We forecast short term strength in uranium pricing while market balance remains tight. However, we anticipate a retrace to average contract pricing of $US65/lb (Real) by 2030 as new supply flows to meet market demand. We believe the Street fails to understand the relationship between contract basket and realised pricing, and because of this will be disappointed by producer earnings over the short to medium term. Our favourite exposure remains developer NexGen Energy (NXG) with its world class Rook I asset.
This compendium sector piece provides a deep dive into nuclear energy and the uranium fuel market. We include discussion on the benefits of nuclear power and its place in decarbonisation of the global economy. We provide a review of the civilian nuclear power generation fleet, including a geographic breakdown of historical and projected construction starts and retirements.
Total uranium market demand has improved slowly since the 1990’s with new build demand being offset by retirement of less efficient reactors. US nuclear utility census data suggests these providers are in a better fuel contract position than they were a decade ago, this is at odds with prevailing market consensus.
Uranium deposits are relatively abundant across the world, although their economic viability depends significantly on prevailing market pricing. In 2020 the International Atomic Energy Agency (IAEA) suggested that at US$50/lb market pricing, sufficient defined recoverable resources exist for 63 years of global consumption, this figure increases with improvement to market pricing.
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