There is a Power Revolution taking place in the global economy today. There are several dimensions to this Revolution and thus a number of different investment opportunities that flow from this technological evolution.
- Phasing out power generation from fossil fuel sources due to both severe environmental concerns (associated with climate change) as well as finite supplies of these fuels
- Exponential growth in the use of renewable power sources as they become cost-competitive with fossil fuel-generated power (the International Renewable Energy Agency projects this by 2020)
- Massive growth in the use of lithium-ion battery technology, with the electric vehicle market being the single, largest catalyst
- Massive growth in need/demand for advanced energy storage cells
- A Renaissance in the nuclear power industry
As with any paradigm shift in the global economy, this Revolution requires vast amounts of raw materials to fuel these changes. In particular, this is generating new sources of demand and massive increases in demand for many metals and minerals.
Some of these raw materials have already received considerable media and analyst coverage and thus are already fully on the radar of metals investors. Lithium and cobalt were the first two “battery metals” to attract media and investor interest – and a plethora of junior mining companies have jumped into these two markets.
Other battery metals/minerals are now also acquiring additional prominence, at different speeds. These metals and minerals include nickel, graphite and manganese. But opportunities in the massively growing energy storage market and an effective rebirth for the nuclear power industry haven’t drawn nearly as much attention -- yet. For these two investment niches, the most important raw materials for investors are vanadium and uranium.
The vanadium market is now rapidly attracting increasing interest from investors, analysts, and (of course) the mining companies who find and produce these metals. This sudden spike in interest is largely a function of price.
Since the beginning of 2016, the price of vanadium has exploded by more than a factor of five, going from below US$3/lb to over US$15/lb. Even cobalt hasn’t been able to match that advance in percentage terms – and cobalt has recently given back some of its gains.
Why is vanadium currently the hottest metals market? Vanadium has unique metallurgical properties that make it a key component of the highest-efficiency energy storage cells, yet it is also a relatively rare metal.
On the supply side of the power equation, we need a radical increase in this storage capacity as a result of the rise in renewable power sources. Because power generation for (for example) wind and solar power varies dramatically at different times, in order to be cost-competitive we need to able to store excess power generated at peak intervals and then consume that surplus power during troughs in power generation.
On the demand side, there is an equally growing need for a dramatic increase in storage capacity. Here the electric vehicle market is the biggest driver of demand. EV’s use electricity as fuel, and that demand will fluctuate considerably over the course of the day. Without abundant energy storage capacity, intervals of peak demand could strain power-generation capacity.
While vanadium is clearly the hottest metals market today, many analysts and industry observers are expecting uranium to become the hottest metals market tomorrow. Again, there are drivers on both sides of the supply/demand equation.
In terms of demand, nuclear power is becoming an increasingly popular power generation option as fears concerning nuclear power (following the Fukushima disaster) have receded. The numbers speak for themselves.
There are approximately 450 nuclear reactors in operation today around the world. But there are 71 new reactors currently under construction. There are another 165 reactors already planned and a further 315 are proposed. Those numbers come from a report from BMI Research that projects a 6,600% increase in nuclear power generation in China by 2016.
Effectively, the global nuclear industry appears ready to double in size over the course of the next generation – and that means twice as much yellowcake to fuel all these reactors. Then there is the supply side of this equation.
With the price of uranium still in a long-term trough, more and more uranium supply continues to come off the market, including some of the world’s highest-grade hard rock uranium mines. Combine surging demand with falling supply and this leads to only one conclusion: significantly higher prices in order to restore equilibrium to this sector. Indeed, analysts such as Cantor Fitzgerald have been banging the drum about much higher uranium prices as far back as 2015.
Two metals markets that are key components of the Power Revolution: vanadium and uranium. One market is already hot today. The other appears certain to heat up imminently.
For investors, one junior mining company provides an exciting play on both of these metals – Blue Sky Uranium Corp. (TSX: V.BSK, OTCQB: BKUCF, Forum).
BSK is positioned to be a low-cost uranium producer in a nation with a robust nuclear industry, but with no domestic supply of uranium. At the same time, it’s district-scale flagship Project (Amarillo Grande) has demonstrated robust vanadium mineralization, including the potential for one or more primary vanadium deposits.
For investors who are intrigued by this combination, stay tuned. Stockhouse will be publishing a full-length feature article on Blue Sky Uranium and Amarillo Grande in the near future.
www.blueskyuranium.com
FULL DISCLOSURE: Blue Sky Uranium Corp. is a paid client of Stockhouse Publishing.