Uranium Price - Where is it heading?

[Value Collector]

Hmm not so sure about that, I had a different take on it. The lead time, life time and expense of NP is such that once it is approved and construction started you almost guarantee the uranium demand for the next 20+ years. As uranium is such small input cost, once built the NP is seeing out its life cycle.


I assume NP have some kind of guaranteed price agreement with the relevant governing body that extends into the decade kind of time period. You cannot simply just shut down a NP if the price of gas suddenly become too cheap. Something else to check up on though. Or they are actually state owned and there for control the market. Too many rich people would have skin in the game to allow that haha

After Fukushima, Japan simply shut off their Nuclear Power plants over night, and turned up the dial on the coal and gas.

But what I mean is, let’s say we knew with 100% clarity that global electricity demand would double in 20 years, there is nothing that would guarantee all this extra demand would translate into extra demand for uranium.

This is what I meant by my example, there are plenty of other ways to supply that demand growth that doesn’t require uranium.

And, as I said there is also other ways to supply uranium demand, eg reprocessing those annoying stock piles of spent fuel rods.

Can a mine compete on price, when it’s competition is willing to pay money to get rid of its stockpiles?

 

[fiftyeight]

After Fukushima, Japan simply shut off their Nuclear Power plants over night, and turned up the dial on the coal and gas.

But what I mean is, let’s say we knew with 100% clarity that global electricity demand would double in 20 years, there is nothing that would guarantee all this extra demand would translate into extra demand for uranium.

This is what I meant by my example, there are plenty of other ways to supply that demand growth that doesn’t require uranium.

And, as I said there is also other ways to supply uranium demand, eg reprocessing those annoying stock piles of spent fuel rods.

Can a mine compete on price, when it’s competition is willing to pay money to get rid of its stockpiles?

Electricity demand will grow, and fast. Governments will have to do something to slow price rises.

Currently grid scale renewable are kinda sorta maybe filling the gapish.

Gen 3 and Gen 3 + are viable options now. Contracts can be and are being signed.

MSR, LMFR and other future technologies are gaining momentum, gaining political support. There is a strong chance they will replace current tech. But that could be decades away.

My feelings are demand is likely to grow for the next 10+ years, and then could fall off a cliff.

More reading required

 

[Value Collector]

Electricity demand will grow, and fast. Governments will have to do something to slow price rises.

Currently grid scale renewable are kinda sorta maybe filling the gapish.

Gen 3 and Gen 3 + are viable options now. Contracts can be and are being signed.

MSR, LMFR and other future technologies are gaining momentum, gaining political support. There is a strong chance they will replace current tech. But that could be decades away.

My feelings are demand is likely to grow for the next 10+ years, and then could fall off a cliff.

More reading required

I have no doubt demand for electricity is going to grow, But we are talking about Uranium not electricity in general.

I would bet heavily that electricity demand will grow, I just think that growth doesn't automatically make a case for rising Uranium demand or rising uranium prices, far more electricity is going to be coming from non conventional sources, and grids are going to become trading platforms, moving energy around from decentralised sources and storage.

I am not an expert though, but as I said I feel much more confident owning companies that produce commodities that are not as substitutable eg Iron ore and copper.

I want to own a company that is a large, low-cost and long life producer of an essential commodity with easy access to the most important markets for those commodities, with option to extend its reserve base.

FMG does that for me.

Uranium is a bit too esoteric for my little monkey Brain to comprehend, I can just see far to many possible risks and a lack of companies that fit my criteria.

Saying that I have exposure to uranium via BHP, so I welcome any uptick in uranium price, I just can't make a pure play investment myself.

Mining is a hard enough business without choosing a commodity that might see low or no demand growth, while also having huge potential reserves sitting on the side lines that may flood to market at some stage.

 

[fiftyeight]

I have no doubt demand for electricity is going to grow, But we are talking about Uranium not electricity in general.

I would bet heavily that electricity demand will grow, I just think that growth doesn't automatically make a case for rising Uranium demand or rising uranium prices, far more electricity is going to be coming from non conventional sources, and grids are going to become trading platforms, moving energy around from decentralised sources and storage.

I am not an expert though, but as I said I feel much more confident owning companies that produce commodities that are not as substitutable eg Iron ore and copper.

I want to own a company that is a large, low-cost and long life producer of an essential commodity with easy access to the most important markets for those commodities, with option to extend its reserve base.

FMG does that for me.

Uranium is a bit too esoteric for my little monkey Brain to comprehend, I can just see far to many possible risks and a lack of companies that fit my criteria.

Saying that I have exposure to uranium via BHP, so I welcome any uptick in uranium price, I just can't make a pure play investment myself.

Mining is a hard enough business without choosing a commodity that might see low or no demand growth, while also having huge potential reserves sitting on the side lines that may flood to market at some stage.

Agreed, increased electricity demand does not automatically lead to uranium price increase. But I do think that the increased demand will put pressure on governments to find a solution quicker than other large scale solutions are ready. Uranium would make a very good stop gap.

10 - 20 years is long enough for my monkey brain, I dont know what I am doing tomorrow most of the time.

I dont think uranium will be the kind of share you buy and put in the bottom draw, there is a lot going and to stay across. Way back when, my first ever extended report I submitted as part of my science degree was on nuclear power. Wish I still had it. It is something I enjoy reading up on still.

 

[Value Collector]

pressure on governments to find a solution quicker than other large scale solutions are ready. Uranium would make a very good stop gap.

.

I don't know about that, Nuclear power plants probably have the longest planning and construction phases out of everything, renewables are fairly fast to install in comparison, and remember the 100 day of its free challenge Elon Musk accepted to install the Battery in SA.

The Smart grid is coming, storing electricity and dynamic management of loads is the solution in my opinion.

 

[Ann]

The new HBO series on the Chernobyl disaster will not be great PR for the nuclear industry I shouldn't think. There will be a lot of people who weren't born at the time and may know very little if anything about it. This may give them a bit of a jolt when they see it. It looks very well made going by the trailers.

Chernobyl Review: A Good Disaster Series About Slow Suffering and Bad Politics

 

[fergee]

Uranium is the red headed step kid of investments right now and the contrarian in me is really starting to get interested. I have never invested in or done much research into the sector but I found this chart last night while I was trawling for info regarding Uranium supply and demand and thought it was interesting.

 

[Value Collector]

Uranium is the red headed step kid of investments right now and the contrarian in me is really starting to get interested. I have never invested in or done much research into the sector but I found this chart last night while I was trawling for info regarding Uranium supply and demand and thought it was interesting. View attachment 99969

Good Luck with it, I have built a fortune on red headed step kids, but I don't have the insights to figure this one out.

 

[fergee]

I have built a fortune on red headed step kids, but I don't have the insights to figure this one out.

Hard workers I hear.
Cheers for the reply.

 

[sptrawler]

There is an expectation that the price of uranium will rise.

https://www.mining.com/boss-wants-to-restart-honeymoon-uranium-project/

I suppose if the climate change lobby keep building momentum, there is little doubt that nuclear will feature in carbon reduction strategy.
Just my opinion.

 

[Smurf1976]

Something to bear in mind is that the economics of nuclear power are such that uranium is a minor overall cost. Most of the cost is in construction and in things like regulatory compliance and so on, the actual fuel (uranium) is a comparatively minor issue.

As such there's no real demand side response to changes in the uranium price. Even if it doubles, that's not generally going to result in anyone shutting down or at least reducing the output from a nuclear plant in favour of greater reliance on coal, gas etc for power. Price would need to go seriously high for that to occur which means to the extent there's a response, it's on the supply side. It's not like coal where the price is effectively capped by the price of oil and gas.

 

[fergee]

There is an expectation that the price of uranium will rise.

https://www.mining.com/boss-wants-to-restart-honeymoon-uranium-project/

I suppose if the climate change lobby keep building momentum, there is little doubt that nuclear will feature in carbon reduction strategy.
Just my opinion.

Agreed. My logic so far is an increase in EV's on the road and electricity usage in general coupled with a desire for lower carbon emissions can realistically only be accomplished by nuclear generators. Correct me if Im wrong there anyone?

Looks like a theres a good pipeline of new reactors coming online, also a few closures as well, but on balance Uranium demand will increase. Also seems like a lot of suppliers are shuttering up and not interested in selling at loss any more reducing supply. Supply/demand dynamics look good for a bull run some time in the next few years.

I doubt the Russians will be selling their old nukes either now that the proliferation treaty with the US has expired.

This sector just seems so hated right now, the proverbial animal spirits have left and just roadkill remains of people have bought and held and lost hope.

@sptrawler Cheers I will check out Boss(great name).

 

[fergee]

Something to bear in mind is that the economics of nuclear power are such that uranium is a minor overall cost. Most of the cost is in construction and in things like regulatory compliance and so on, the actual fuel (uranium) is a comparatively minor issue.

As such there's no real demand side response to changes in the uranium price. Even if it doubles, that's not generally going to result in anyone shutting down or at least reducing the output from a nuclear plant in favour of greater reliance on coal, gas etc for power. Price would need to go seriously high for that to occur which means to the extent there's a response, it's on the supply side. It's not like coal where the price is effectively capped by the price of oil and gas.

Great comment @Smurf1976 That inelastic demand is the reason prices could go substantially higher like they did in the previous bull market....classic boom bust economics. Do you follow any Uranium companies at all?

 

[Value Collector]

There is an expectation that the price of uranium will rise.

https://www.mining.com/boss-wants-to-restart-honeymoon-uranium-project/

I suppose if the climate change lobby keep building momentum, there is little doubt that nuclear will feature in carbon reduction strategy.
Just my opinion.

I don’t know, The USA has 420 Nuclear Plants, and they will all be defunct and need replacing by 2050, but it hasn’t opened a new one since 1996, the trend of nuclear is down.

Not to mention that the USA has 70 years of Nuclear waste just sitting there ready to be reprocessed into new fuel rods if they ever get the green light.

 

[Value Collector]

Something to bear in mind is that the economics of nuclear power are such that uranium is a minor overall cost. Most of the cost is in construction and in things like regulatory compliance and so on, the actual fuel (uranium) is a comparatively minor issue.

As such there's no real demand side response to changes in the uranium price. Even if it doubles, that's not generally going to result in anyone shutting down or at least reducing the output from a nuclear plant in favour of greater reliance on coal, gas etc for power. Price would need to go seriously high for that to occur which means to the extent there's a response, it's on the supply side. It's not like coal where the price is effectively capped by the price of oil and gas.

it works both ways,

the cost of storing spent fuel rods is so high, if reprocessing into new fuel rods became legal in the USA, companies with large existing stock piles of spent rods would be willing to pay people to take them off their hands, creating a large “free” supply of fuel.

 

[sptrawler]

Something to bear in mind is that the economics of nuclear power are such that uranium is a minor overall cost. Most of the cost is in construction and in things like regulatory compliance and so on, the actual fuel (uranium) is a comparatively minor issue.

I understand what you mean, I just can't see how they can get sufficient grunt over the medium to long term, without nuclear. I could very easily be wrong, but there doesn't seem to be anything else on the horizon, gas is a limited resource, coal is out, doesn't leave much.
Wind and solar, with storage are fine for places like Australia, which has a large land area and a relatively small population therefore the load may well be met.
But when you get to places like Indonesia, Singapore, Japan etc, it isn't so easy.

 

[fergee]

it works both ways,

the cost of storing spent fuel rods is so high, if reprocessing into new fuel rods became legal in the USA, companies with large existing stock piles of spent rods would be willing to pay people to take them off their hands, creating a large “free” supply of fuel.

Good point about the ability to convert spent fuel rods to a usable substance and as you stated that would be a legislative risk to a Uranium rally and could potentially cap the price. Good for the US but China and India would still be net Uranium buyers for a few more decades Im picking and they are the ones who seem to be bringing the bulk of the new capacity online in the 2020's.

Interesting the video after the one you linked to was about desalination. Water scarcity is another big trend effecting the world and the only way I know of to efficiently desalinate water requires a lot of electricity.

 

[Smurf1976]

I understand what you mean, I just can't see how they can get sufficient grunt over the medium to long term, without nuclear. I could very easily be wrong, but there doesn't seem to be anything else on the horizon, gas is a limited resource, coal is out, doesn't leave much.
Wind and solar, with storage are fine for places like Australia, which has a large land area and a relatively small population therefore the load may well be met.
But when you get to places like Indonesia, Singapore, Japan etc, it isn't so easy.

In a technical (engineering) sense it's doable.

To work though it needs a large geographic spread and that requires not having political boundaries in the way. Therein lies the difficulty.

In the Australian case we can do it with wind, solar and hydro plus some batteries. There's no question about that but even here it does involve a lot of geographic spread once you realise that the bulk storage for SA and Victoria will in practice be in NSW and Tasmania and that it's only a matter of time before the idea of a Queensland - PNG link is revived.

That sort of thing works technically and can work economically but fails dismally if there's a war going on etc. Eg Saudi Arabia spends some very serious $ to avoid energy cooperation with Qatar for just one of many such examples.

In practice nuclear, renewbles and fossils are all going to play a significant role for quite some time yet. There will be places where one dominates as is the case now but we're not going to see 100% renewables globally anytime soon and we're not going to see 100% nuclear either. Nor are we about to see an actual end to coal, oil or gas in the near future.

There'll be an ongoing nuclear industry at the global level for long enough to make any new mines viable.

 

[Value Collector]

Good point about the ability to convert spent fuel rods to a usable substance and as you stated that would be a legislative risk to a Uranium rally and could potentially cap the price. Good for the US but China and India would still be net Uranium buyers for a few more decades Im picking and they are the ones who seem to be bringing the bulk of the new capacity online in the 2020's.

Interesting the video after the one you linked to was about desalination. Water scarcity is another big trend effecting the world and the only way I know of to efficiently desalinate water requires a lot of electricity.

there is also a large amount of potential supply coming from decommissioned nuclear weapons in the future.

 

[fergee]

there is also a large amount of potential supply coming from decommissioned nuclear weapons in the future.

Potentially yes, but the break down of nuclear treaties between the US and Russia and the emergence of a new arms race with China make me think that stock piling nukes is preferred over using them to generate electricity.