Uranium going nuclear

Image: Nuclear Influencer Isabelle Boemeke via HIGHSNOBIETY / ELLIOT & ERICK JIMENEZ

Not a wind farm, not solar panels, not hydro power; it’s nuclear, the forgotten child of the ‘clean energy’ family, despite its potential to be the second largest source of low-carbon electricity in the world behind hydropower. With zero- emissions, it generates power by splitting uranium atoms and the heat released by this is used to create steam which spins a turbine to generate electricity without the fossil fuel baddies. There is a growing realisation among people in the energy industry (and those investing in it) that nuclear energy will be an important component of the world’s carbon neutral goals.  

In the United States, already one in five homes are powered by nuclear and as a result, is the equivalent of removing 100 million cars from the road, according to the Office of Nuclear Energy. Whilst a biased view, they also state that nuclear energy produces more electricity on less land (we’re talking 1 uranium pellet producing as much fuel as 120 gallons of oil or 1 tonne of coal as demonstrated in the image below) and that the minimal- but radioactive- waste can be reprocessed and recycled. Undeniably there has been a clear, transformational shift but Duncan Craib, Managing Director of Boss Energy (ASX: BOE), states that the fundamentals that have underpinned the market’s recent optimism have existed long before this shift in attitude. 

Whilst nuclear does not have a formal seat at the COP26 table, a number of global leaders have acknowledged its requirement in assisting global decarbonisation, even in Japan where the wounds of Fukushima are still felt, the restarting of 15 of its 54 nuclear reactors is set to occur by 2030.   

The facts and figures 

Let’s get a couple of things straight (with the help of some Sprott statistics); the annual global demand for uranium is 150 million pounds and the bulk of demand is distributed across 445 nuclear power plants. Australia has the single-largest known deposit of uranium, Kazakhstan is the largest producer- accounting for 41% of global uranium production in 2020- Canada’s Athabasca Basin hosts the highest-grade uranium deposits and although uranium mining is a global activity, only a handful of companies account for the majority of production according to Sprott, who’s uranium fund, Sprott Physical Uranium Trust (SPUT) launched earlier this year and is now the world’s largest fund holding actual uranium (rather than future contracts) after its recent shopping spree where it racked up nearly 500,000 pounds of uranium in a single day. On the other side of the pond in France, 70% of electricity is generated by nuclear power whist the UK is publicly displaying its support for the industry through an unveiling of a proposal to develop 16 new small modular reactors (SMRs). Similarly, Germany- who were once the face of anti-nuclear activism- now have public figures launching a campaign to reverse the closure of all the nation’s nuclear power stations if the country is to reach its climate targets on time. This is all very exciting for the forgotten child, who, in 2017 at US$18/lb could not economically produce uranium and mining companies began to slash supply. Now that uranium can dust off its coat tails and attend the cashed up resources party as it sits around US$50/lb.

So the take home is this; uranium- which is largely used as fuel in nuclear reactors- was previously hurt by the 2011 Fukushima Daiichi disaster in Japan, but has recently made a comeback stronger than an ABBA and is attracting new investors into the market due to myriad of reasons. The growing focus on clean energy is a definite and possibly the strongest contributor to its bull run, Japan dusting off and restarting its nuclear power plants is another, the development of small modular reactors (SMRs) which can be manufactured at a plant and transported to site and installed- think of flat pack IKEA but nuclear reactor instead of new wardrobe- reducing onsite construction costs and increasing containment efficiency and safety is the yet another reason. Having navigated this ‘mine-field’ to the best of my ability, the main thing I’ve deduced is there’s a uranium party going on and you want to be invited.

Our take at Caldera

We believe young people today are more concerned with the danger of coal, the health implications fossil fuels have on humans and the planet and the fact that coal producing companies are not required to deal with their waste when nuclear which might be far more safe, has the waste size of a gummy-bear-sized pellet and is currently a non-starter. Pictured above is Isabelle Boemeke, a nuclear advocate raising awareness about the need for clean, nuclear energy to conquer climate change, she says “nuclear is like a technology from the future. We figured how to harness the power inside an atom and create clean, emission-free electricity in reactors that can be built anywhere”.

We get it, nuclear is frightening to a lot of people and due to past events, it’s a scary sphere to comprehend but nuclear bombs and nuclear power are not the same thing and the latter is needed to decarbonise. The slow death from global warming and fossil fuels will undeniably be more deadly than Chernobyl.