Amir Adnani and the Future of Uranium

Amir Adnani and the Future of Uranium – And Nuclear Energy

Oakshire Financial talks to Amir Adnani, chief executive of Uranium Energy Corp. Most of the chat, as the name of the site implies, is about the price of uranium. I’ll let you discover (most of) that part for yourself – whenever I read something like this, I imagine a movie tycoon yelling into the telephone, “Buy Chilean copper!! Sell Nigerian manganese!! What do you mean I’ve lost everything?!!!”

But Adnani also keeps an eye on nuclear energy – that’s his marketplace, after all – and he has some interesting insights.

The growth in the nuclear industry is going to come from exactly where it was going to come from pre-Fukushima. The countries and the economies that are expanding most rapidly are the ones that really need more power. The growth isn’t going to come from the West. In fact, only 3% of the reactors that are under construction right now—there are about 65 reactors under construction—are in G7 countries. The top four markets are China, Russia, India and South Korea. Saudi Arabia plans to build 16 nuclear reactors, which is a $400 billion program. Chinese officials have reiterated the country’s plans to grow its nuclear capacity to about 70 gigawatts (GW) by 2020. India plans to get to about 60–63 GW of installed nuclear capacity by 2030 and it further aims to supply 25% of electricity from nuclear power by 2050.

I guess that can sound discouraging to western ears, but the water isn’t all cold.

Having said that, there is incremental growth in the developed world, too. The U.S. Nuclear Regulatory Commission approved four licenses earlier this year for operating nuclear reactors to come on-line in Georgia and South Carolina. They are the first licenses of this type to be issued in the U.S. in almost 30 years. Even in the United Kingdom there have been announcements to build seven or eight new nuclear reactors. It is very positive to see those developments post-Fukushima.

It certainly is. I admit that there’s nothing really new here – the uranium stuff is actually more enlightening if you’re interested in commodities – but I like how Adnani puts a lot of data together to make his points. For example:

There aren’t too many metals that have a gap of about 40 million pounds (Mlb)/year (demand weighs in at 180 Mlb/year versus 140 Mlb of annual mine production). That gap is only going to widen next year due to the expiration of the Megatons to Megawatts program, a secondary source of supply, in which uranium is derived from dismantled Russian nuclear warheads. That’s about 15% of the global uranium market. Of course, demand is going to grow because 65 reactors are going to be coming on-line in the near future and another 100–150 reactors are at various stages of planning and permitting. The supply-demand fundamentals in uranium are very compelling.

I’ll take his word for it. He’s a uranium guy, so of course he’s bullish on it – but he’s also very clear-eyed at the same time. Really worth a full read.

Amir Adnani.

Fluor Invests in NuScale

You know, it’s kind of sad that no one is willing to invest in nuclear energy anymore. Wait, what? NuScale Power celebrated the news of its company-saving $30 million investment from Fluor Corp. Thursday morning with a press conference in Washington, D.C. Fluor is a design, engineering and construction company involved with some 20 plants in the 70s and 80s, but it has not held interest in a nuclear energy company until now. Fluor, which has deep roots in the nuclear industry, is betting big on small-scale nuclear energy with its NuScale investment. "It's become a serious contender in the last decade or so," John Hopkins, [Fluor’s group president in charge of new ventures], said. And that brings us to NuScale, which had run into some dark days – maybe not as dark as, say, Solyndra, but dire enough : Earlier this year, the Securities Exchange Commission filed an action against NuScale's lead investor, The Michael Kenwood Group. The firm "misap...

Wednesday Update

From NEI’s Japan micro-site: NRC, Industry Concur on Many Post-Fukushima Actions Industry/Regulatory/Political Issues • There is a “great deal of alignment” between the U.S. Nuclear Regulatory Commission and the industry on initial steps to take at America’s nuclear energy facilities in response to the nuclear accident in Japan, Charles Pardee, the chief operating officer of Exelon Generation Co., said at an agency briefing today. The briefing gave stakeholders an opportunity to discuss staff recommendations for near-term actions the agency may take at U.S. facilities. PowerPoint slides from the meeting are on the NRC website. • The International Atomic Energy Agency board has approved a plan that calls for inspectors to evaluate reactor safety at nuclear energy facilities every three years. Governments may opt out of having their country’s facilities inspected. Also approved were plans to maintain a rapid response team of experts ready to assist facility operators recoverin...

Nuclear Utility Moves Up in Credit Ratings, Bank is "Comfortable with Nuclear Strategy"

Some positive signs that nuclear utilities can continue to receive positive ratings even while they finance new nuclear plants for the first time in decades: Wells Fargo upgrades SCANA to Outperform from Market Perform Wells analyst says, "YTD, SCG shares have underperformed the Regulated Electrics (total return +2% vs. +9%). Shares trade at 11.3X our 10E EPS, a modest discount to the peer group median of 11.8X. We view the valuation as attractive given a comparatively constructive regulatory environment and potential for above-average long-term EPS growth prospects ... Comfortable with Nuclear Strategy. SCG plans to participate in the development of two regulated nuclear units at a cost of $6.3B, raising legitimate concerns regarding financing and construction. We have carefully considered the risks and are comfortable with SCG’s strategy based on a highly constructive political & regulatory environment, manageable financing needs stretched out over 10 years, strong partners...

NEI Nuclear Notes

Search This Blog