This article caught my attention last week:
‘Nova Scotia moves to lift decades-old uranium mining ban’
You can read the full article here.
If you can’t get past the paywall, here’s a quick snapshot of what’s covered:
Novia Scotia, a province sitting off Canada’s southeast coast, initially banned uranium mining in the early 1980s.
However, in a recent policy shift, the government has been pushing to lift these bans, partly in response to rising community support.
Undoubtedly, the desire to monetise its reserves and increase economic resilience is a big motivator, too.
So, two key questions to ask:
Why is this policy shift happening right now?
AND
What does it signal for Australian states that continue to block uranium mining?
Mining Memo’s Take
Money talks.
When metal prices rise, community sentiment for mining projects tends to increase.
Previous concerns, like radioactive contamination of groundwater, are being replaced with bullish outlooks for uranium prices and the windfalls on offer!
The uranium bull thesis has arrived. And residents, governments, and companies want to get on board.
So, how does this offer useful insights for Aussie investors?
Well, Nova Scotia is a prime example of what could happen in Australia soon.
WA, Victoria, Queensland, and NSW all hold similar bans on uranium mining.
But as prices rise and public support for nuclear energy gains traction, I suspect more governments will step back and allow mining to occur.
That’s because, as the opportunity cost starts to weigh deep, residents will question why they aren’t capitalising on the value of their natural resources.
But there is another issue at play here…
Uranium supply looking thin across the West
Kazakhstan, the world’s largest uranium producer, is firmly under the grip of China.
The Middle Kingdom has poured billions into Kazakhstan’s development as part of its One-Belt-One Road initiative.
Chinese firms also hold major stakes in Kazakh uranium companies and are major buyers of their ore through long-term offtake agreements.
Meanwhile, Europe’s decade-long uranium supply chain from Niger is unwinding.
The new military Junta has a strong anti-Western flavour and is clearly pivoting future deals with China and Russia.
Meanwhile, Namibia, another important uranium mining hub, shocked the market in 2023 when rumours surfaced about government plans to nationalise its mines.
Trading in Paladin Energy [ASX:PDN] was briefly suspended after its share price cratered 20% in a single session. It’s one of several ASX uranium plays exposed to Namibian assets.
But as the West pursues nuclear ambitions, it has left its commodity supply chain unchecked — yet again!
That’s why Australia and Canada will be crucial — two major sources of uranium ore.
However, like Canada, Australia’s attitude toward uranium mining is mixed. However, as the example from Novia Scotia shows, sentiment is shifting.
Western Australia: A key player
Over the last two decades, the Western Australian government has flipped and flopped over its attitude toward uranium mining.
Both sides of the political divide have installed bans over the years. And for now, a blanket ban remains in place on all NEW mining uranium projects.
Will that last?
Well, when you consider the culmination of factors hitting at once…
Like higher uranium prices, rising public sentiment for nuclear power, and the need for the West to secure supply chains…
There’s a case to be made for the WA government to lift those bans.
And that’s precisely what WA’s liberal opposition party intends to do if it wins the state election NEXT month.
So, what would a policy shift potentially mean for stocks holding uranium assets in WA? Would it result in an instant re-rating?
Perhaps. But it will take time to restore the market’s confidence. After all, the WA government has lifted and re-instated bans several times.
I, for one, will keep my focus on stocks located in places with a history of government support… There’s already enough uncertainty in this sector!
Given the deep sell-off that’s taken place in recent months, quality no longer demands a steep premium.
This is a market ripe for accumulating stocks in regions with regulatory certainty.
Value is everywhere in this market, so there’s no need to compromise on quality.
You should focus on the best uranium stocks for your portfolio.
I’ll have more to say on that next week.
Stay tuned!
Regards,
 |
James Cooper,
Editor, Mining: Phase One and Diggers and Drillers
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