Uranium: Why It Can Rally Back to $70, page-57

I think it may have mudguts.

The first, and most obvious is that Langer Heinrich production will now/ soon cease entering the spot market. It looks like the mine will be bought by their Chinese partner and this will mean all supply is then destined for Chinese stockpiles to support their reactor building programme.

That's less U available for Western utilities on a permanent basis.

Secondly, and less obvious, is it shows that we at the point in the cycle where one of RR's great quotes that "Mines Die Hard" is happening. Despite everything uncontracted producers have tried to 'not die' they now are. This means that unless prices increase materially, and soon, then producers will fall over.

A lead candidate, IMO, is Cameco based on their balance sheet and their current 2x tax disputes. Whilst this may sound like heresy, as their (and others) LT contracts roll off and complacent utilities continue to buy what they need on the spot market (or run down their own inventories) then these mines will have less and less cash flow positive portions of their mines to source ore from.

I would expect a number more supply led production cuts this year.

The U sector, with only a handful of large producers dominating the industry must, surely, be able to enforce a supply discipline to push prices up analogous to Glencore in the Zn sector.

Cheers
John