The discussions around nuclear energy and its role in abating the current crisis are growing every day.
Last week it was Japan and Germany, this week it is Switzerland and California…
A handful of Swisse politicians are pushing the leaders to take a leaf from Germany’s book. They suggest that to keep the lights on in their nation over the coming winter, five of their nuclear reactors must be brought back online.
For now, all these advocates can do is gather petitions. But, with 100,000 signatures, they will have the ability to initiate a referendum on the matter. Getting those signatures won’t be too hard, though, in my opinion, because the alternative — energy shortages — certainly won’t be popular.
Meanwhile, in California, a new bill was put forward late last Sunday. While it will certainly face an uphill battle, this bill proposes to keep the state’s last nuclear power plant open past its planned closure in 2025.
What is fascinating about this bill is where it has come from. Because this wasn’t some political play from a Republican in a Democrat stronghold. It was actually put forward by a Democrat who argues that nuclear power must be kept alive as gas-burning plants shut down.
The point, though, for investors like yourself, is that nuclear energy is back in a big way…
Desperate times
Now, none of this should really surprise you if you’ve been a long-time Money Morning reader.
Energy has been a prominent topic amongst all our editors for months now. Hell, our publisher — James Woodburn — was even talking about it back in 2020! You can see what he had to say on the matter right here.
Because at the end of the day, for Australians, nuclear is a serious option to consider. I know some people in this country don’t want to hear that, but neither did many Japanese, Germans, Swisse, or Californians…
Desperate times call for desperate measures.
But when it comes to reliable and cleaner energy, it would be stupid to ignore nuclear as an option.
Fortunately, there is still a possibility that we could see nuclear Down Under. Because as the UK’s Secretary for International Trade, Anne-Marie Trevelyan, recently told the AFR:
‘Countries will make their decisions but AUKUS has effectively given the country permission to talk about nuclear technology. There is an opportunity coming from a defence posture that the country is having to take to have a conversation about what nuclear power in terms of civil origin is about.’
AUKUS, if you’re unfamiliar with the name, is the program responsible for securing us the infamous nuclear submarines — equipment that is exclusively for military purposes.
But the point that Trevelyan is making is that this is the first step toward nuclear understanding. People will need to be trained and instructed on how to work with nuclear technology. Given enough time and a willingness from officials, that training could then pave the way for nuclear power in Australia:
‘As the development of nuclear skills across Australia grows, things like SMRs [small modular reactors] could become part of Australia’s mix. There is a really big agenda there around clean energy.’
It is certainly a possibility that should excite people hoping for a serious and informed discussion on nuclear energy’s potential. And more importantly, for investors, it should excite you about the ongoing boom in uranium stocks!
Demand and price on the rise
What is fascinating about the market for uranium is how relatively stable it is. That is when compared to gas and oil, at least.
Here’s a chart for uranium in USD per pound from the last five years to give you some context:
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Source: Trading Economics |
As you can clearly see, the price of uranium has been steadily increasing over the years. In particular, there was a big spike in late 2021 as fears of oil and gas shortages began to emerge. At the time, this was due more to logistical issues rather than the war we now have today.
The overarching point is that prices are on the rise as demand grows.
For many of the local uranium stocks that have been flying higher lately, this is great news. After all, higher prices simply mean bigger revenues and profits.
But, as one asset manager (John Ciampaglia) interviewed by Kitco notes, prices will likely have to go even higher to meet potential demand…
Here is what Kitco reports:
‘However, if nuclear power is going to play a more significant role in global energy, Ciampaglia said that uranium prices have to go up. While there is plenty of uranium in the world, the market needs to see higher prices to bring that supply online.
‘“If you have a lower grade mine, you might not be able to bring it back online until prices hit $60 or $65 a pound. The reality is you probably need to see uranium prices at $80 or $90,” he said.’
So, if uranium prices really do reach this US$80 or US$90 mark, it will almost certainly send the current crop of ASX producers screaming higher. And that is certainly what current investors are speculating on.
Better still, long term, the sky may be the limit for nuclear demand and uranium prices. Because as the world begins to realise just how pivotal nuclear could be to energy sovereignty, we could see much bigger things.
Regards,
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Ryan Clarkson-Ledward,
Editor, Money Morning
Ryan is also co-editor of Exponential Stock Investor, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.
