The Case for Uranium
Weekly Investment Update | By Brian Schreiner
Today’s post is an excerpt from our Q3 Investment Outlook.
We believe the bull market for uranium is still in its early innings, driven by a fundamental and persistent supply and demand imbalance. After years of unsustainably low prices, a structural deficit is set to define the market for the foreseeable future. This dynamic presents a compelling, long-term investment thesis for uranium and the broader nuclear infrastructure sector.
A confluence of powerful forces is fueling a rapid growth in demand for energy, from growing populations and rising living standards to technological advancements like Artificial Intelligence. To meet this demand, the world is rediscovering the unique advantages of nuclear power.
Unlike weather-dependent renewables, nuclear energy delivers a stable, uninterrupted 24/7 supply and requires significantly less land than wind or solar farms. Despite being one of the cleanest, safest, and most efficient energy sources known, nuclear power currently accounts for just 9% of the world’s electricity.
This is set to change. A global nuclear renaissance is underway, solidified by the 2023 "Declaration to Triple Nuclear Energy by 2050," a commitment launched by more than 20 countries, including the U.S., Canada, the U.K., France, and Japan. This ambition is reflected in expert forecasts. The International Energy Agency (IEA) foresees global nuclear power increasing by 234% by 2050. And the World Nuclear Association’s 2023 reference scenario forecasts uranium demand to nearly double, increasing from 65,650 tons to almost 130,000 tons by 2040, a 98% increase in uranium requirements over the period.
Among the most promising catalysts are Small Modular Reactors (SMRs), a transformative solution quickly emerging globally. Unlike traditional large-scale plants, SMRs are smaller, scalable, more affordable, and faster to deploy. This flexibility makes them highly attractive for both investors and operators. Big tech companies and innovative startups like Last Energy and TerraPower are advancing SMR technology to deliver dedicated, localized energy for high-demand users. Their modular nature can also simplify deployment, with vendors often managing the entire process from construction to operation. Oklo, an advanced nuclear technology company is working to submit its formal application process for its first commercial SMR later this year. Sam Altman’s departure as the firm’s board chair suggests that OpenAI may be planning to purchase power from Oklo in the future.
While demand is accelerating, uranium supply remains severely constrained. For nearly a decade following the Fukushima event in Japan, uranium prices were too low to incentivize the development of new mines. This led to extensive mine closures, a halt in exploration, and a significant depletion of expertise across the sector.
Uranium production has only recently begun to recover. Today, there are over 436 operational reactors worldwide with 173 more in the pipeline, yet the supply chain is still catching up. With the U.S., China, and France alone representing approximately 58% of global uranium demand, the need for new, reliable production is critical.
To bridge the supply gap, which is projected to widen over the next decade, the restart of idled mines and the development of new projects are imperative. Junior miners are playing a pivotal role here, leveraging existing infrastructure to bring production back online more quickly and cost-effectively than building new mines from scratch.
We believe sustained higher uranium prices will be necessary to secure future supply. This fundamental imbalance – structurally rising demand against a backdrop of constrained supply – forms the basis for a long-term bull market. We expect this will lead to increasing profits not only for uranium itself but also for miners, refiners, and companies involved in developing the world's expanding nuclear infrastructure. α
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Interesting things I came across this week…
Extreme Concentration in the S&P 500 (Apollo)
Quantum having a moment, but remains futuristic (CNBC)
Jamie Dimon Says Private Credit Is Dangerous but Allocates $50 Billion (Mish Talk)
Tour de France Water Bottle Drama (NBC Sports)
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