Uranium Investing News

By Melissa Pistilli-Exclusive to Uranium Investing News

As the reality of climate change and the need for clean energy production begins to set in, governments around the world are considering or re-considering nuclear power as a viable alternative to fossil fuels.

Countries like China, South Korea, Russia, Japan and even the United Kingdom have made it clear they are moving toward nuclear to supply a greater portion of their energy needs.

The latest news comes out of the UK. The nation’s Energy and Climate Secretary Edward Miliband announced this week that 10 new nuclear sites will be built across the UK over the next 15 years in order to cut carbon emissions while meeting the country’s energy needs.

“The threat of climate change means we need to make a transition from a system that relies heavily on high-carbon fossil fuels to a radically different system that includes nuclear, renewable and clean-coal power,” said Secretary Miliband.

The first nuclear plant of what some are calling “one of the world’s most ambitious expansions of nuclear-power capacity” is expected to come online by 2018. Many of the 10 plants will replace existing reactors that will soon reach the end of their life. This way, the plants will be in areas that already support nuclear power.

Presently, nuclear power is responsible for about 13 per cent of the UK’s energy production. By 2025, that number is expected to rise to 25 per cent.

“Change is also needed for energy security,” said Milibrand. “In a world where our North Sea reserves are declining, a more diverse, low-carbon energy mix is a more secure energy mix, less vulnerable to fluctuations in the availability of any one fuel.”

Increasing global demand for nuclear power equals increasing demand for uranium supplies.  And while the supply side is expected to be in a surplus over the short-term, the longer term outlook is still bullish.

“Demand for uranium is particularly acute at start-ups, since nuclear reactors use around three times the level of uranium to fire up as they need once they reach steady-state operation,” notes Investors Chronicle writer Matthew Li. “If these concerns are borne out it will push up uranium prices and the profitability of producers.”

And uranium producers who are able to secure long term offtake contracts with utilities companies will be in a great position to take advantage of rising uranium demand. While spot market prices are still well below their pre-crash highs, it’s important to know that only 10 per cent of uranium is actually traded on the spot market, says Investors Chronicle writer Mark Heyhoe.

Some utilities companies, especially out of Japan and South Korea, are working to partner with uranium miners on joint venture projects or to buy stakes in the companies. Two examples are the Japan Australia Uranium Resources and Development’s agreement with Mega Uranium [TSX: MGA] on the Lake Maitland project in Western Australia and Korean Electrical Power Corp’s 17 per cent stake in Denison Mines [TSX: DML].