Commentary
I have not talked much lately about uranium in the newsletter as I did not feel there was actually anything major to report. We are in a multi-year uranium bullmarket due to a lack of supply and increased demand due to a major buildout of nuclear reactors worldwide (primarily in emerging markets).
Depending on who you want to listen to, the world currently needs 180 million pounds of uranium annually (and growing), yet the supply is only 130-140 million pounds (and not growing enough). This supply shortage is largely due to years of underinvestment in new uranium resources.
The underinvestment is largely due to a long period of low prices resulting from uranium oversupply that came online after the last bull market in uranium. This oversupply was exacerbated by the Fukushima accident, which caused Japan and several other countries to shut down or curtail their operating reactors, further choking demand.
The accident and demand curtailment turned the market upside down, and the price of uranium crashed. As uranium mining is an extractive industry, one must replace what one mines, or you go out of business at some point. No one spent money on new uranium resources as the price did not warrant it. We now have a supply issue and rising prices, which is our opportunity.
This is a basic review. Now, we have what I think could be a major change in policy by the US, which is the culmination of many similar announcements from countries around the world.