As a vital component of nuclear energy, investors continue to rely on rising uranium demand as the globe shifts its focus to alternate energy sources. Throughout the year, the spot price of uranium grew from roughly $30 to $42.05 per pound, and almost 40% rise.
Uranium prices have traditionally been erratic, ranging from $136 per pound in 2007 to $18 per pound in 2016. The fuel has been in a slump since the Fukushima nuclear accident a decade ago, but that is changing as governments seek to decarbonize the economy. Nuclear, which presently accounts for 10% of worldwide power output, avoids the intermittent production problem that plagues many renewables.
The Sprott Physical Uranium Trust, which debuted in Canada last year, shook up the market. The fund has witnessed “explosive expansion,” allowing it to purchase “nearly a third of the world’s yearly supply” and contributing to uranium prices rising by more than 30% last year.
According to World Nuclear Association data, Kazakhstan is by far the greatest uranium production. Kazakhstan’s mines will account for 41% of global supply in 2020. Australia, Namibia, Canada, and Uzbekistan are other big producers. The Cigar Mine is the world’s biggest uranium mine.
According to a recent forecast report published by Currency.co, the volatile geopolitical environment in the early stages of 2022 was the basis for continued Uranium price surges.
Turmoil in Kazakhstan
Protests in Kazakhstan against rising energy prices turned into large-scale unrest, resulting in the deaths of hundreds of protestors.
Uranium prices have risen as Kazakhstan, the world’s largest producer of radioactive metal, tries to deal with fatal demonstrations that presented the country’s government with its most serious challenge in decades.
In an effort to calm the turmoil, the Central Asian republic, a former Soviet Union member that produces more than 40% of the world’s uranium, has interrupted communications networks and banned certain travel. After Kazakh President Kassym-Jomart Tokayev requested help, Russia and its Collective Security Treaty Organization partners indicated they would send “peacekeeping soldiers.”
The upheaval might lead to a greater reliance on suppliers outside of Kazakhstan, causing shares of uranium firms in North America and Australia to rise.
Meanwhile, Russian aggression against Ukraine steadily escalated, resulting in global sanctions against the Putin regime, causing further supply-chain anxieties.
Given that Russia is one of the world’s largest suppliers of oil and natural gas, Russia’s war with Ukraine has increased worldwide dangers to energy supply. US and worldwide oil prices have reached their highest levels since 2008, while Europe’s benchmark, Dutch TTF gas prices, have lately reached new highs.
Unlike Europe, the United States is not reliant on Russian oil or natural gas, according to John Ciampaglia, CEO of Sprott Asset Management, but it is “somewhat reliant” on Russian enriched uranium. According to him, the United States relies on Russia for 16% of its enriched uranium supply, while Europe relies on Russia for 20%.
According to Mining.com, uranium might continue its bullish run, thanks in part to an aggressive purchasing binge by the Sprott Physical Uranium Trust, which raised its holdings by 10% in February 2022 alone. Meanwhile, The Conversation advises prudence in the face of speculative interest and irrational excitement. The industry might see a bubble in the uranium market, reminding investors not to be shocked if it is followed by an over-correction to the downside.
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Role of Uranium in Green Transition
Uranium might pave the way to net zero emissions. It is a dense, plentiful material with the potential to power the whole globe while emitting no carbon dioxide. A single uranium pellet the size of a gummy bear can provide the same amount of energy as 17,000 cubic feet of natural gas, a ton of coal, or 120 gallons of oil. This makes it extremely effective.
As new nuclear power technologies evolve, needing less uranium in certain circumstances or utilizing today’s nuclear waste as fuel, an increase in nuclear power output does not always imply an increase in demand for mined uranium. Nonetheless, demand is projected to climb.
Uranium is prevalent in the Earth’s crust, accounting for around 2.8 parts per million. It is thus 700 times more prevalent than gold. Mining output of the mineral barely provided 74% of the world’s current reactor demand in 2020. However, with increased electricity consumption and a global drive to shift to green energy, demand for nuclear power will inevitably rise.
Cameco (TSX: CCO; NYSE: CCJ) will report its second-quarter 2022 earnings before the market opens on Wednesday, July 27, 2022.
Cameco will review market trends and strategy execution before opening the floor to questions from investors and the media.
Cameco Corp. CCO, +0.59 percent up 0.59 percent to C$29.17 on Friday, July 15, in what proved to be an all-around positive trading afternoon for the Canadian market, with the S&P/TSX Composite Index GSPTSE, +0.36 percent increasing 0.36 percent to 18,394.45. This was the stock’s third straight day of increases. Cameco Corp. fell C$11.88 shy of its 52-week high (C$41.05) set on April 13th. The trading volume of 1.0 million shares remained below the 50-day average volume of 1.7 million.
Cameco said in February that its board of directors had recommended a 50% increase in its annual dividend for 2022, in response to 70 million pounds of extra long-term contracts added to its portfolio since the beginning of 2021 and better market fundamentals.
The firm declared a $0.12 per common share annual dividend, payable on December 15, 2022 to shareholders of record on November 30, 2022.
Cameco is one of the world’s major suppliers of the uranium fuel required to power a clean-air planet. Its nuclear fuel products are used by utilities all over the world to provide safe, dependable, and emission-free nuclear electricity.
Its holdings are concentrated in tier-one mining and milling facilities with the licensed capacity to produce more than 30 million pounds of uranium concentrates per year and more than 464 million pounds of proven and probable mineral reserves. Cameco also provides uranium refining, conversion, and fuel manufacture services.According to its report, Cameco will greatly focus on innovation and accelerating the adoption of advanced digital and automation technologies to allow them to operate our assets with more flexibility.
They also reiterated their commitment “to responsibly and sustainably manage our business and increase our contributions to global climate change solutions by exploring other emerging and non-traditional opportunities within the fuel cycle.”