• Christopher Hall

Uranium stocks rise on the ASX

Uranium shares on the ASX are running hot after almost a decade in the doldrums. Some uranium miners are up > 100% in the last quarter and over 70% in the last month.

The prices have risen to their highest point in nearly five years.

Several global events, including the Fukushima nuclear disaster and Kazakhstan ramping up uranium production, tipped the uranium market into oversupply in 2011.

A gruelling seven-year bear market ensued, dragging the commodity’s price down 85%. The bear market also killed off many industry participants, with the number dropping from more than 500 to around 50.

Larger producers such as Cameco and Kazatomprom opted to shut-in parts of their production, refusing to continue mining during the bear market, despite some moving closer to the end of their long-term supply contracts.

In late 2020 there was a looming supply crisis for the generation fuel, just as a raft of new nuclear plants commenced service this coming decade.

There have been few official company announcements since December 2020 regarding what drove specific shares higher, so we need to keep the lens macro-focused for now.

In 2020, the US Senate Committee on Environment and Public Works approved a bill that advances a federal initiative to establish a national, strategic uranium reserve; it had bipartisan support.

This is good news for uranium suppliers, particularly those who plan to sell uranium to the US Department of Energy.

Under the new American Nuclear Infrastructure Act, the DOE will only be able to buy uranium recovered from facilities licensed by the Nuclear Regulatory Commission or equivalent agreed state agencies.

Importantly, it will exclude companies owned, controlled or subject to jurisdictions in China or Russia, from selling uranium to the US.

The US Democratic party, which will take power in January under incoming president Joe Biden, finalised a climate change platform in August that included existing and advanced nuclear technologies within the ‘technology-neutral’ approach it will take to decarbonise the power sector.

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