Special Edition Uranium (Part III): The Western | Australian Markets
Former geologist James Cooper continues together with his particular three-part collection on uranium. Today’s version continues with uranium’s hidden vulnerabilities within the world provide chain.
The election outcomes are in. No Dutton means no nuclear for Australia.
But will that influence world demand for nuclear energy and, therefore, uranium provide?
Not a likelihood!
Australia is a fly on the wall in the case of world power consumption.
What issues right here is the construction of nuclear energy services throughout Asia and the potential revamp of stations throughout Europe and North America.
So, immediately, I’ll end our three-part collection on the uranium market with a particular deal with provide chain vulnerabilities.
As I detailed final week, latest occasions in Niger spotlight a kink in France’s power fortress. Niger has provided the French economic system with plentiful uranium provide fuelling the international locations power independence.
But as I discussed, the new Junta authorities is much more aligned with Russia and China, which means France’s entry to this beneficial provide may expire quickly.
And that would arrive exactly as different main power customers pivot to a nuclear answer to fulfill future energy wants.
But as all the time, the West continues to miss the upstream phase of the worldwide provide chain: Mining.
Kazakhstan, the world’s largest uranium producer, is already closely dedicated to Chinese contracts.
It’s unlikely to shift these, on condition that China is a main investor within the nation and its mining corporations.
That contains Kazatomprom, the world’s largest uranium-producing company, which accounts for round a quarter of world provide.
Then there’s Namibia… Another important uranium hub.
This nation has grow to be a alternative vacation spot for ASX performs like Paladin Energy [ASX: PDN], Bannerman Energy [ASX: BMN], and Deep Yellow [ASX: DYL].
But right here, too, issues fester…
Water shortage proved a main hurdle for Paladin’s potential to course of ore final 12 months.
And in a signal of the instances immediately, the Namibian authorities just lately expressed curiosity in nationalising its assets.
No doubt that can keep ASX management groups awake at night time.
Discussions about bringing its mines underneath state control have subsided for now.
However, as I keep reminding readers, resource-rich nations are inclined to elevate this agenda when the commodity cycle turns upward, and useful resource costs rise. We’re seeing this worldwide, from copper, gold and uranium.
And the geopolitical risk extends to Australia, too
Take Toro Energy’s [ASX: TOE] partially ‘stranded’ Wiluna uranium deposit.
The West Australian authorities has blocked new uranium tasks, which may restrict Toro’s potential to develop and increase the life of its future mine.
Meanwhile, the Federal authorities has additionally barred sure uranium developments within the Northern Territory.
That leaves maybe one secure option for buyers right here in Australia… South Australia’s Boss Energy [ASX: BOE].
Could this be a prized uranium investment alternative?
Perhaps, however Boss has its issues, too.
The board infamously offloaded its holdings within the stock during some difficult manufacturing intervals final 12 months, quickly after the mine restarted operations.
In response, the company’s share price cratered 60 %!
No doubt, Boss will come via this.
But I’m attempting to level out that the uranium market just isn’t an simple enviornment for the stock picker! That’s why I’ve been watching it (principally) from the sidelines.
From the growth in 2023 to a main correction in 2024.
But I firmly consider NOW is the time to significantly take into account alternatives within the uranium market. Uranium stocks have cratered to multi-year lows; that is a sector swimming in bargains!
If you’d like to seek out out the identify of the long time period uranium play I’m recommending to my paid readership group, you are able to do so right here.
Until subsequent time.
Regards,
James Cooper,
Editor, Mining: Phase One and Diggers and Drillers
All advice is basic advice and has not taken into consideration your personal circumstances.
Please search impartial financial advice concerning your own state of affairs, or if unsure concerning the suitability of an investment.
James Cooper has been a working geologist in mines throughout Australia, Canada, and Africa because the early 2000s. He’s led the operations of tiny explorers via to large producer outfits. He’s seen booms and busts firsthand and he additionally understands the cyclical nature of particular person commodities. For instance, James was proper there when Barrick Gold launched an monumental $7.5 billion takeover bid for Equinox. That was the height of the final cycle.
With his background as a geo and finance skilled, he brings a distinctive insight and expertise to Fat Tail Investment Research. He writes the broader resource-focused investing letter Diggers and Drillers and the ultra-speculative explorer-focused trading service Mining: Phase One.
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