Wednesday, October 27, 2021

Uranium prices fluctuate after years on financial interest

Long-term demand for nuclear power expected to increase; Canada is the world’s second largest producer of uranium

Uranium is once again in Canadian headlines due to significant financial investor interest in the mineral. Uranium market participants say the nascent event has its benefits, but continues to speculate as to how the rise in prices will affect utility amid an excess of demand over supply.

uranium prices September has been extremely volatile – above US$50 a pound by the middle of the month – about 40 percent, which is higher than all other major commodities, according to bloomberg. Prices are around US$45 in . fell to end of september, which is still more than 30 percent a month.

This is coming on the heels of very stable prices over the past five years, after a gradual decline five years ago. Prices peaked at US$136 per pound in 2007.

As of September 28, Sprot Physical Uranium Trust, a Canada-based exchange-traded fund, is almost ready. 35 percent Since the establishment of 19th July. It has accumulated uranium reserves of about 16 percent of the annual consumption of the world’s reactors, bloomberg informed of.

The fund gives investors a way to invest directly in uranium without physical possession of the mineral, similar to a gold fund.

Grant Isaacs, senior vice president and chief financial officer of Saskatchewan-based uranium-mining company Chemeco, said during Sept. 20 that uranium demand looks sustainable in a way that feels different this time around. conference call.

He sees Sprot’s purchase of the mineral as disproportionately beneficial to the uranium market, noting that it is being done “in the most transparent and verifiable way” he has ever seen, paying prices available to the public. being done.

Isaac said he was delighted that Sprot took over from Cameco as the largest buyer of uranium.

Uranium, in fact, does not trade on the open market like other commodities. Rather, buyers and sellers negotiate long-term contracts for the mineral privately. Thus it has been said that the uranium market lacks price transparency.

“One of the things that a lot of investors are expecting from trust is the bigger role it plays in that price discovery process,” said John Ciampaglia, CEO of Sprot Asset Management, during September 14th. webcast. “And that’s exactly what the Trust has done so far.”

watch and wait

Utilities that require the mineral to power nuclear reactors are not actively buying or selling the product, despite the noise in the uranium markets. economist Peter St. Onge Says they are not known for their financial prowess and can be “the deer in the headlights”.

“It hasn’t happened [for] long – uranium has been sleeping for at least five years,” he told The Epoch Times. “One of the concerns is that these people” [the utilities] Get caught flat-footed,” he said.

However, Per Zender, technical adviser to the Sprot Uranium Fund, said during the webcast that “I am not concerned that any utility materials running the reactors will run out.” He said utilities are probably watching and waiting to see if the price hike is sustainable, as they have some inventory.

The Epoch Times contacted Ontario Power Generation for comment, but did not receive a response.

St Onge, a research fellow at The Heritage Foundation and a former senior fellow at the Montreal Economic Institute, said the uranium price has plenty of room to move before it becomes a problem, potentially prompting the government to get involved. Is.

Isaacs said the lack of response from uranium fuel buyers should not be surprising, as the change in uranium prices has been very sudden, as it takes time to adjust to the new facts.

Isaacs also explained that a problem with the uranium market is uncommitted production, meaning that the mineral may be sold below production costs, thus affecting market pricing mechanisms.

“I don’t think it’s fully appreciated [Sprott fund] The vehicle has been put on the market at the moment,” Isaacs said.

A bright future for uranium?

As countries aim to move away from fossil fuels in favor of renewable energy, the role of nuclear power is considered. Renewable energy, such as wind and solar, has its drawbacks depending on the season or time of day, and can also set its own environmental problems.

In addition, an energy crisis is plaguing Europe. US benchmark West Texas Intermediate oil price has risen again and is hovering just below US$75 a barrel. and netural gas 5 per barrel, which has reached its highest level since 2014.

Nuclear power has been beset by a handful of disasters such as Fukushima, Chernobyl and Three Mile Island, but its proponents suggest it is the safest and lowest-cost form of energy available.

However, nuclear power remains unpopular politically, St Onge says, adding that some tough choices need to be made because decarbonizing the entire economy doesn’t come without some pain. He said it would take time to build more nuclear plants, which could overcome the energy shortage.

“We can play games about solar panels and wind all day. It is not yet. Maybe it will be in 20 years. Nuclear is the only way to do this in the near future, and everyone hates nuclear. Nobody wants to support nuclear,” St Onge said.

According to Ontario Power GenerationAbout 60 percent of Ontario’s electricity is provided by nuclear power.

Demand for uranium is expected to continue for a long time. Natural Resources Canada lists it as an important mineral, along with rare earth elements such as lithium, graphite, cobalt and nickel, which are essential for making electric vehicles, batteries and electronic components.

Canada is second largest Uranium producer in the world, at 13 percent – although it is second only to Kazakhstan, which produced 42 percent of the world’s supply in 2019.

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This News Originally From – The Epoch Times

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