The uranium market is poised for a “breakout year,” due to growing demand, a 10 percent cut in mining production announced by Kazakhstan – due, said KazAtomProm Chairman Askar Zhumagaliyev in January, to an oversupplied market – and because of probable shift in U.S. policies, said Uranium Energy Corporation founder and Chief Executive Officer Amir Adnani.
In a letter addressed to company shareholders that was released Wednesday, Adnani said that, “a corner is turning in the uranium market. You can see this in the improving price for spot uranium, which is up over 40 percent in just two months.”
Pressure on prices is coming from the record number of reactors now under construction, which currently exceeds the numbers from 2010 and 2011 prior to the devastating accident at the Fukushima Daiichi nuclear generating station in Japan, he noted.
Demand is being driven by unprecedented levels of air pollution in at least 25 major cities in China and India, Adnani said. Offering proof, at a recent conference presentation, available below, Adnani showed a short GoPro clip from Beijing that recently went viral. The film, in a few seconds, shows dark clouds of smog rolling into across the city until they obliterate the view of rush hour traffic.
Critical to the pricing rebound is the recent announcement from Kazakhstan concerning a 10 percent cut in uranium mining, due to an oversupplied market. Key to understanding the impact of this production trimming is to consider Saudi Arabia's domination of the oil market, given Saudi Arabia produces 12 percent of the world's oil, said Adnani.
Should Saudi Arabia cut production, oil prices would have to respond, he said. Kazakhstan, in turn, controls 40 percent of the world's uranium production, meaning the country's production would have has close to four times the impact of an oil cut announced by the world's largest oil producer.
Historically, a Republican administration in Washington has meant stronger support for nuclear power. Evidence of this includes President Barack Obama's consistent avoidance of using the words “nuclear power” in any of his State of the Union speeches. President Donald Trump, in contrast, is in favor of nuclear power and has surrounded himself with advisers who are also industry advocates, Adnani said.
“The recent appointment of Rick Perry, former governor of Texas, as U.S. Secretary of Energy, demonstrates the new administration's interest in developing clear, pro-active measures to transform U.S. energy policy,” Adnani said.
In a 13-minute video clip shows Adnani's presentation at the Metals Investor Forum in January.
Enjoy the clip:
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