Four or five years ago, the nuclear industry globally went through a massive renaissance. It dawned on people that there was a base load power problem. This is a great technology to help firm up solar and wind or complement pumped hydro. The world over, we’ve now got a massive renaissance in the construction of reactors, particularly in China and India, the US, Korea, and the Middle East, including the UAE.
The real opportunity for an ASX investor is the commodity cycle. There is little doubt, given hundreds of reactors will be built in the next decade, that at the end of the day, the world is not short of uranium. What is comes down to is who is in production in the next half-decade when all of that underinvestment comes home to roost.
If you happen to be in production in the next half-decade, you get to cash in. It’s safe to say that if the nuclear industry keeps going the way it is, and the outlook gets better and better, there will be more and more mines. Despite the fact you might need five times as much uranium in 10 years’ time as you need now, what is also likely is that supply might go 5 times or 10 times. The real opportunity, in our view, is now the next half decade.
It is a bit like lithium. Lithium had been through a big downturn. EV cars were meant to come and a lot of lithium mines were closed. Then it did come and the mines that kept running and hit pay dirt. Now a lot of lithium suppliers have come and the EV industry has hit a plateau. Everyone is questioning, why is the lithium price in the toilet?
In our view, the opportunity in uranium is who is going to be in production in the next half-decade, because after that, there could be a lot more mines. That’s when you could see the uranium price – which has now gone from $30-$40 a pound to circa $90 – start to peel off. For now, it takes a while to get a mine up. If you’re in production, now should be your time.
GIB Price at posting:
3.0¢ Sentiment: Hold Disclosure: Held
