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Up, Up, Down, Down: Uranium Only uranium is the winner!
UNDERGROUND MINING
Up, Up, Down, Down: Uranium
Only uranium is the winner!
since an early increase in spot prices in march above us$60/ lb, the generally regarded price threshold required to encourage new production in the nuclear industry, uranium has been on a downward trend.
The conflict between Russia and Ukraine was the main cause of the uptick. After initially plummeting on (unfounded) worries that Russian forces would destroy Europe's largest nuclear power facility at Zaporizhzhia in Ukraine, spot buying increased as worries sanctions could affect Russian, Uzbek, and Kazakh supplies.
The most recent drivers of uranium price growth have originated from a comparable source.
Although the US is trying to move away from fossil fuels and toward carbon-free energy sources like nuclear, nuclear power still provides 20% of the country's electrical needs. The Biden Administration is anxious to lessen its dependency on Russia to meet its energy demands, and the President is actively lobbying Congress to support a US$4.3 billion proposal to purchase enriched uranium from US companies.
That will necessitate significantly more output, not just from the United States but also from other non-Russian nations like Australia, where Boss Energy (ASX:BOE) recently announced the reactivation of the Honeymoon uranium mine in South Australia. Although prices of U3O8 are currently around three times stronger than their cyclical lows from about five years ago, uranium bulls are predicting that they will rise further as supply at nuclear reactors increase. Rick Rule, a well-known investor, informed early in June that an incentive price of US$75/lb would now be required to meet the needs of the worldwide nuclear power sector.
According to Rule, "the incentive price for additional uranium production with inflation in the supply chain is $US75/lb."
Given that the world consumes 180 million pounds while generating 120 million, leaving a 60 million pound shortage annually, it is easy to determine that the price of uranium needs to surpass the incentive price of $US75 over the course of five years. That or the lights go out, I guess. There are only those two options. Which of those takes place? It is believed that uranium costs shall increase.
