December 8, 2016 | The uranium price dropped to its lowest level in over 12 years in 2016, will 2017 be a bounce-back year for the struggling industry? … Read MoreGet Uranium Stock Investor Kits
November 29, 2016 | Sprott US Holdings’ President and CEO, Rick Rule talks about the junior resource sector in 2016 and the year ahead, particularly on precious metals, copper, lithium and uranium. … Read MoreGet Copper Stock Investor Kits
Uranium is a heavy metal that is used as an abundant source of concentrated energy and occurs in most rocks in concentrations of two to four parts per million. This makes uranium as common in the earths crust as tin, tungsten and molybdenum.
Uranium Supply and Demand
Uranium was discovered in 1789 by a German chemist, but much has changed since then in terms of supply and demand of the nuclear material. According to the World Nuclear Association, world mine production of uranium has expanded significantly since 2005.
The demand for uranium continues to grow. Uranium is considered to be a cleaner power source in a world struggling to reduce greenhouse gas emissions in the face of global warming.
In 2014 the total world production of uranium was 56,217 tonnes, a drop from the previous year’s 59,370 tonnes. The top uranium-producing countries were Kazakhstan, Canada and Australia, all of which saw a decrease in output. However, the decline was not limited to the largest producers, but was felt across the world. Demand is expected to grow significantly in coming years as reactors in Japan start to come back online post-Fukushima and as China moves away from coal and towards uranium, in an effort to reduce the amount of carbon dioxide the country produces.
This looming deficit makes uranium exploration companies and miners currently producing optimistic that prices will recover by 2020. Especially considering there aren’t enough new projects coming up to fill the massive supply gap. While there are other sources of energy currently being utilized, many countries, particularly China and India, have been looking to reduce their carbon footprint and improve their air quality, making uranium an ideal option.
Why Invest in Uranium?
As mentioned, the demand for uranium is increasing annually and as it stands, there is not enough being produced globally to ensure this demand is met. In spring 2015, there were 26 nuclear reactors being constructed in China, with more being proposed. In order to fuel these, China has been seeking acquisition opportunities in other parts of the world, particularly assets in Kazakhstan, Canada and Australia. This will mean great things moving forward for uranium company’s exploring and operating in those regions. Then there is the US, who is the world’s largest consumer of uranium. It has been sourcing a majority of its uranium from other countries. In fact, in 2014 the US purchased 94 percent of its uranium from foreign sources and considering the countries supplying it are mostly Russian-friendly, it shows that the US is losing its influence in the global uranium sector.
With the uranium market shifting on a global scale as more countries look to convert to nuclear power, it also means major supply deals will be coming down the pipes. Major global players like Canada and the United Kingdom have started to increase their nuclear cooperation, while the US has decided to terminate a state of national emergency against Russia following the end of the HEU Agreement between the two countries. And lets not forget Australia, which currently has the world’s largest known uranium reserve. While the laws there against uranium mining in certain states has hindered its potential, there are talks that the nuclear boom from Asia could give it a much-needed reboot.
Uranium: Not without its controversy
While uranium is a cleaner and more efficient power source compared to oil and coal, opponents point fingers at environmental and security concerns. To address the former, industry leaders point to innovations in uranium mining and enrichment, stricter industry standards, guidelines, and regulations, and a new generation of nuclear power plants. And grassroots resistance from aboriginal and environmental groups forces uranium companies to cooperate with local communities in a fair and transparent manner.