This is really interesting. Thorium dreams have always been rolled out when oil is stratosphere-ing to appease the fear. (I might venture to say, when oil was being used as a weapon by the U.S. against some other nation state, and was seriously hurting its constituents as it hoovered up their income like a tax with nothing more to show for it)
Now oil is tanking, and they are rolling this out for bigger reasons (like you write). Still would like to see the proof of multiple constructions, but this looks like a whole new ball game.
I do believe the nuclear sector deserves more coverage on this site. Maybe a spot in the daily rundown?
Uranium is different than most commodities. Spot price is not truly indicative of what's going on in the market, it’s bankers/traders/funds (15% of market). Miners prefer to sell into term contracts and utilities need to secure supply (85% of market), and those prices are rising but we only get a glimpse when miners publish their term sheets. Latest U3O8 futures price is $76.60, while contract prices are coming in higher for future delivery. This signals power utilities’ expectations of constrained supply.
Top 10 uranium producing countries: Kazakhstan, Canada, Namibia, Australia, Uzbekistan, Russia, Niger, China, India, South Africa. The top two are more than 50% of worldwide production. The incoming US government’s mercantilist approach and ‘more-energy-from-all-sources’ policy will mean sourcing from friendly suppliers and sanctioning unfriendly ones.
So what is a useful tracking metric in this space? Cameco is a miner but also a bellwether for the industry. It’s fully vertically integrated from extraction to processing to enrichment to now owning half of Westinghouse Electric in the generation sector. It’s the AAPL of nuclear. And two bullish signals recently happened. 1) Golden cross on Oct 31. 2) Yesterday Nov 21 Cameco broke above its previous all-time high set during the October 2024 FOMO hype cycle of AI data centers securing nuclear power contracts (and prior high dating back to 2007). This price action might be the market digesting Trump’s energy admin picks and seeing which way the wind is blowing policy-wise for the next four years. The recent TS Lombard report pointed out that nuclear energy is one of the few overlapping areas of agreement between the outgoing and incoming administrations. Trump 45 put uranium on the Critical Minerals List, Biden took it off, so watch what Trump 47 does.
Logical next step is increasing M&A of production-ready and proven reserves in the US and sanction-friendly countries. Possible next step is something similar to the silver industry, where manufacturers are cutting the line to buy concentrate directly from miners. In this case it could be tech companies buying mine production to fuel their AI dreams. It’s not the same old capital markets financing game for miners anymore - those financiers don’t commit until they see firm prices for an extended period. And unlike gold, there’s no vaulted reserves that can be dumped onto the market; the closest thing is mines on ‘care & maintenance’ which can be re-started faster than new mines will be permitted and built.
So the flow would be: producers first then explorers, majors then juniors, domestic then friendly, watch for a top when supply exceeds demand.
This is really interesting. Thorium dreams have always been rolled out when oil is stratosphere-ing to appease the fear. (I might venture to say, when oil was being used as a weapon by the U.S. against some other nation state, and was seriously hurting its constituents as it hoovered up their income like a tax with nothing more to show for it)
Now oil is tanking, and they are rolling this out for bigger reasons (like you write). Still would like to see the proof of multiple constructions, but this looks like a whole new ball game.
Kairos Power not a privately held company
I do believe the nuclear sector deserves more coverage on this site. Maybe a spot in the daily rundown?
Uranium is different than most commodities. Spot price is not truly indicative of what's going on in the market, it’s bankers/traders/funds (15% of market). Miners prefer to sell into term contracts and utilities need to secure supply (85% of market), and those prices are rising but we only get a glimpse when miners publish their term sheets. Latest U3O8 futures price is $76.60, while contract prices are coming in higher for future delivery. This signals power utilities’ expectations of constrained supply.
Top 10 uranium producing countries: Kazakhstan, Canada, Namibia, Australia, Uzbekistan, Russia, Niger, China, India, South Africa. The top two are more than 50% of worldwide production. The incoming US government’s mercantilist approach and ‘more-energy-from-all-sources’ policy will mean sourcing from friendly suppliers and sanctioning unfriendly ones.
So what is a useful tracking metric in this space? Cameco is a miner but also a bellwether for the industry. It’s fully vertically integrated from extraction to processing to enrichment to now owning half of Westinghouse Electric in the generation sector. It’s the AAPL of nuclear. And two bullish signals recently happened. 1) Golden cross on Oct 31. 2) Yesterday Nov 21 Cameco broke above its previous all-time high set during the October 2024 FOMO hype cycle of AI data centers securing nuclear power contracts (and prior high dating back to 2007). This price action might be the market digesting Trump’s energy admin picks and seeing which way the wind is blowing policy-wise for the next four years. The recent TS Lombard report pointed out that nuclear energy is one of the few overlapping areas of agreement between the outgoing and incoming administrations. Trump 45 put uranium on the Critical Minerals List, Biden took it off, so watch what Trump 47 does.
Logical next step is increasing M&A of production-ready and proven reserves in the US and sanction-friendly countries. Possible next step is something similar to the silver industry, where manufacturers are cutting the line to buy concentrate directly from miners. In this case it could be tech companies buying mine production to fuel their AI dreams. It’s not the same old capital markets financing game for miners anymore - those financiers don’t commit until they see firm prices for an extended period. And unlike gold, there’s no vaulted reserves that can be dumped onto the market; the closest thing is mines on ‘care & maintenance’ which can be re-started faster than new mines will be permitted and built.
So the flow would be: producers first then explorers, majors then juniors, domestic then friendly, watch for a top when supply exceeds demand.