Uranium Investments Deliver Handsome Returns with Minimal Risk

Uranium investment increasingly compels the attention of serious investors throughout the world. Uranium demand is expected to increase by 50 percent by 2030 as more and more reactors come online in China, the United States and the U.K. [1] In the face of increasing demand, limited supplies and scaled-down uranium mining operations worldwide, the boom side of the boom-and-bust cycle is inevitably drawing closer. Investing in uranium mining for the long-term is guaranteed to pay off eventually as reserves dwindle while demand increases.

Other favourable intelligence for investing in uranium includes the United States pro-nuclear and pro-business stance and an inevitable rise in demand after an 80-percent decline in prices. [2] Savvy investors also understand that investing in Australia mining concerns generates a big strategic advantage over other uranium investments. That’s because Australia’s uranium reserves are the largest in the world and estimated to comprise about one-third of the world’s total supply. [3]

Background and History of Uranium

Uranium OreGerman chemist Martin Klaproth discovered uranium among some mineral samples from the Joachimsthal silver mines in what is today the Czech Republic. [4] Originally used to colour glass and ceramics, uranium wasn’t known for its radioactive energy until 1896. Henri Becquerel discovered these properties, but his prized student, Marie Curie, named the phenomenon radioactivity and went on the discover the element radium in 1898. Curie and her husband Pierre refined tonnes of uranium ore to produce a fraction of a gram of radium, which sold for as much as $75,000 per ounce until the late 1930s. The demand for radium ignited a uranium mining frenzy, and new discoveries of uranium deposits were made in Australia, the United States, the Belgian Congo, Canada and Portugal.

The first successful demonstration of nuclear fission occurred in 1939 and was performed by Otto Hahn in Germany. The prospect of war ignited atomic research, and a team led by Enrico Fermi built the first atomic pile, or nuclear reactor, at the University of Chicago in 1942. The Manhattan Project followed, and the first nuclear explosion was set off at the Trinity site in New Mexico in July of 1945. After bombing the Japanese cities of Hiroshima and Nagasaki to end the war, scientists began exploring the peaceful use of nuclear power and developed an experimental reactor in 1951 in Idaho Falls. The first full-scale nuclear reactor was brought online in 1957.

Demand for Uranium

Thermal power plant with large chimneyThe demand for uranium continues to grow with a virtually unlimited prospect for growth. Emerging economies throughout the world are developing nuclear power as the most cost-efficient option and the one that’s the least damaging to the environment. The world’s uranium mines now supply about 90 percent of what utility companies need to power their reactors. [5]

China’s emerging role in the global economy creates an incredible market for uranium ore and refined uranium products for nuclear reactors. China already has 35 reactors and is currently building another 20, which compares to 60 reactors in the United States. [6] However, China plans to build 177 more reactors. Even if these plans aren’t fully realized, even one-third or one-half would dramatically affect the market for uranium over the long-term. Similarly, India has 20 reactors online and is building five more, but India plans to add 64 more reactors in the near future.

The demand for uranium and the limited stockpiles of uranium ore ensure that the prices will rise. The current price of uranium doesn’t cover the costs of mining the ore, so prices will inevitably rise as uranium mining gears up to meet the demand. Currently, the Nuclear Energy Agency estimates that nuclear reactors could continue running for 200 years at their present rate of uranium consumption. [7]

 

Following Institutional Investments: Always a Wise Strategy

Institutional investments are worth following when choosing investment products, and professional money managers are already moving funds into the uranium space. The United States imports more than 90 percent of its uranium, and supports nuclear power more enthusiastically than ever before. [8] The World Nuclear Association reveals that 13 countries now rely on nuclear energy for 25 percent or more of their electricity needs. Former Energy Secretary and U.S. Senator Spencer Abraham confirms that nuclear power is on the upswing–especially in Asian countries where many new plants are under construction or in the preliminary planning stages.

COUNTRY

(Click name for
Country Profile)

NUCLEAR ELECTRICITY GENERATION 2016

REACTORS OPERABLE

1 Aug 2017

REACTORS UNDER CONSTRUCTION

1 Aug 2017

REACTORS PLANNED

1 Aug 2017

REACTORS PROPOSED

1 Aug 2017

URANIUM REQUIRED

2017

TWh

% e

No.

MWe net

No.

MWe gross

No.

MWe gross

No.

MWe gross

tonnes U

Argentina
7.7
5.6
3
1627
1
27
2
1950
2
1300
218
Armenia
2.2
31.4
1
376
0
0
1
1060
0
0
88
Bangladesh
0
0
0
0
0
0
2
2400
0
0
0
Belarus
0
0
0
0
2
2388
0
0
2
2400
0
Belgium
41.3
51.7
7
5943
0
0
0
0
0
0
1015
Brazil
15.9
2.9
2
1896
1
1405
0
0
4
4000
336
Bulgaria
15.8
35.0
2
1926
0
0
0
0
1
1200
327
Canada
97.4
15.6
19
13,553
0
0
2
1500
0
0
1750
Chile
0
0
0
0
0
0
0
0
4
4400
0
China
210.5
3.6
37
33,657
20
22,006
40
46,700
143
164,000
7757
Czech Republic
22.7
29.4
6
3904
0
0
2
2400
1
1200
570
Egypt
0
0
0
0
0
0
2
2400
2
2400
0
Finland
22.3
33.7
4
2764
1
1720
1
1250
0
0
480
France
384.0
72.3
58
63,130
1
1750
0
0
0
0
9216
Germany
80.1
13.1
8
10,728
0
0
0
0
0
0
1480
Hungary
15.2
51.3
4
1889
0
0
2
2400
0
0
356
India
35.0
3.4
22
6219
6
4350
19
17,250
46
52,000
1091
Indonesia
0
0
0
0
0
0
1
30
4
4000
0
Iran
5.9
2.1
1
915
0
0
4
2200
7
6300
178
Israel
0
0
0
0
0
0
0
0
1
1200
0
Italy
0
0
0
0
0
0
0
0
0
0
0
Japan
17.5
2.2
42
39,952
2
2756
9
12947
3
4145
2517
Jordan
0
0
0
0
0
0
2
2000
0
0
0
Kazakhstan
0
0
0
0
0
0
0
0
3
1800
0
Korea DPR (North)
0
0
0
0
0
0
0
0
1
950
0
Korea RO (South)
154.2
30.3
24
22,505
3
4200
2
2800
6
8800
4816
Lithuania
0
0
0
0
0
0
0
0
2
2700
0
Malaysia
0
0
0
0
0
0
0
0
2
2000
282
Mexico
10.3
6.2
2
1600
0
0
0
0
3
3000
0
Netherlands
3.8
3.4
1
485
0
0
0
0
0
0
102
Pakistan
5.1
4.4
5
1355
2
2322
0
0
0
0
101
Poland
0
0
0
0
0
0
6
6000
0
0
0
Romania
10.4
17.1
2
1310
0
0
2
1440
0
0
179
Russia
179.7
17.1
35
26,865
7
5904
26
28,390
22
21,000
7767
Saudi Arabia
0
0
0
0
0
0
0
0
16
17,000
0
Slovakia
13.7
54.1
4
1816
2
942
0
0
1
1200
367
Slovenia
5.4
35.2
1
696
0
0
0
0
1
1000
137
South Africa
15.2
6.6
2
1830
0
0
0
0
8
9600
312
Spain
56.1
21.4
7
7121
0
0
0
0
0
0
1271
Sweden
60.6
40.0
8
8376
0
0
0
0
0
0
1471
Switzerland
20.3
34.3
5
3333
0
0
0
0
3
4000
521
Thailand
0
0
0
0
0
0
0
0
5
5000
0
Turkey
0
0
0
0
0
0
4
4800
8
9500
0
Ukraine
81.0
52.3
15
13,107
0
0
2
1900
11
12,000
1945
UAE
0
0
0
0
4
5600
0
0
10
14,400
865
United Kingdom
65.1
20.4
15
8883
0
0
11
15,600
2
2300
1734
USA
805.3
19.7
99
99647
4
5000
16
5600
19
28,500
17,847
Vietnam
0
0
0
0
0
0
4
4800
6
7100
0
WORLD**
2,490
10.6
447
392,335
58
 63,070
162
167,817
349
400,395
67,867
TWh
% e
No.
MWe
No.
MWe
No.
MWe
No.
MWe
tonnes U
NUCLEAR ELECTRICITY GENERATION
REACTORS OPERABLE
REACTORS UNDER CONSTRUCTION
ON ORDER or PLANNED
PROPOSED
URANIUM REQUIRED

Supply of Uranium

The supply of uranium is relatively common in the planet’s crust and can be found in seawater and rocks. The cost of extracting uranium depends on its concentration and geological logistics.

  • Very high-grade ore: 200,000 parts per million
  • High-grade ore: 20,000 ppm
  • Low-grade ore: 1,000 ppm
  • Very low-grade ore: 100 ppm
  • Granite: 3-5 ppm
  • Sedimentary rock: 2.8 ppm
  • Seawater: 0.003 ppm

The identified sources of uranium add up about 5.5 million metric tonnes, and another 10.5 million metric tonnes remain undiscovered. This estimate is expected to double as mining technology advances, and new methods of extracting uranium become available. Currently, the world generates 2.8 trillion kilowatt hours of electricity each year from nuclear power. It takes 10 metric tonnes of uranium to produce one tonne of LEU, which generates 400 million kilowatt hours of electricity. Fuel-recycling breeder reactors can generate more fuel than they consume, and these reactors could match the world’s current energy output for 30,000 years. [10]

Common classifications of uranium order include: [9]

 

Very high-grade ore (Canada) – 20% U 200,000 ppm U
High-grade ore – 2% U, 20,000 ppm U
Low-grade ore – 0.1% U, 1,000 ppm U
Very low-grade ore* (Namibia) – 0.01% U 100 ppm U
Granite 3-5 ppm U
Sedimentary rock 2-3 ppm U
Earth’s continental crust (av) 2.8 ppm U
Seawater 0.003 ppm U
Power Station

Uranium: A Surprisingly Clean Energy Source

Clean Nuclear EnergySome investors might worry about the consequences of supporting nuclear power in light of criticism from environmental groups and anti-nuclear activists. However, nuclear plants generate the least carbon dioxide pollution and lowest carbon emissions. Using breeder reactors could provide power for the world indefinitely, so nuclear power is clean and sustainable and returns a higher cost-value than other energy sources.

Many critics argue that nuclear power is a finite resource while renewable sources such as solar energy, wind power, biomass, hydroelectric and geothermal energy are limitless. Although these infinitely renewable energy sources are important to energy sustainability in the distant future, none of these energy sources have been developed well enough to provide a significant portion of the world’s energy needs at competitive prices.

 

Storage Concerns Aren’t a Pressing Issue

The uranium used in nuclear power plants–which consists of enriched pellets of uranium oxide formed into rods–is stored until most of the radioactivity decays. This uranium is then recycled into Mixed Oxide Fuel, or MOX, which can be reused in power plants or prepared for long-term storage. The total amount of the world’s nuclear waste would fit in a two-storey building the size of a basketball court, so storage concerns aren’t big issues. Even so, plans are being made for secure, long-term storage of nuclear plant waste.

Why Countries Need Uranium as a Source of Energy

Nuclear ReactorsWhen it comes to clean, sustainable and cost-value energy sources, no source offers as many advantages as nuclear power. That why people remain optimistic about using this incredible energy source despite some risks and high-profile accidents. Some of the key benefits of nuclear energy include: [11]

  • Uranium-235 produces 3.7 million times as much energy as the same amount of coal.
  • Uranium delivers the highest amount proportion of energy to mass of any other energy source.
  • Uranium remains abundant.
  • Although radioactivity takes a long time to decay, the amount of waste in nuclear processes is less than those generated by other fuels by an exponential margin.
  • Designing new nuclear power plants, although expensive, can be depreciated between 30 and 40 years, which makes investment more attractive.
  • The half-life of Plutonium-239 is 24,110 years, and reprocessing this material from U.S. spent fuel assemblies through the year 2030 could provide enough power to run 20 nuclear plants for 40 years.

 

High-Profile Nuclear Accidents Fail to Discourage Nuclear Power Plants

Despite accidents at Chernobyl in 1986 and Three Mile Island in 1979, nuclear power’s record of providing clean energy rivals the history of other energy sources. Any new technology experiences growing pains and accidents, and other energy sources produce a steady stream of carbon pollution that nuclear power doesn’t generate. That’s why the last decade has seen a resurgence in nuclear power plant planning and construction. About 60 nuclear plants are currently under construction, and these plants alone will generate 60,000 megawatts of electric power–which is one-sixth of the world’s current nuclear-power generating capacity.

Australia and Nuclear Energy

Australia has mined and treated uranium since the 1950s and has the largest reserves of the ore in the world. The country already relies heavily on mining for its GDP. Low demand and high supply of uranium ore over the last decade have depressed prices and closed many mining operations. However, current contracts are coming to an end, demand is increasing geometrically and emerging markets are creating new demand for uranium ore. The prices reached a historic high of $137 per pound in 2007 and have fallen to about $18 per pound. At these rock-bottom rates, uranium can only rise in price as demand reignites the industry.

Boss Energy Team

Other important Australia advantages in uranium investing include: [3]

  • Uranium mining in Australia has been ongoing since 1954, so there are fewer worries about disturbing people with a new mining industry.
  • Australia produced 7447 tonnes of uranium in 2016, which positions the country as the third-largest producer in the world.
  • Although Australia does not use nuclear power itself, any future regulations of carbon-generation from making electricity could make nuclear power an attractive alternative.
  • South Australia has already proposed locating a nuclear waste repository in its territories.
  • The Australian economy depends on mining activities for 20 percent of its GDP, so expanding uranium mining is likely to be a key strategy for the country’s economic future.

Companies have cut back operations until the prices rises enough to fund new mining operations. That time is rapidly approaching, and investors have an extraordinary opportunity to invest in long-term uranium mining in uranium-rich Australia where proven reserves promise the best returns for the longest period.