Mike Fagan,
Editor
Oct. 28, 2022
Rising energy costs, power shortages, climate change initiatives, and blows to energy security worldwide — particularly as a result of Putin’s war-of-choice in Ukraine — are driving the narrative for the mass adoption of clean-burning nuclear power.
As a result, investors are turning to the small-cap uranium sector with a particular focus on exploration and development companies with advanced projects on US soil.
The global climate crisis — caused by the release of harmful fossil fuel emissions into the atmosphere — has reached such a tipping point that countries like Switzerland are now resorting to covering their precious glaciers with blankets during the summer months to slow the rate of ice melt!
From North America to Europe to Asia… world leaders are coming to the stark realization that efforts to cool the planet through the attainment of net-zero emissions by 2050 is simply not going to be feasible without carbon-emission-free nuclear energy being an integral part of the global energy mix.
They’re also quickly understanding that depending on unstable foreign regimes — like Russia — for their energy security is a clear losing bet with truly dire consequences.
Just ask the whole of Europe as winter fast approaches!
Even Japan — site of the 2011 Fukushima tsunami disaster — is seeing a dramatic resurgence in favorable sentiment toward nuclear power generation.
Prime Minister Fumio Kishida is pushing hard for a revamp of the country’s nuclear energy program, calling for a comprehensive government study focused on:
- Restarting 17 of 36 reactors
- Extending the life of current reactors
- Building new next-generation reactors, including Small Modular Reactors (SMRs)
Somewhat surprisingly, the public reaction among Japan’s citizenry has been overwhelmingly receptive to the proposed revamp.
Just a year ago, a poll showed only 44% in favor of the restarts. Last month, that favorable rating jumped to 53% with young people (age 18 to 39) showing resounding support at a 71% clip.
Key takeaways are the clear positive shift along with the “future direction” of public opinion showing growing support, especially among young people, for nuclear power in Japan.
That same positive narrative is taking hold all across the globe.
China’s government just approved the construction of six new reactors across three provinces with plans to build as many as 30 new reactors by 2030.
South Korea — which already gets about a third of its power from its fleet of 25 nuclear reactors — is aiming to resume construction of its Shin Hanul 3 and 4 reactors by 2024.
In Europe, France’s economy minister has doubled down on the need for a top-to-bottom overhaul of the electricity market saying, “there is no energetic transition without nuclear energy.”
Germany has done a complete about-face with regard to nuclear… admitting that nuclear power needs to be a part of the energy mix going forward.
Poland is currently seeking partners to build 6 to 9 gigawatts of nuclear capacity as Warsaw moves to reduce its carbon emissions and gradually phase out coal.
All indicators point to US-based Westinghouse Electric getting the contract for the construction of the first plant. As we reported earlier this month, Westinghouse is being acquired by industry-leader Cameco [in partnership with Brookfield Renewable Partners] for a staggering US$7.9 billion.
In Canada — which currently gets about 15% of its electricity from nuclear — the government just announced it will provide C$970 million in financing to develop a grid-scale Small Modular Reactor… a new nuclear technology touted as a key part of the country’s plan to reduce carbon emissions.
The project, which is being developed by utility Ontario Power Generation, is a big part of the country’s initiatives to cut carbon emissions by 40%-45% below 2005 levels by 2030 on the way to net-zero emissions (aka, carbon-neutrality) by 2050.
Here in the United States, the recent advent of SMRs is becoming a key part of the US Department of Energy’s goal of developing safe, clean, and affordable nuclear power options.
The SMRs currently under development in the US represent a variety of sizes, technology options, capabilities, and deployment scenarios.
These advanced reactors — envisioned to vary in size from tens of megawatts up to hundreds of megawatts — can be used for power generation, heat processing, desalination, and other industrial uses.
SMRs offer numerous advantages over their larger and aging counterparts such as relatively small physical footprints, reduced capital investment, ability to be sited in locations not possible for larger nuclear plants, and provisions for incremental power additions.
A groundbreaking project by TerraPower — a privately held nuclear power innovator backed by Bill Gates — has the potential to rewrite the narrative on nuclear energy generation in this country and perhaps the world.
Called Natrium (see below), the plant’s state-of-the-art tech — which has been in design for years and is the result of an ongoing collaboration between TerraPower and GE Hitachi — greatly mitigates the risk of nuclear meltdown.
One thing you’ll notice right away is that Natrium does NOT have that ominous looking containment dome most nuclear reactors are known for.
That’s because Natrium utilizes a highly advanced low-pressure cooling system — which runs 24/7 and uses molten sodium instead of water — enabling the reactor to be shut down in less than a second should any unforeseen issues arise.
It’s also tiny by comparison, requiring a much smaller footprint than the giant nuclear reactors of yesteryear.
In other words, it’s not the proverbial eyesore we typically equate with nuclear power plants of past design.
Oddly enough, Natrium is being constructed in the small town of Kemmerer, Wyoming — a longtime hub for coal!
The Biden administration is also finally putting its money where its mouth is.
In addition to the pending $4.3 billion for the revitalization of America’s domestic uranium sector, the administration has issued a Notice of Intent for the implementation of a $6 billion nuclear credit program to support the operation of reactors across the nation.
And earlier this year, the US Department of Energy awarded over $60 million for 74 US-based nuclear projects.
The powerful tailwinds that are currently in-play for the US nuclear power sector are also trickling down to the commodity space with uranium (or “yellowcake”) surging from the $25 per pound range to currently above $50 per pound.
US Energy Secretary Jennifer Granholm just revealed that the United States is developing a comprehensive uranium strategy focused on becoming self-reliant on domestic sources of yellowcake — following decades of underinvestment in uranium mining — for our own consumption, stating:
“The United States wants to be able to source its own fuel from ourselves, and that's why we are developing a uranium strategy both through the Defense Production Act as I mentioned, as well as seeking an additional large amount by the year end for a more fulsome strategy. We’ve got to develop our own supply chain in order for our existing reactors to continue to function as well.”
Part of that strategy may also include heavy sanctions or an all-out ban on Russia’s state-owned uranium firm Rosatom. The Biden administration has already placed a ban on the import of Russian fossil fuels; uranium may be next!
According to the US Energy Information Administration (EIA), Russia is the United States’ fourth largest source of uranium. In 2021, 14% of uranium imports to the US came from Russia. America’s top three sources of yellowcake are Kazakhstan (35%), Canada (15%), and Australia (14%).
Naturally, with any commodity that has seen a stark underinvestment in mining over an extended period of time — you have to start looking at supply and demand.
And with uranium, what we arrive at is a market that’s consuming close to 200 million pounds of uranium annually — yet producing only around 135 million pounds.
That equates to a 65-million-pound structural deficit this year… which, when compounded over the next seven or eight years to the end of the current decade, balloons to a jaw-dropping 400 million-plus pounds.
Those are staggeringly large numbers… and they underpin the need for new domestic uranium sources reaching the supply chain through — you guessed it — boots-on-the-ground uranium exploration and mining.
With so few bright spots in the market these days — with the DOW down 11%, the S&P 500 down 18%, and the NASDAQ down 28% for the year — foresighted investors are turning their attention to the small-cap domestic uranium space.
These are the tiny, nimble companies that explore for and develop the world’s next uranium mines right here on North American soil.
With things heating up across the domestic uranium space, the price of yellowcake has nowhere to go but up — and that’s why investors are jumping into select small-cap uranium miners with US-based projects.
For all of those reasons, uranium’s recent price surge to $50-plus per pound is really just the beginning. We could easily see a surge to $70-plus per pound in the coming quarters… particularly as the major US utilities continue entering into their next major uranium contracting cycle.
With the timing spot-on, we’ve identified an under-the-radar small-cap uranium firm that has amassed an industry-leading pipeline of exploration and development-stage projects across the western United States with combined resources of nearly 100 million pounds of yellowcake.
It’s a fast-moving situation that gives you the early-mover advantage on a timely uranium stock opportunity at the onset of what may prove to be the most powerful and sustainable uranium bull market in history.
Mike Fagan
Editor, Daily Profit Cycle