recovery Renewed optimism
The long road back to today’s five-year high price of close to $US35/lb has been aided by the mothballing of uneconomic mines and, more recently, by investment funds buying surplus uranium in the belief that a sustainable recovery is underway, and the price could continue rising.
Morgan Stanley, a leading investment firm, is tipping a short-term (spot market) price of $US48.50/lb in 2024 while long-term contract prices could be significantly higher.
Optimists certainly see a strong case for nuclear power given its zero-carbon credentials and the hope that accidents at power plants, such as Three Mile Island in the US in 1979, Chernobyl in Ukraine (1986), and Fukushima (2011), will not be repeated.
The bull case for uranium is built on a combination of ongoing demand from the world’s 445 currently operating nuclear reactors which supply roughly 10% of the world’s electricity, new reactors as demand for carbon-free electricity grows, the development of new (and smaller) reactors, as well as a lack of investment in new uranium mines.
An example of what the future of nuclear power might look like is the resurrection of the decommissioned Trawsfynydd power plant in Wales, which has been earmarked for the installation of a new generation of small nuclear reactor which will be cheaper and easier to operate.
Challenges remain
Encouraging as the prospect of a nuclear power revival might be, there are hurdles for uranium explorers and potential miners to overcome with the most important being greater acceptance of the nuclear option by governments and the broader community, which has been programmed to believe that nuclear power is dangerous.
The irony of anti-nuclear brainwashing is that it can now be demonstrated that more damage has been done to the environment by burning fossil fuels than has ever been done by nuclear power.
In time, the anti-nuclear activists might even consider an apology for driving public opinion down the carbon pollution blind alley.
Pre-emptive buying
A more immediate issue for the uranium industry is to see the first wave of rising prices upgraded into a long-term higher price.
For that to happen uranium buyers need to be power utilities rather than