Hello everybody,
Right here some longer lecture to find a brand new sector.
Take your time the approaching days and coming weekend to examine the content material and the used sources.
This is not monetary recommendation. By no means rush into investments. At all times take your time to do your individual DD earlier than investing.
I am a long run investor
The concept of this lengthy an detailed put up is to assist to eliminate a false impression
Many individuals in Western Europe and North America nonetheless assume that world nuclear energy technology is reducing, however actually yr after yr the worldwide nuclear energy technology will increase and the final 5 years an necessary shift to extra use of nuclear energy (besides in Germany and Belgium) than beforehand anticipated has began to happen via licence extensions everywhere in the world (USA, Canada, FR, Japan, …) and an acceleration in new nuclear energy reactor constructions (China, India, Russia, France, UK, USA (SMR’s), UAE, South Korea, Japan, Turkey, Egypt, …)
Observe: I discover that I am unable to put up photographs right here, so I needed to work with numerous hyperlinks to pictures and graphs.
Take a look at the graph on the finish of this text: https://stockhead.com.au/assets/here-are-five-reasons-why-uranium-is-about-to-boom/
World Nuclear Electrical energy Manufacturing: https://world-nuclear.org/information-library/current-and-future-generation/nuclear-power-in-the-world-today.aspx
A. NEW REACTOR CONSTRUCTIONS:
Within the Western world we do not discover it but, however numerous new reactors are being construct and deliberate for future building begins as we converse.
Grid connections, new building begins and closures in 2022: https://world-nuclear.org/information-library/facts-and-figures/reactor-database-guide.aspx
World Reactor database with most up-to-date knowledge about grid connections, new building begins: https://world-nuclear.org/information-library/facts-and-figures/reactor-database.aspx
Supply: World Nuclear Affiliation
Overview of all nuclear reactors in building right now and their deliberate grid connection: https://www.world-nuclear.org/information-library/current-and-future-generation/plans-for-new-reactors-worldwide.aspx
Supply: World Nuclear Affiliation
Many individuals assume that nuclear reactors at all times take greater than 10 years to construct and go effectively over price range on a regular basis.
However the actuality is completely different.
Sure, the few new reactors construct these days within the Western World (Vogtle items 3 and 4, …) went effectively over price range and over time, however the reactors construct in China, India, UAE are construct in ~6 years time and near price range.
Hyperlink to Graph about all reactor constructions worldwide because the begin of use of nuclear energy: https://www.reddit.com/r/nuclear/feedback/ofwa7c/nuclear_reactor_construction_first_concrete_to/
Supply: IAEA
Why that distinction?
When constructing many reactors in Western World in 1970-1985 the USA, France, Canada, … have been in a type of “Meeting line work” mode (Fleet mode building) the place completely different building work teams went from one building web site to the subsequent building web site which made the building extra environment friendly.
At present China and India are in that very same scenario (fleet mode building) as the Western World was 1970-1985, whereas the Western World misplaced that workforce with expertise in establishing reactors.
Hyperlink: Scroll down to search out the graph about “China nuclear energy plant building”: https://world-nuclear.org/information-library/country-profiles/countries-a-f/china-nuclear-power.aspx
Supply: World Nuclear Affiliation
By consequence the few new massive reactors construct in Europe and the USA in the mean time take way more time, as a result of the workforce/engineers has to reinvent that information. That very same workforce will turn into increasingly more environment friendly at future reactor constructions as soon as once more.
Chinese language massive transfer on nuclear reactor construct out
Western world (USA, EU, South Korea, Japan) has an growing provide safety challenge on completely different commodities, one in all them is uranium.
Why?
China is considerably growing their uranium consumption in coming years, whereas many western nations are making U-turn on the usage of nuclear reactors by extending the operational licence of many present reactors (USA, Canada, France, …) and pushing for brand new reactors constructions sooner or later (a pair massive reactors and numerous SMR’s)
The 150 extra massive nuclear reactors that China goals to construct from 2021 to 2035 will on their very own enhance the worldwide uranium consumption by 30%.
Add to that the extra uranium demand from all the brand new future non-chinese reactors which might be being construct in the mean time and within the close to future (India, Russian, Turkey, Egypt, South Korea, … USA (SMR’s), Poland, …)
However even uranium traders are severely underestimating the uranium provide insecurity of China and the share of worldwide uranium manufacturing that China will need to declare for themself for 200 Chinese language reactors.
China needs to safe uranium:
a) for 150 new first cores (one new reactor core of a 1000MW reactor wants ~1,450,000lb, one 1200MW reactor wants ~1,700,000lb U3O8)
hyperlink: https://thediplomat.com/2022/09/powering-chinas-nuclear-ambitions/
New nuclear reactors deliberate (scroll down to search out the overview): https://world-nuclear.org/information-library/country-profiles/countries-a-f/china-nuclear-power.aspx
Supply: World Nuclear Affiliation
b) they should renew previous long run provide uranium contracts signed in 2005-2008 which might be coming to their finish in the mean time.
c) to construct up their very own strategic reserve for their very own power safety.
Take a look at slide 20: https://www.kazatomprom.kz/storage/c3/kap_investor_handout_3q.pdf
Supply: Kazatomprom presentation
1 ton U3O8 = ~2204 lb U3O8 (uranium)
1 ton U = 2600 lb U3O8
=> 23,000 tU = ~ 60 million lb U3O8 solely as a strategic reserve
Added to that the wanted uranium:
– for the brand new 150 chinese language new cores (moste future reactors are 1200MW reactors) = 150 x ~1,700,000lb U3O8/ new core = 255 million lb U3O8
– annual consumption of the present chinese language reactors: one 1000MW reactor consumes ~450,000lb/yr
Evaluate this with the full world uranium manufacturing 2022 of ~135 million lb U3O8
Quickly Kazatomprom and Cameco :“Sorry western utility, we now have much less future uranium manufacturing out there for you, China took extra”
After Kazatomprom/Cameco/Orano, China is taking a look at Langer Heinrich (Paladin Vitality, CNNC requested to restart the mine as quick as attainable & not too long ago CNNC purchased 26% of the uranium manufacturing of Langer Heinrich of 2023/2024/2025), Rossing (purchase all uranium as an alternative of leaving a component for western utilities), Kayelekera (Lotus Vitality), DASA (World Atomic), …
World Atomic (GLO), Vitality Fuels (UUUU), UR-Vitality (URG), EnCore Vitality (EU) and Paladin Vitality (PDN) are signing uranium provide contracts with utilities as we converse
United Arab Emirates has 4 reactors right now, the final one is sort of 100% construct
hyperlink: https://www.world-nuclear.org/information-library/country-profiles/countries-t-z/united-arab-emirates.aspx
Supply: World Nuclear Affiliation
India can be growing the variety of reactors they’ll construct the approaching years
hyperlink: https://www.power-technology.com/information/india-nuclear-plants/
Hyperlink: scroll down to search out the overviews : “Reactors below building in India” and “Energy reactors deliberate” : https://www.world-nuclear.org/information-library/country-profiles/countries-g-n/india.aspx
Supply: World Nuclear Affiliation
These “2022?” will in all probability be unfold over 2023-2025, like UAE did (fleet mode building): building begin of a pair in 2023, adopted by a pair in 2024 and the final building begins in 2025.
B. MANY U-TURNS IN FAVOUR OF NUCLEAR ENERGY RECENTLY
When Fukusihma nuclear accident occurred all 54 Japanese reactors have been shutdown in 2011-2013 and remained shutdown for a few years. At present nevertheless, Japan made an enormous U-turn on that topic:
– right now 10 Japanese reactors are again in service
– {the japanese} authorities needs to restart many different japanese reactors by Summer time 2023 (I count on it should take a bit longer, so for example by early Winter 2023): https://oilprice.com/Different-Vitality/Nuclear-Energy/Japan-Plans-To-Restart-Seven-Nuclear-Reactors-By-Summer time-2023.html
Right here an replace of January 5, 2023: https://twitter.com/wang_seaver/standing/1610806358299013120
– Japan needs to increase the operational licence of many japanese reactors (=> extra sudden uranium demand): https://www.bloomberg.com/information/articles/2022-11-28/japan-studies-plan-to-extend-life-of-60-year-old-nuclear-plants?sref=z77yHwwS&utm_content=power&cmpidpercent3D=socialflow-twitter-energy&utm_campaign=socialflow-organic&utm_medium=social&utm_source=twitter&leadSource=uverifypercent20wall
– Japan needs to construct new reactors
hyperlink: https://thediplomat.com/2022/11/japans-changing-nuclear-energy-policy/
Constructing new western reactors will take 7 to 10 years, you’ll say. However look what they need to do in following article:
hyperlink: https://twitter.com/quakes99/standing/1596375846696390656
Supply: John Quakes on twitter
Japan needs to exchange reactors on present nuclear plant websites whereas preserving the present infrastructure of right now. This can make the building of a brand new working reactor a lot much less longer.
3 months in the past Japan utilities met with Cameco to debate their future uranium wants, as a result of their uranium stockpile reached a crucial low degree, like in lots of different nations with nuclear reactors.
South Korea additionally made a U-turn not too long ago: https://pulsenews.co.kr/view.php?sc=30800028&yr=2022&no=770043
USA is placing everyting in place to assist the longer term large construct out of SMR (Small Modular Reactors) within the USA, whereas extending the operational licence of present reactors:
hyperlink: https://spectrum.ieee.org/nuclear-power-plant
Different nations making a U-turn in favour of nuclear energy are UK, FR, …
All of the U-turns and introduced operational licence extensions of present reactors the final 5 months resulted in an ADDITIONAL ~10,500,000 lb ANNUAL uranium demand in comparison with a complete world uranium manufacturing of 135,000,000lb in 2022.
Additionally: https://www.brookfield.com/insights/new-dawn-nuclear-power
C. THE GLOBAL URANIUM SUPPLY SIDE
In 2022 the worldwide uranium manufacturing will solely attain 135Mlbs. And solely with a big larger uranium value in Q42022 than right now (~49USD/lb), the uranium sector may perhaps attain 155Mlbs world manufacturing in 2023.
However the annual uranium demand in 2022, earlier than the ~10,500,000lb of sudden extra ANNUAL uranium demand (July, August, September and October 2022 bulletins) is 190-200Mlbs (main demand + first influence of overfeeding in 2022) which reduces operational inventories of producers, convertors and end-users (utilities).
=> That is a defict of ~75Mlb in 2022 (200+10-135) and based mostly on my estimates once more a deficit of ~70Mlb in 2023 (200+15+10-155)
These operational inventories at the moment are at a crucial low degree in line with UxC (presentation in 1H2022), that means that there’s no room anymore to cut back operational inventories additional. So now utilities successfully want to search out ~190Mlbs out there! However the place precisely?
At present the uranium spotprice is ~49USD/lb, whereas the uranium sector wants 80USD/lb to extend manufacturing to have the ability to get world uranium provide and demand in equilibrium once more a pair years after reaching these 80 USD/lb (Attributable to additional inflation, quickly 90 USD/lb will likely be wanted as an alternative of 80 USD/lb)
Now comes the time that this will likely be translated in a lot larger upward stress within the uranium market (This occurs steadily, not in a single day. I am a long run investor)
And as a result of the pure uranium price solely represents ~5% of complete manufacturing price of electrical energy from a nuclear reactor, utilities won’t thoughts to purchase uranium above 100 USD/lb if wanted, as a result of the price of shutting the reactor down on account of gas scarcity will price a lot extra for the utility than paying 2 instances the uranium value of right now
Rationalization:
Complete electrical energy manufacturing price of electrical energy from nuclear reactor with 50USD/lb uranium value = 100
Complete electrical energy manufacturing price of electrical energy from nuclear reactor with 100USD/lb uranium value = 100+5=105
That is solely a rise of 5% of complete electrical energy manufacturing price.
Pure principle, this is not a value goal: Complete electrical energy manufacturing price of electrical energy from nuclear reactor with 300USD/lb uranium value = 100+(7*5)=135. (Nonetheless cheaper than within the case of a doubling of the gasoline value (see decrease))
Observe:
Complete electrical energy manufacturing price of electrical energy from gasfired energy station with 50EUR/Mwh gasoline value = 100
Complete electrical energy manufacturing price of electrical energy from gasfired energy station with 100EUR/Mwh gasoline value = 100+70=170
That is already a rise of 70% of complete electrical energy manufacturing price.
Complete electrical energy manufacturing price of electrical energy from gasfired energy station with 300EUR/Mwh gasoline value = 100+(5*70)=450 => massive drawback!
And in a pair years some present uranium mines of right now will likely be depleted and can want substitute by new uranium mines. However these new uranium mines want a few years of building and better uranium costs than right now.
Conclusion: The uranium value is about to extend considerably and because of the world threat off mode of investor on the worldwide stockmarket right now the uranium mining firms are once more very low cost and have an enormous upside potential in coming months and couple years. And the market at all times anticipates.
This is not monetary recommendation. Please do your individual DD earlier than investing.
If :
a) Sprott Bodily Uranium Belief (U.UN on the TSX and SRUUF on US inventory trade) is an funding in bodily uranium (no uranium on paper!) with out being uncovered to the mining dangers
U.UN share value at 16.50 CAD/share represents an uranium value of ~49.00 USD/lb.
Right here the hyperlink to the fairness analysis report about Sprott Bodily Uranium Belief: https://twitter.com/quakes99/standing/1599475875153870848
Supply: John Quakes on twitter
Whereas the uranium sector wants 80USD/lb to extend manufacturing to have the ability to get world uranium provide and demand in equilibrium once more a pair years after reaching these 80 USD/lb.
And if the inflation stays excessive in 2023, quickly 90 USD/lb will likely be wanted as an alternative of 80 USD/lb.
The wanted 80 USD/lb and 90 USD/lb are based mostly on:
– the worldwide manufacturing price curve evaluation in comparison with the worldwide annual uranium consumption;
– Cameco in Might 2022: “If the nuclear sector needs us to restart are US property, than we’ll want 80 USD/lb uranium promote value”
– Amir, CEO of UEC, when uranium value was ~50 USD/lb mentioned: “Utilities have to pay a lot larger uranium costs for US manufacturing. -> However these larger manufacturing price uranium mines are wanted to shut the uranium provide hole! => If no considerably larger uranium costs => no Uranium manufacturing => Not sufficient uranium for all utilities.
– Ben Finegold of Ocean Wall on October 7, 2022: “Time period contracting ~90-100 USD/lb” “We have now seen break even costs as excessive as 90 USD/lb”
– …
2) Yellow Cake (YCA on london inventory trade) at an uranium value of solely ~47.2 USD/lb (= YCA share value 396.3GBp/share), whereas transactions are occurring now above 60USD/lb and even already 70USD/lb
Right here a hyperlink to the NAV worth of Yellow Cake and their low cost in comparison with NAV worth: https://docs.google.com/spreadsheets/d/1SdQ0pXhW2KJ_PJoiJ3w97tzVz1fGcupAU9bfpTJkOHw/edit#gid=2006377867
c) Sprott Uranium Miners etf (URNM etf): effectively diversified 100% uranium sector etf
Supply: The Bear Traps Report December 4th, 2022, posted by John Quakes on twitter: https://twitter.com/quakes99/standing/1603034945664200709
Observe: The Bear Traps Report is an expert report learn by 600 institutional traders (banks, hedge funds, …)
The holdings of Sprott Uranium miners etf (URNM etf): https://sprottetfs.com/urnm-sprott-uranium-miners-etf/
=> European different: URNM.L on London inventory trade = HANetf ICAV – Sprott Uranium Miners UCITS ETF
d) World X Uranium etf (URA etf): 70% invested within the uranium sector
=> European different: URNU.L on London inventory trade = World X Etfs Icav – World X Uranium Ucits ETF
e) Particular person uranium firms: If you’re in search of particular person uranium firms, you’ll be able to have a look at the holdings of Sprott Uranium Miners etf
This is not monetary recommendation. By no means rush into investments. Take your time to do your individual DD earlier than investing.
I am a long run investor
Cheers
