Uranium (Nuclear Energy)

[winston]

How to Profit From Uranium’s Coming Bull Market

by Brian Kehm

Source: The Oxford Club


http://www.investmentu.com/article/deta ... 0JK-JF96M8

[winston]

Uranium stocks fall… sector fund URA tumbles more than 10% in the past six weeks.

[winston]

How We'll Know When to Buy This Hated Commodity

By Matt Badiali

"We had anticipated things would get better sooner."

That's what Tim Gitzel, the CEO of uranium major Cameco (CCJ), told shareholders at the company's annual meeting last month.

In April, Cameco suspended operations at its Rabbit Lake uranium mine in northern Saskatchewan. Until then, Rabbit Lake was the longest-producing uranium operation in the province.

Cameco also delayed development of wells at its U.S. operations. The decisions caused more than 500 employees to lose their jobs.

Gitzel's words reflect the tough uranium market that's still ongoing today.

A bear market has gripped uranium for the past decade. Conditions began to improve slightly from mid-2010 to early 2011. But in March 2011, a magnitude 9.0 earthquake and tsunami caused severe damage to the Fukushima Daiichi nuclear plant in Japan... and sent the industry reeling again.

The resulting decrease in demand coincided with competition from low-priced natural gas and coal. This combination has sent uranium prices plummeting to their lowest level since 2005...

As you can see in the chart below, the trend looks bleak for uranium...

Please Enable Images to See this

And even though uranium prices are down about 80% from their peak in mid-2007, improved plant efficiencies and the closure of older plants have slowed demand growth.

Uranium miners like Cameco have been hit hard in the past couple of years...

Company Market Cap Return*
Energy Fuels (EFR.TO) C$150 million -78%
Denison (DNN) $250 million -72%
Fission Uranium (FCU.TO) C$300 million -63%
Paladin Energy (PDN.TO) C$360 million -62%
Uranium Energy (UEC) $91 million -61%
Cameco (CCJ) $4.7 billion -51%
* From 2014 highs.

Low prices devastated production. In the first quarter of 2016, U.S. production of uranium fell from 1.2 million pounds to 626,000 pounds, a decline of nearly 50%.

That drop in production makes sense when you look at the decline in nuclear power plants in recent years. In 2012, there were 104 nuclear power plants operating in the U.S. Today, there are just 99. According to the Nuclear Energy Institute, we could see up to 20 of the existing plants close early.

It's clear uranium miners need more plants to come online. Most of this new production will take place in other parts of the world, namely China, India, and Korea.

Like all commodities, uranium is a cyclical industry. We expect the market to improve eventually. Cameco's decision to curtail production in the U.S. and Canada is a positive. The opening of new nuclear power plants will help, too.

Demand will improve once the plants sign long-term supply contracts. Until now – with prices falling at a steady clip – they've chosen not to lock in higher prices.

That's why we're avoiding these uranium miners for now. We still need to be patient with uranium stocks. We'll keep an eye on the market and wait for a turn.

Source: Growth Stock Wire

[winston]

Hong Kong Billionaire Li Bets on Uranium With NexGen Deal

by Natalie Obiko Pearson

NexGen raising $60 million to develop project in Saskatchewan
Uranium market set to tighten as mines near end of lifespans

Uranium prices are down more than 60 percent from a 2011 record

The uranium market is set to tighten in 2020 as older mines in Namibia and Australia end operations, while demand from nuclear utilities in Asia and the Middle East ramps up

Uranium is trading at about $27 a pound, down from over $70 in January 2011 before prices slumped following the Fukushima disaster in Japan. Forecasters predict uranium may average $44 a pound by 2017

Source: Bloomberg

http://www.bloomberg.com/news/articles/ ... investment

[winston]

Deal Will Close California’s Last Nuclear Plant by 2025

Competition from a glut of natural gas and surging solar and wind production also has dampened enthusiasm in Europe for nuclear power.

Conservationists said the success of the Diablo Canyon deal could show the way forward for the country’s 60 other commercially operating nuclear plants, most of them more than 30 years old.

Source: Associated Press

http://www.theepochtimes.com/n3/2096658 ... t-by-2025/

[winston]

1 Commodity Stock to Buy Now for Long Term Gains -- Hint: It's Not Oil

Oil isn't the only commodity on the cusp of a major turnaround.

The number of new power plants being built between now and 2025 is expected to easily outdistance the number of power plants being shut down.

China is going to be a big player on the construction front, with projections calling for over 80 nuclear power plants in the country by 2025, more than double the number it has up and running today.

Source: The Motley Fool

http://www.fool.com/investing/2016/06/2 ... ins-h.aspx

[winston]

Is Uranium Set to Double?

By David Fessler

Uranium

It's been a while since I've written about nuclear power and uranium. Because the typical utility runs on a number of different fuels, there really isn't a pure nuclear play to invest in.

Instead, many energy investors are drawn to uranium as a proxy investment. That said, uranium prices are in the dumper, and U.S. utilities announced the closure of six nuclear plants in the last month.

But a number of analysts feel uranium prices are set to double over the next two or three years. And a number of big hedge funds are betting big on an upswing in the price of uranium.

So I gave my friend Rick Rule a call. Rick - like my colleague Sean Brodrick - is one of the top natural resource mining and investment experts in the world.

Rick is the president and CEO of Sprott U.S. Holdings Inc. He leads a highly skilled team of earth science and finance professionals who enjoy a worldwide reputation for resource investment management.

He's made hundreds of millions of dollars investing in natural resources. If anyone knows whether this is a good time to jump into the uranium market, he does.

What follows is an abbreviated version of a conversation Rick and I had recently.

Dave: Rick, let's start with the big picture. What are your thoughts on the uranium market?

Rick: Given that the all-in costs to produce uranium are about $60 per pound, I would expect its price to at least double from its current $30 level over the next three to four years.

The bull case for uranium is pretty simple. It's the densest form of energy in the world. So if you're Japan or Taiwan or South Korea and you need energy security, there's nothing like uranium.

You can, in a fairly small warehouse, store enough raw material to keep your economy going for five years. The price of the fuel, relative to the value of the power, is so small, it almost doesn't matter.

The fuel cost makes up between 2% and 3% of the operating budget of an old small plant... and far less in the total cost structure of a million-pound plant.

[Editor's Note: A million-pound plant means the plant uses 1 million pounds of uranium per year.]

Dave: The biggest cost is building the plant itself, right?

Rick: Amortizing capital, that's right. The ongoing compliance, material storage, handling and legal expenses are big, big, big, fail-safe costs. Insurance and bonding, on an annual basis, cost more than fuel.

The second part of the bull case is simply the current market share that uranium has in the world's baseload capacity. In the U.S., which can afford to be anti-nuke, 16% of the baseload capacity is nuclear.

Which means that in the near term, we have no choice but to continue it. On a systemwide basis, 2% to 3% involuntary dips in power generating capacity are a threat to the grid; they could shut it down. Imagine the effect of a 16% drop.

And finally, both the International Energy Agency and Cameco Corporation (NYSE: CCJ) believe that the median cost of production worldwide in uranium (including the cost of capital, not just cash costs) is about $60 a pound.

So you make the stuff for $60, and you sell it for $27. You lose $33 a pound and try to make it up on volume. That obviously doesn't work. In order for the lights to stay on in a four- to five-year time frame, the price of uranium has to double in a four- to five-year time frame.

Dave: But there's another side to this equation, right?

Rick: Right. Here's the other side of the equation, the downside: Worldwide economic growth is very slow and doesn't seem to be making any upturns.

Secondly, one consequence of high energy prices of all types in the last decade has been that there is increasing efficiency in energy production and in energy use in a lot of energy-intensive industries. This has reduced demand for uranium.

The third issue revolves around the whole political and social concern, which is the fact that uranium is a pariah. And increasingly, the places that can afford to [avoid nuclear energy] won't make the decision based on technology or economics. Rather, they'll make the decision based on politics and social preference.

Dave: So what's the most common bearish case for uranium that you hear?

Rick: The problems that are widely stated by the people who have a bearish investment thesis on uranium, ironically, are wrong. Their primary suggestion is that forms of alternative energy will back nuclear out of the equation, and I think that's a real falsehood.

I don't think, even with the increasing nonsubsidized economics of solar in warm climates, that it has the probability of going from 2% of total consumed electricity to 15%. The greater risk is how much cheaper natural gas and coal are than they used to be. And how much more energy-efficient big industrial users of electricity are.

An example would be that the building I'm in right now in Vancouver is now 50% more energy-efficient than it was 15 years ago as a consequence of retrofitting. That's pretty astonishing. And you would know this because you're an energy technologist, but most people in the market don't understand that the greatest source of energy in the world is efficiency.

Dave: You're right, Rick. I was trying to explain to someone not too long ago that the greatest source of energy is efficiency. They had trouble visualizing that.

I keep reading about U.S. nuclear plant closings. Six have been announced in just the past month. I'm having trouble seeing a doubling of the price of uranium as U.S. plants continue to close.

In the U.S., the problem seems to be that these nuclear operators aren't being properly compensated for their carbon-free generation. What are your thoughts on the global nuclear power sector as a whole? Is the U.S. closure of plants unique to this country?

Rick: Globally, they're closing old 250,000-pound plants that are pretty inefficient. If you compare the efficiency of the plants being closed (ingloriously called "firecrackers," by the way)...

Dave: They are some of the earliest designs from 40 years ago, correct?

Rick: That's right, and those plants are being replaced on a global basis by 1.25 million-pound Chinese and Emirati plants. From a U.S. point of view, we're in the process of permitting the building of two plants, which are million-pound plants, and we're closing six 250,000- to 300,000-pound plants.

Dave: So the net loss isn't going to be that great.

Rick: It's not going to matter. Now, the truth is, the future of the nuclear energy industry probably isn't in places like the U.S., where we have a lot of alternatives that we can afford. The future of the nuclear power industry, if it occurs, is going to be in places like Japan, in particular, which has a stated political policy of energy security.

There's just no way you can store five years' worth of liquefied natural gas (LNG) or coal. You can't do it. It takes too much space. There are probably 50 different facilities in Japan that could store five years' supply of enriched uranium.

LNG has fallen by 60% in nominal terms and more in real terms.

They understand in the Emirates and in Saudi Arabia that reducing the domestic demand for natural gas for power generation allows them to use that same natural gas for exports as LNG, or as feedstock for fertilizer or chemical production.

In other words, the highest and best use of natural gas, ironically, in areas where they have a lot of it, isn't to generate electricity but to substitute nuclear power and use that natural gas for higher and better uses.

And we have our answer. Uranium is set for a double. I like Cameco. It is the world's largest uranium producer.

But there are certainly others out there. Sean recently profiled Cameco and Uranium Energy Corp. (NYSE: UEC). Both will certainly benefit when uranium starts to move.

Source: The Non-Dollar Report

[winston]

Buy Uranium!

By Eric Fry

As China’s awful air quality continues to worsen, the need to do something about it becomes increasingly urgent. That’s where uranium comes in…

“Mainland China has 34 nuclear power reactors in operation, 20 under construction, and more about to start construction,” the World Nuclear Association reports.

“Additional reactors are planned, including some of the world’s most advanced, to give a doubling of nuclear capacity to at least 58 GWe [gigawatt electric] by 2020-2021, then up to 150 GWe by 2030 and much more by 2050.”

The number of nuclear plants in operation worldwide will increase by roughly eight per year over the next 20 years – from 440 to 595.

This construction boom is a striking departure from the trend of the last 20 years, when the net number of operating nuclear reactors increased by exactly zero.

Uranium demand already exceeds the annual mined supply. The gap has been filled by stockpiles from places like Russia and Japan. Remember, Japan shut down all 54 of its reactors and did not begin to restart a meaningful number of them until very recently.

So rather than a buyer of uranium, Japan has been a seller of uranium from its stockpiles. That trend should reverse as the country continues restarting its reactor fleet.

And that trend is likely to coincide with growing uranium demand from China and elsewhere, which is why the gap between demand and mined supply is likely to widen substantially over the next few years.

Source: Non-Dollar Report

http://nondollarreport.com/2016/07/poll ... ?src=email

[winston]

Japan conglomerates seek to merge loss-making nuclear fuel operations: sources

Source: Reuters

Only three of Japan's 42 reactors are currently operating after they were idled in the wake of the 2011 earthquake and tsunami that destroyed Tokyo Electric Power Co's (9501.T) Fukushima Daiichi power station.

http://www.reuters.com/article/us-mitsu ... the%20Bell

[winston]

Desperate uranium miners switch to survival mode despite nuclear rebound

China plans to build at least 60 nuclear plants in the coming decade, South Africa last month kicked off a major nuclear tender, and Thursday's signature of the Hinkley Point contract between French utility EDF and the UK government opens the way for up to 12 new reactors in Britain.

Uranium, which before the 2008 financial crisis had briefly peaked around $140 per pound in June 2007, traded around $70 per pound just before the Fukushima disaster and has been on a downward trend ever since.

Uranium however has to be mined, converted, enriched and turned into fuel rods in an 18 to 24 month process. And as security of supply is so important and uranium makes up just a few percentage points of the cost of running nuclear reactor, utilities tend to have 5-7 years' worth of inventory.

In the five years before Fukushima, utilities worldwide bought about 200 million pounds of uranium per year, he said.

Although Japan's consumption averaged only around 25 million pounds per year, when it closed its reactors demand was cut far further, falling by half. European and U.S. utilities saw that the market was over-supplied and reduced inventories, buying less.

Mining firm Energy Fuels estimates global uranium stocks held by utilities, miners and governments are now at around 1 billion pounds. That is down from a peak around 2.5 billion pounds in 1990, but still many years' worth of consumption.

Despite the plunge in uranium prices after the 2008 financial crisis and again after Fukushima, uranium production has doubled from 80-90 million pounds in the mid-1990s to about 160 million pounds last year, according to Energy Fuels data.

Most of that new supply came from Kazakhstan, which over the past decade has more than quintupled its output to become the world's leading source of uranium with a 38 percent market share in 2013, WNA data show.

Many legacy long-term supply contracts will expire in 2017-18, which will force many mines to close or throttle back even further than they already have

Source: Reuters

http://www.reuters.com/article/us-urani ... s%20Select