Long-term contracting between 20 only occurred at a moderate level. With mines being shuttered, inventories shrinking and issues such as Brexit potentially affecting transportation, questions are now surfacing about availability of supply. This leads into UxC’s observation that, until recently, uranium consumers always assumed that material would be available. Of relevance to eventual upwards pressure on pricing, UxC points out that producers are continuing their spot purchasing in order to meet their contractual obligations even though there are fewer low-cost inventories available.Īll of this means that utilities and other inventory holders no longer have such large buffers in the case of a serious production disruption. Some of them still hold significant amounts but there has been a definite drawdown. In addition, various funds that hold uranium inventories sold about double what they purchased in 2020. In other words, if nuclear plant operators want to keep operating then prices will have to rise.Įuropean utilities started reducing their inventories a few years ago by delaying contracting, and US companies are following suit. The rub is that producers have made it clear that they will not risk capital to bring idle or new projects online at current price levels. Okay, 70% is a lot, but analysis by UxC shows that once we get past 2025, higher cost production must be brought online because of declining inventories and depletion of reserves. According the UxC, an estimated 70% of uranium is produced at below $30 per lb (the current approximate spot price), leaving 30% above the spot. The reduced production is great for putting pressure on inventories and pricing but here’s where I believe things get really interesting. The Kazakh’s produced 20% below target last year and Cameco is losing approximately 1.5 m lbs per month with Cigar lake shut down. This is strong language from a group that is often cautious with predictions.Īpproximately 6 million lbs of production is coming off the market as Ranger and COMINAK cease operation. They went on to say that there are “concrete steps occurring soon regarding deployment”. In other words, a real game changer for the nuclear energy sector. There has been a lot of hype over the years – enough to make veteran observers cautious about predictions – so it was particularly encouraging to hear the UxC team state that they are “very excited about the recent changes in SMRs” which could lead to a “paradigm shift”. I wrote a piece all about SMRs last month because the technology has the potential to dramatically change the future of the nuclear sector. Considering China’s aggressive approach to the adoption of clean baseload energy, there are going to be a lot of eyes on this plan.
China’s growth rate is accelerating and a new 5-year plan will be announced in March. Interesting, in 2020, China overtook France in nuclear power generation and is now second only to the US. As the UxC team pointed out, this is double the current amount generated globally.Ĭhina is on target to complete five new reactors and commence work on four to six new reactors this year. Case in point: the United Nation’s IPCC (Intergovernmental Panel on Climate Change) has stated that a median of 840 GWe by 2050 is required to meet climate goals. UxC also specifically noted that countries that have discontinued, or are looking to discontinue, nuclear energy generation, are struggling to provide convincing plans for reaching their goals.Ĭlimate change targets require major action. A perfect example of this is the US nuclear regulators considering extending power plant licenses to 100 years. Nuclear energy is actively being touted by governments and utilities as a key component for reaching climate goals, and it’s more than just lip service. It’s a very informative presentation and I wanted to share a few items that really leapt out.
If you’re new to the sector, I should mention that UxC is the industry’s leading research and analysis group for nuclear fuel. I’m not just referring to this week’s boost for uranium stocks following the Bank of America uranium forecast, I’m also talking about a number of other positive factors.Ī few weeks ago, UxC held a live webinar focusing on key market trends for 2021. The uranium sector is receiving a lot more attention from investors these days, and sentiment as a whole is on an upward trajectory.
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