Coming Recos from KatusaThe Hottest Commodity in China Is Yellow... But It Isn’t Gold
By Marin Katusa, Casey’s Energy Report
The last time something this big happened in the nuclear energy market, the price of uranium jumped by nearly 200%.
In the latest attempt to ensure that its economy doesn’t go hungry, China is buying unprecedented amounts of uranium and booking a seat on the bus to economic superstardom.
It’s reported that China might be purchasing up to 5,000 metric tonnes of uranium this year – that’s more than twice than what it needs. But take into account that there will be at least 60 nuclear reactors in the country by 2020, and China’s stockpiling seems to make more sense.
Not far behind is India, the other ascending star. Under pressure to cut pollution, yet ensure that there’s enough supply for their economies to continue at a breakneck pace, both China and India are spearheading the biggest expansion the nuclear industry has seen since the oil crisis in the 1970s.
Ambitious plans indeed, but even if only a fraction of the planned reactors start up, a lot of uranium will be required. In numbers, the average 1,000-megawatt reactor needs about 400 tonnes of uranium to start.
By 2020, China’s demand for uranium will be up to 20,000 tonnes, more than a third of the 50,572 tonnes mined last year globally, and output will be boosted to 85 gigawatts. India would have quadrupled capacity to 20 gigawatts and will need at least 8,000 tonnes of uranium.
And while the uranium bull market of 2006 and 2007 did stimulate growth of the industry – at least 27 mines opened up in 10 countries – analysts agree: it’s not going to be enough for future demand.
It isn’t a huge step from there, then, to say that uranium prices are on the brink of rebounding after three years of decline.
RBC Capital Markets predicts that prices of uranium will jump by nearly 32% next year, the most since 2006. For uranium companies whose stocks have taken a beating over the last three years, this news is like manna from heaven.
With rising prices and soaring demand, we’ll be seeing more companies trying to get onto the gravy train. But not all of them are destined to be ten-baggers and so we’re out on a quest to find the ones that are positioned to take full advantage of the looming opportunities.
We’re heading out next week to the Athabasca Basin in Saskatchewan, Canada, home to the highest-grade uranium deposits in the world. Armed with nothing more than a gallon of mosquito repellent (Saskatchewan mosquitoes are legendary), we’ll be scouting out which uranium company will be next to join Uranium Energy Corp on the Casey Ten-Bagger List.