Uranium Week: Summer Slowdown

Weekly Reports | Aug 09 2022

Last week saw the uranium spot market into summer holiday mode, ahead of the weekend’s passing of important US legislation through the Senate.

-Spot uranium market slows
-Critical US bill passes Senate
-Europe dealing with energy problems

By Greg Peel

As is typical in August, the uranium market slowed to a crawl last week as summer vacations dominated. Industry consultant TradeTech reports only two spot market transactions concluded, totalling 250,000lbs U3O8 equivalent.

Having shot up US$3.00/lb the week before, TradeTech’s weekly spot price indicator eased by -US$1.00 to US$47.75/lb.

In term markets, attention was focused on the August 1 deadline for responses to the US Department of Energy’s requests for proposal to supply its planned strategic uranium reserve.

TradeTech’s term market indicators remain at US$51.50/lb (mid) and US$53.00/lb (long).

The spot price shot up last week on news Democrat Senate leader Chuck Schumer and Senator Joe Manchin had reached an agreement on the make-up of the Inflation Reduction Act. With Manchin on board, the only stumbling block would be Senator Kyrsten Sinema who, like Manchin, has a track record of dissent. But after tweaking a couple of elements Sinema, too, came on board.

The Senate vote on the weekend was thus 50/50, with the vice president using her casting vote. The legislation must now pass the House, but given a Democrat majority that should not be an issue.

The Inflation Reduction Act is viewed as a significant achievement for the US nuclear industry. The measure would invest US$369bn into energy and climate change programs, with the goal of reducing carbon emissions by -40% by 2030.

Clean energy tax credits would drive the majority of those emission reductions, including a production tax credit for existing nuclear power plants and a tax credit for investment in new zero-carbon electricity facilities, including nuclear power plants.

Change of Heart

Following the Fukushima disaster, the then German government started the clock on a phase-out of nuclear power in the country. Three plants remain in operation.

Last week, German Chancellor Olaf Scholz said it might “make sense” to extend the life of those plants, despite the fact they only account for only a small proportion of German electricity generation.

Europe’s energy security situation, heading into winter, is dire.

Ukraine has had to disconnect its Zaporizhzhia nuclear power plant – the largest in Europe – from the grid due to Russian bombing nearby. One missile hit electricity infrastructure. Of course, disconnecting the plant does nothing to alleviate the risk implicit in a direct hit.

But it’s not just Putin causing problems for European power.

Last week, France, which derives 70% of its power from nuclear and is generally a power exporter, was challenged by record summer heat which led to higher river water temperatures. This places nuclear power facilities that use river water for cooling at risk of closure.

Uranium companies listed on the ASX:

ASX CODE DATE LAST PRICE WEEKLY % MOVE 52WK HIGH 52WK LOW P/E CONSENSUS TARGET UPSIDE/DOWNSIDE
BKY 08/08/2022 0.3500 0.00% $0.64 $0.14
BMN 08/08/2022 2.1900 3.35% $2.29 $0.12
BOE 08/08/2022 2.5600 6.38% $3.10 $0.14 $2.600 1.6%
ERA 08/08/2022 0.2500 – 4.00% $0.58 $0.16
PDN 08/08/2022 0.7700 5.56% $1.12 $0.42 -79.2 $0.800 3.9%
PEN 08/08/2022 0.2100 5.26% $0.35 $0.12
VMY 08/08/2022 0.1900 0.00% $0.33 $0.09

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