Investors See Big Opportunity as Uranium Supply Dries up

Matthew Gordon and Brandon Munro, CEO of Bannerman Energy sit down to talk about all that’s been happening in uranium and energy.

What’s been happening?

The uranium market is facing increased uncertainty due to recent geopolitical events, according to industry experts. The guys discuss the implications of the recent coup in Niger and ongoing issues in Kazakhstan.

Munro outlines how the coup in Niger, which produces over 7.5% of the world's uranium, could impact supply. Borders were closed and a nationwide curfew was declared, with all institutions of the republic being suspended. With the country under military rule and France potentially getting involved, uranium exports could be disrupted. This comes on top of existing issues with supply from Kazakhstan, the world's largest producer. Sanctions on Russia, Kazakhstan's major trading partner, have already caused complications with transporting uranium out of the country.

In the days following we saw statements from Global Atomic and GoviEx say that employees were safe and it was business as usual. With 25% of the EU’s uranium coming from Niger the coup raised a series of concerns for their clean energy sector. Orano, the major operator in the region said ‘operations continue as normal’.

The conversation highlights how quickly shifts in supply dynamics can impact the uranium market. With utilities having run down stockpiles in recent years, even small disruptions could lead to increased buying and higher prices. The recent events could drive more investment into physical uranium funds. With supply uncertainties mounting, utilities may start rebuilding inventory buffers as well.

Winner of the week

It’s a tie between Votgle and China.

Georgia Power announced that Vogtle Unit 3, the first newly constructed nuclear reactor in the U.S. in over 30 years, has entered commercial operation and is now serving customers with emissions-free electricity. Vogtle Unit 3 and eventually Unit 4, which is in the final stages of construction, represent long-term investments in clean energy for Georgia. Once operational, the two new Vogtle units will be the largest generator of clean energy in the nation. The completion of Vogtle Unit 3 is a milestone for Georgia Power and parent company Southern Company's commitment to providing reliable, affordable and emissions-free energy. Nuclear power currently supplies about 25% of Georgia Power's energy mix. The new units will serve Georgia Power's 2.7 million customers for 60-80 years.

The Chinese government has approved the construction of 6 new nuclear reactor units, marking the first nuclear project approvals in 2023. The units will be built at 3 sites - Ningde, Shidaowan, and Xudabao. They include 2 Hualong One units each at Ningde and Shidaowan, and 2 unspecified units at Xudabao. The approvals underscore China's continued commitment to nuclear power expansion, after approving 10 new reactors in 2022. Construction of the 6 units will require an estimated $16.8 billion in investment. Safety was emphasized as the top priority. The companies involved - CGN, CNNC, and Huaneng - are moving forward with preparatory work for the approved projects.

Bungle of the week

Collectively awarded to all of those that proclaimed that renewable pricing can only get cheaper. In the last 2 weeks, Vattenfall and Ørsted abandoned their offshore wind projects in the US & UK due to costs soaring by 40%. 

The Siemens Gamesa board has also initiated an “extended technical review” of their wind turbine components due to a substantially increased failure rate. This will incur “significantly higher costs” than previously assumed, estimated to be in excess of $1.09 billion.

Question of the week

Matthew and Brandon discuss Kazatomprom’s second-quarter operations and trading announcement. Sales have gone up 13% because of (FLEX) in their contracts. What does that mean?

Moonshot & Fizzers

The potential moonshot is the physical uranium funds… or will they fizzle out? 

For 11 days before the coup in Niger SPUT had been trading at an average discount of 11.00%, since the coup it has substantially reduced, sitting at an average discount of -7.82%.

Tweet of the week

Matt and Brandon highlight @sollidnuclear’s tweet on the myth that is Biomass as a climate-friendly energy source. 

Takeaway

With substantial geopolitical risks layered on top of existing supply-demand dynamics, volatility and uncertainty may continue in the uranium sector. For uranium buyers and investors, having a long-term view and not overreacting to short-term moves will be critical. But the conversation indicates the potential for rapidly changing market conditions in the months ahead.

“Strategic patience” is required by all… an exciting September coming up.