Do you want to invest in uranium? According to the World Nuclear Association, uranium has become one of the world’s most important energy minerals in the last 60 or so years. With the ever-increasing problem of climate change, we need to double nuclear power, and uranium will play a defining role in this as it can be used for energy generation. Additionally, in an attempt to put a dent in America’s petroleum use, they will need to provide an extra 300 billion kWhs each year to charge the 100-million plus squadron of fully-electric vehicles that America needs by 2040.
If you want to make a uranium investment, know that there is a lot of uranium in the world, and it just keeps being discovered as each year passes. Based on studies conducted by the AAPG Energy Minerals Division, uranium resources have increased roughly 25% over the past couple decades. That said, the question still remains; is there enough uranium in North America to fuel our nuclear future?
Luckily, the answer to this question seems to be a yes as the majority of high-grade uranium deposits in the world are found in Saskatchewan, Canada in the Athabasca Basin (a region in the Canadian Shield). Fortunately for America and their northern neighbors, the Athabasca Basin is often referred to as the ‘Saudi Arabia of Uranium’.
Additionally, Saskatchewan has one of the largest to-be-developed uranium deposits, Nexgen’s (TSX:$NXE) Rook I. This site can have over 120 people and it is able to safely store hundreds of miles of drill core high in uranium. In fact, deposits in the Athabasca Basin just keep on being discovered. Nexgen Energy of Canada recently announced that they discovered a new deposit on their Rook I site, called the Arrow Deposit.
For those new to the world of uranium investing, NexGen is a uranium mining company which explores and extracts uranium in North America. Over the past three years, Nexgen has hosted the high-grade Arrow deposit, the Harpoon discovery, the Bow discovery, and the Cannon area. All of which are located on NexGen’s Rook I property.
Even though Nexgen has a number of uranium deposits, the Arrow deposit has the potential to become the world’s largest uranium deposit. This deposit has estimated at 3,480,000 tons with 201,900,000 pounds of uranium. According to the CEO of NexGen, Leigh Curyer, “The importance of Arrow is not necessarily its size, although upon completion it will be the largest uranium resource development in North America. What really sets it apart is the fact Arrow has the grade and size of the best-known uranium deposits but presents very few of the mining challenges that often come with certain types of uranium deposits in the Athabasca Basin.”
Essentially, North America is uranium-independent. For instance, during the Cold War, the United States developed deposits in Wyoming and New Mexico which were sources of uranium for a number of weapon programs. There have been significant discoveries in thirteen states in the U.S., with Virginia being the most notable.
Canada, on the other hand, is the world’s largest uranium producer, accounting for roughly 22% of global output. Even though Kazakhstan passed Canada in 2009, they are still the leading uranium supplier with the United States. Canada supplies the United States with about 30% of the uranium that they use in their nuclear power plants.
As of right now, Canada’s share of known world uranium resources is at 8%, but that number is expected to increase with time and as technology advances. As a matter of fact, if you want to get into uranium investing, start preparing as Nexgen has predicted 1,000,000,000 pounds of uranium will be discovered over the next decade.
Just keep in mind when attempting to figure out future energy needs, that there is little uranium needed to produce power in a nuclear reactor. A single uranium fuel pellet, for instance, is the size of a fingertip and it contains as much energy as 17,000 cubic feet of natural gas, 1,780 pounds of coal, or 149 gallons of oil.
As each year passes, the United States consumes roughly:
- 25,000 tons of uranium when generating 20% of their electricity
- 624,000,000 tons of natural gas when generating 34% of their electricity
- 750,000,000 tons of coal when generating 30% of their electricity
- 1,000,000,000 tons of petroleum. This was used to fuel America’s transportation sector, and this sector contains the energy equivalent of 1,500,000,000 tons of coal
That, of course, is a massive difference and it is why uranium is becoming one of the cheapest fuels out there. With only 5% of the energy in uranium fuel is used in a reactor, the majority of the 25,000 tons is able to be burned in future reactors. This allows it to get up to ten times the energy it provided in the first pass.
All in all, it looks as if the amount of uranium which is needed will become even lower. Plus, when compared to fossil fuel, the amount of mining and drilling to get uranium is small as well.
MZConsulting has stated that one of the major issues facing the uranium market has come from the 2011 tsunami. This caused Japan to shut down all 55 of its nuclear power plants and Germany then decided to accelerate its plan to shut down their nuclear power plants as well. This caused uranium supply and demand to go out of balance and the market is only now recovering from this imbalance.
As of March 2017, according to AAPG Energy Minerals Division, the spot uranium price remains below $30 per pound due to long-term uranium oversupply. That said, the price is expected to rise in 2017. Due to the oversupply in uranium, Kazakhstan, the world’s largest uranium producer, has decided to cut output by 10% in 2017.
It’s worthwhile noting that China will soon be entering the uranium supply world in 2017 with their mine in Namibia, called the Husab mine. This mine will add roughly 15,000,000 pounds of uranium to the market each year after it reaches full-term production. That said, the costs at Husab mine are above uranium’s current price ($30 per pound) and the world is in oversupply, therefore, it’s unclear how China will proceed.
Furthermore, the uranium industry has been hit repeatedly by the United States government as it has sold excess uranium directly to the market. With that said, the Uranium Producers of America have recommended that the DOE stops selling sales when the uranium spot market price is below the EIA reported production cost for uranium ($35 per pound).
Rick Perry, U.S Secretary of Energy, has issued a Determination which permits the Department of Energy to continue making uranium transfer to the open market. This supports cleanup work at the Portsmouth Gaseous Diffusion Plant in Ohio. That in mind, the Determination will reduce the total amount of those transfer per year from 1,700 tons of uranium to 1,300 tons.
All in all, the nuclear industry remains positive. In 2016, ten new reactors were completed, and only three were closed. Most of these reactors were in China, Korea, India, Pakistan, Russia, and the United States. As of right now, there are 60 new reactors being constructed, thus making this is largest nuclear construction in 25+ years. China plans to have 58 GW by the year 2020, and 400 GW by 2050, therefore, this period of low uranium prices is a good opportunity to build strong uranium inventories.
In the long run, there are a lot of efforts going to making the extraction of uranium from seawater the future of uranium supply. But, as of right now, people will continue to rely on uranium in high-grade ore deposits.
Featured Image: depositphotos/sergeyussr
