Uranium Week: Wake Me Up In September

Weekly Reports | Aug 16 2022

There were no transactions reported in global uranium markets last week, at all. The highlight was passage of a bill supporting US nuclear energy.

-Nuclear-supportive act passes US Congress
-Impact of loss Russian supply
-France can’t take the heat

By Greg Peel

You know it’s summer when not one transaction was reported in either the uranium spot or term markets last week.

TradeTech’s weekly spot price indicator remains unchanged at US$47.75/lb and term indicators at US$51.50/lb (mid) and US$53.00/lb (long).

The highlight of the week was passage of the US Inflation Reduction Act through the House, now requiring only Biden’s signature to become law. But he, too, is presently on holiday.

The bill, which aims to reduce carbon emissions by -40% by 2030, includes US$369bn for climate and energy provisions and aims to accelerate the nation's transition away from fossil fuels with support for the domestic nuclear power and renewables industries, TradeTech notes. Clean energy tax credits drive the majority of emission reductions in the bill.

These include Production Tax Credits for electricity produced by existing US nuclear power plants and a new technology-neutral tax credit for all clean electricity technologies, including advanced nuclear and power upgrades placed into service in 2025 or later, as well as a 30% credit for the investment in a new zero-carbon electricity facility, in addition to nuclear power plants.

Although the direct effects of the bill will not be realised immediately, the news does finally provide broad policy support that gives nuclear generation an opportunity to compete on a level playing field with natural gas and renewals in the US.

This will undoubtedly draw the attention of those in the investment community who recognise its growth potential but have been reticent to make commitments absent policy support, TradeTech suggests.

But…

The other side of the equation is nevertheless supply. While Russia only supplies around 6% of global uranium, Citi notes, it supplies 26% of the enriched uranium required to fuel nuclear generation. Russia is also the largest builder of new nuclear plants around the world.

As such, it is both very difficult and highly costly to wean off Russian supplies in the short- to mid-term, Citi points out. Utilities in the US are also significantly exposed to Russian supplies, so the Inflation Reduction Act will go some way to addressing this issue.

A shortage of enriched uranium in the open market, potentially caused by the disruption to Russian supplies in the near term (Citi’s bull case), would likely lead to a higher conversion rate and, subsequently, to higher U3O8 spot prices versus current levels.

Sacre Bleu

France lost its place as Europe's largest electricity exporter this week as prolonged outages at several of the country's nuclear power plants due to the European heatwave caused the country to import more power than it exported during the first half of 2022, TradeTech reports.

Sweden, which generates most if its electricity from nuclear power, hydro, and biofuels, was Europe's largest net power exporter in the first half of 2022.

Nuclear energy generates around 10% of electricity produced today globally, with almost 20% in advanced economies, and France is the leader with 70% of its electricity generated from nuclear energy.

Uranium companies listed on the ASX:

ASX CODE DATE LAST PRICE WEEKLY % MOVE 52WK HIGH 52WK LOW P/E CONSENSUS TARGET UPSIDE/DOWNSIDE
BKY 15/08/2022 0.3400 0.00% $0.64 $0.14
BMN 15/08/2022 2.0000 – 6.10% $2.29 $0.12
BOE 15/08/2022 2.5100 – 0.40% $3.10 $0.14 $2.600 3.6%
ERA 15/08/2022 0.2500 4.00% $0.58 $0.16
PDN 15/08/2022 0.7400 – 3.85% $1.12 $0.42 -78.2 $0.800 8.1%
PEN 15/08/2022 0.1800 -14.29% $0.35 $0.12
VMY 15/08/2022 0.1900 0.00% $0.33 $0.09

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Share on FacebookTweet about this on TwitterShare on LinkedIn

Click to view our Glossary of Financial Terms