"The thesis I think has become much more understood on a global basis, and also amongst many more institutions and even individual investors," said John Ciampaglia.
John Ciampaglia: Uranium Thesis Gaining Global Traction, Powerful Catalysts at Workyoutu.be
As energy concerns rise across the world, more countries are looking to uranium as a solution.
John Ciampaglia, CEO of Sprott Asset Management, said that while his firm was "very constructive and bullish" when it launched the popular Sprott Physical Uranium Trust (TSX:U.UN,TSX:U.U) just over a year ago, the supply/demand fundamentals for the commodity have only improved since then.
"The thesis I think has become much more understood on a global basis, and also amongst many more institutions and even individual investors," he told the Investing News Network.
A slew of events have led to this awakening, and the bull case for uranium seems to be intensifying almost on a daily basis — Ciampaglia pointed to recent events such as Japan's move to restart more nuclear reactors and California's decision to extend the life of its Diablo Canyon nuclear power plant.
"All of these catalysts I think are very powerful," he said.
Aside from broad factors at play, Ciampaglia broke down a key element of the nuclear fuel cycle, explaining that rather than securing supply of uranium first, utilities go "in reverse order" when they decide to buy.
"(The utilities) actually start by contracting out the fabrication of fuel rods, and then they contract the enrichment services; then they contract out the conversion part of the step," he explained during the conversation. "Then they buy the uranium that will start the whole process."
Russia controls 25 percent of global conversion capacity and almost 40 percent when it comes to enrichment; Ciampaglia said this dominance has boosted prices about 50 percent for the former and 120 percent for the latter.
"We think eventually what's happening to the prices of conversion and enrichment is going to kind of move backwards into the chain and ultimately lift the price of U3O8," he said.
Watch the interview above for more from Ciampaglia on uranium.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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