in global inventories. Plus, new production is expected for a while, meaning there is a serious possibility of a shortage.
Some key sections of the report include
The uranium market has recovered from a decade-long decline. Mining operations will be restarted as the price of uranium rises but because reserves and grades at existing producers are declining, and more advanced development projects are required, supply will only be able to keep up with demand sometime soon. The producers argue that higher prices should be used to encourage new production.
The European Union has approved billions of euros in green nuclear energy subsidies. Nuclear reactors generate clean energy when powered by uranium, one of the most energy-dense fuels. Opinions about uranium and nuclear power have shifted worldwide for similar reasons. Many Japanese people are now calling for the restart of their nuclear reactors.
After 10 years of underinvestment, mergers, and warnings from industry leaders that new output requires high prices, the supply side is finally recovering. Uranium stocks have increased in value over the last few years.
This study provides a wealth of data about a dynamic industry and analyzes the major drivers that will continue to drive price growth in the near future. It includes a list of uranium stocks and ETFs to consider and an explanation of why you should invest in each.
This market may be in the early stages of a long-term bull market for uranium, meaning it’s a good idea for investors to keep an eye on it.
The Oregon Group's "The Start of the Uranium Bull Market and the Coming of the Second Atomic Age" report can be read in its entirety by clicking here.
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