Experts: Better Fundamentals, Energy Concerns Make This Uranium Bull Market Different

Clean electricity key to decarbonization

Growing the electricity sector in a clean and sustainable way is especially important for decarbonization. According to the International Energy Agency (IEA), electricity demand is anticipated to climb 2.4 percent this year after growing by 6 percent in 2021. The pace is expected to remain steady into 2023 and beyond.

“The need for electricity is growing and growing and growing; everything is becoming electrified right now,” McElroy said, pointing to the rising number of electric vehicles. Providing the electricity needed to power this new wave of automobiles will play a major role in whether they can roll out successfully.

“(Then) you start talking about climate change, bringing that in and dealing with clean, green energy — there's very few real solutions for that," he continued. "And nuclear is, I think, really starting to take its rightful place as the primary alternative for fossil fuels.”

Widely considered to be in the midst of a renaissance, nuclear power is now being considered around the globe as an important linchpin to emissions-reduction goals. This was highlighted during the Rule Symposium by Scott Melbye, vice president of Uranium Energy (NYSEAMERICAN:UEC) and CEO of Uranium Royalty (TSXV:URC).

“Quite simply, our transition to clean, green energy has not gone very well so far," he said during a presentation at the event. "That doesn't mean it's not a cause we should pursue — we should pursue abundant clean energy. But we have to follow the math and science and not just blindly go into ideology.”

Educating the public about nuclear power, which is both cleaner and safer than fossil fuels, is also an important part of the path forward — despite its advantages it still suffers from a bad reputation. “In the 60 year history of civil nuclear power generation, with over 18,500 cumulative reactor-years across 36 countries, there have been only three significant accidents at nuclear power plants," according to the World Nuclear Association.

Additionally, as Dr. Hannah Ritchie, head of research at Our World in Data, wrote in a 2020 report on energy, when calculating deaths from both accidents and air pollution per terawatt hour, nuclear is much safer.

“Nuclear energy, for example, results in 99.9 percent fewer deaths than brown coal; 99.8 percent fewer than coal; 99.7 percent fewer than oil; and 97.6 percent fewer than gas,” her document reads.

Energy security is national security

Surging prices for oil and gas following Russia's invasion of Ukraine have furthered heightened concerns around energy security and energy independence. The conflict has caused related supply chain challenges, and residual COVID-19 issues have also impacted the alternative energy (solar, wind, nuclear) market.

“The world is in the midst of the first truly global energy crisis, triggered by Russia’s invasion of Ukraine, and the electricity sector is one of the most heavily affected,” Keisuke Sadamori, the IEA's director of energy markets and security, said in a statement released in mid-July. “This is especially evident in Europe, which is experiencing severe energy market turmoil, and in emerging and developing economies, where supply disruptions and soaring fuel prices are putting huge strains on fragile power systems and resulting in blackouts.”

Sadamori went on to say that while the current predicament has forced governments to implement emergency measures to meet the immediate challenges, they need to also “focus on accelerating investment in clean energy transitions as the most effective lasting response to the current crisis.”

UEC’s Melbye also touched on the precarious nature of European energy, particularly in Germany. In 2011, the country decided to close all 17 of its nuclear reactors in response to Japan's Fukushima nuclear accident, and it is now reliant on natural gas out of Russia and coal.

“Germany's number one source of electricity today is coal,” Melbye said, adding that the country's emissions have risen in recent years. “But where it's really caused a security crisis within Europe is their reliance on natural gas from Russia, which was their go-to form of energy; (that) has really caused them to be compromised in dealing with Russian aggression in Ukraine, and has a number of other geopolitical and national security implications."

Fortifying national energy sectors will be contingent on building out domestic production and supply chains. Despite being next door to Canada, the world’s third largest uranium-producing country, the US imports 60 percent of its U3O8 from Russia, Kazakhstan and Uzbekistan.

“(Energy security) is the other new aspect” Fission’s McElroy said. “We've always kind of highlighted the fact that North America, Canada in particular, is a secure, geopolitically safe jurisdiction.” Until the US can bolster its own domestic production, increasing imports from Canada would aid in both energy and national security.

“In today's world, and obviously with the events going on with Russia and Ukraine, there's a much greater emphasis on the safety of jurisdictions,” McElroy said.

"We're blessed in Canada by having the best uranium deposit anywhere on the planet, the highest grade, most economically viable, but now you're (also) in one of the safest geopolitical jurisdictions.”

Currently the US is the largest consumer of uranium, purchasing more than 45 million pounds of the energy fuel annually, yet the country only produced 21,000 pounds of U308 last year.

“I think it really puts Canada in just a prime position,” McElroy said.