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Uranium Week: Everyone Wants In

Weekly Reports | Dec 03 2019

Volumes in uranium markets surged in November as buyers from all corners jumped on the bandwagon.

-Spot uranium volumes up 50%
-Uncertainties still linger
-Swedes prefer green

By Greg Peel

"The month of November was tumultuous on a number of fronts for the nuclear fuel industry," notes industry consultant TradeTech. "The decision by the US government to lift the waiver on Iran's Fordow Fuel Enrichment Plant sent the already uncertain uranium market into overdrive."

Implications of the termination of the one waiver were covered in last week's report.

"Market participants across the board, whether utilities, producers, traders, or financial entities, found themselves confronted with another political policy decision that could have major repercussions for the commercial nuclear fuel sector," TradeTech continues.

The month of November saw 6.0mlbs U3O8 change hands in the uranium spot market – 50% greater than the 2019 monthly average to date.

TradeTech's weekly spot price indicator rose another US10c to US$26.10/lb in the final week, to end the month up 6.5% from end-October's US$24.50lb. That's over 6% above 2018's average spot price of US$24.56/lb, and the 2019 average to date is US$25.66/lb.

A similar volume surge was evident in term markets during the month, which is where utilities secure future requirements. Contracts for delivery over the 2020-27 period settled during the month totalled 9.7mlbs U3O8 equivalent.

TradeTech's monthly term price indicators have risen to US$29.50/lb (mid) from US$27.50/lb in October, and US$33.00/lb (long) from US$31.00/lb.

Yet the entire nuclear industry, from miners to power generators, will end the year in the same state of uncertainty as they did at the beginning.

Investment Option

The first uranium-based exchange-traded fund listed in the US last week. The North Shore Global Uranium Mining ETF (URNMX) contains both mining companies and physical uranium holders and will focus largely on junior miners in the sector.

That said, Cameco is in there, and 30% of the ETF is Canada-based, with another 18% US-based.

The ETF may be an option for Australian investors frustrated by a lack of direct domestic investment opportunity. Energy Resources of Australia ((ERA)), two-thirds owned by Rio Tinto ((RIO)), is currently not mining uranium. Nor is Paladin Energy ((PDN)), although the latter company is working towards restarting its Namibian mine.

Western Australian miners who began development before the new state government reintroduced a mining ban are still in development, while potential projects in other states perennially await a lifting of relevant state government bans.

BHP Group ((BHP)) is a large producer of uranium, but that is lost among the conglomerate's other operations. Ditto Rio Tinto, which has since divested of its own Namibian interest anyway.

Power to the People

Sweden currently has eight operating nuclear reactors providing 40% of the country's power needs. In the wake of Fukushima, the Swedish government vowed to phase out nuclear power by 20240 – a policy still held by the current government.

A recent poll found 78% of Swedes strongly support nuclear energy, up from 71% a year ago, while 11% are against.

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