This is Part One in a Three Part series involving the uranium industry. In Part One, I will discuss the long term demand trends and sentiment leading up to 2023 in a brief way. This is only to build a broad overview of uranium demand and sentiment. In Part Two, I will discuss the Uranium industry and how the supply side operates while providing an overview of the supply leading into 2023. In Part Three, I will discuss the current and long term prospects of the industry by combining the current/future supply and demand forces. Both Part Two and Part Three will be longer than Part One as they are much more intricate and technical.

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Uranium: Part 1, a story of declining demand and fear mongering

I would like to preface that I am historically not a commodity investor, nor do I usually invest in commodities. So, it is interesting to find myself (a value investor) foraging into the commodity world. I thought about it, and it lines up with the inflationary cycles we have seen in the 1970s and in other inflationary time periods. When inflation ravages the global supply, usually commodity supply lags the demand increase from inflation by a large margin leading to very large misallocations. I think this combined with other inherent demand increases in global sentiment really opens the commodity world for value investors especially when combined with long term mispricing. I will be looking at the Uranium sector as a Value Investor who sees a long term, and very large potential, for the uranium industry that doesn’t seem to be valued properly in many areas.

Nuclear Energy, a (very) brief history summary

On December 20th, 1951, the world introduced the first nuclear reactor with the EBR-1 in Idaho, United States. In the proceeding 30 years, the US, along with the world, built up a massive arsenal of nuclear reactors as the cheap clean energy took off. Afterward, in 1979, three-mile island occurred. This completely altered the course of nuclear energy, and the construction of new reactors came to a rapid slowdown as costs skyrocketed due to safety concerns. Combine this with fear mongering from certain political parties worldwide and other notorious disasters such as Chernobyl (1986) you get the below charts.

*Operational Nuclear Reactors from 1954 to 2021.* *https://www.statista.com/statistics/263945/number-of-nuclear-power-plants-worldwide/*

*Nuclear reactor construction starts 1955–2013,* *https://www.researchgate.net/figure/Nuclear-reactor-construction-starts-1955-2013-3_fig2_305219611*

The construction of power plants slowed, and by 1990 the worst-case scenario came to the industry, with a complete halt in new nuclear plant capacity. From 1976 to 2020, MIT estimates that nuclear costs have doubled in the US. Most costs have come from the intense safety measures associated with building nuclear power plants as most material and building costs themselves have arguably lessened in price.

*Projected and Annual Nuclear Power Plant Costs.* *https://energy.mit.edu/news/building-nuclear-power-plants/*

Construction Cost Allocation, https://energy.mit.edu/news/building-nuclear-power-plants/

Now, I don’t want to lead my readers astray, as nuclear capacity has stayed roughly the same over the last decade. This is extremely important to note, as even though reactors aren’t being built at such a rapid rate, they are becoming much more efficient.

Modern Sentiment

To make matters worse for the industry, the “green energy” leaders across the world have become completely inept (in my opinion) when it comes to understanding modern technological advances across the world in the Nuclear Power industry. Prominent left-wing proponents, such as Bernie Sanders and Elizabeth Warren (https://www.youtube.com/watch?v=4tOMr8N-txU), have publicly and vehemently pushed against promotion of new nuclear power plants due to false and extremely outdated narratives.

Across the world, countries led by leaders who are at the forefront in the effort for clean energy have been (inadvertently or not) misleading their constituents and their governments towards an anti-nuclear path. The following list of countries have plans to phase out nuclear energy, recently just changed their minds to stop phase out, or no plans to have any nuclear capacity.

Australia, Austria, Denmark, Ireland, Italy, Estonia, Latvia, Liechtenstein, Luxembourg, Malaysia, Malta, New Zealand, Norway, Portugal, Serbia, Germany, Spain, Switzerland, and Japan.

Unsurprisingly, 75% of the countries on this list are mainly energy importers as their local energy policies are so horrendous for O&G companies to operate (not here to argue whether this is for better or worse, it’s just a fact). But they also are considered to be the worlds biggest advocates for green energy, so their misrepresentation of it has nuclear has contributed to the decades long slide in demand. It is my belief that there are extreme misconceptions about the use of nuclear power and that as other means of energy production become more expensive, these “concerns” will be alleviated. This information is key for later.

In Part 2 we will be going over the supply dynamics of the uranium industry.

Opinions expressed herein by the author are not an investment recommendation and are not meant to be relied upon in investment decisions. The author is not acting in an investment adviser capacity. This is not an investment research report. The author's opinions expressed herein address only select aspects of potential investment in securities of the companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that potential and existing investors conduct thorough investment research of their own, including detailed review of the companies' SEC and CSA filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author's best judgment as of the date of publication and are subject to change without notice. The author and funds the author advises may buy or sell shares without any further notice.

This article may contain certain opinions and “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential,” “outlook,” “forecast,” “plan” and other similar terms. All such opinions and forward-looking statements are conditional and are subject to various factors, including, without limitation, general and local economic conditions, changing levels of competition within certain industries and markets, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors, any or all of which could cause actual results to differ materially from projected results.

Uranium: Part 1

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