Uranium is back in bull market territory.
While most other commodity prices have taken a hit, uranium prices are up more than 35% this year, according to Bloomberg. All as major mine shutdowns wiped out more than half of annual global output, as demand has remained stable.
In many cases, those shutdowns come courtesy of COVID-19. Production decreased in Kazakhstan, the world’s largest uranium mining country, after announcing it would reduce operations for about three months. Cameco halted production at Cigar Lake in Canada, as well.
“Prior to Kazatomprom’s [Kazakh uranium miner] announcement, we were forecasting a 30m pound deficit in [the] uranium supply/demand balance, which now looks as though it could be as much as 40m pounds,” said Alexander Pearce, analyst at BMO Capital Market, adding that the additional shortfall will “only accelerate” the depletion of inventories, as noted by Financial Times.
At the same time, the Trump Administration outlined plans to revitalize the U.S. nuclear energy market. In fact, a report from the Nuclear Fuel Working Group (NFWG) argues that “measures to buoy the struggling companies will allow for a rebirth of nuclear power in the U.S. while disrupting China's and Russia’s hold on the overseas market for reactors,” as quoted by The Hill.
Trump Administration officials also want to grant U.S. energy regulators the ability to block imports of nuclear fuel from Russia and China, adds Reuters. All while creating a U.S. stockpile of uranium from domestic producers.
With the NFWG report, there are several key support points for the industry.
- U.S. purchases of 17-19 million pounds of U3O8, beginning in 2020 from domestic producers based on a competitive bidding process.
- DOE will end the uranium bartering program and reevaluate DOE’s Excess Uranium Inventory Management Policy.
- Streamline regulatory reform and land access for uranium extraction.
- Support Department of Commerce efforts to extend the Russian Suspension Agreement to protect against future uranium dumping in the U.S. market.
- Enable the Nuclear Regulatory Commission to deny imports of nuclear fuel fabricated in Russia or China for national security purposes.
- Increase efficiencies in the export processes and the adoption of 123 Agreements to open new markets for exports of U.S. civil nuclear technology, materials and fuel.
Leading uranium companies that are in a position to potentially benefit from such news include Uranium Energy Corp. (NYSE:UEC), who controls the largest resource base of fully permitted ISR uranium projects in Texas and Wyoming, and Cameco Corp. (NYSE:CCJ) with projects in Wyoming and Nebraska. This is also welcomed news from companies that need uranium as the fuel for their nuclear reactors, including Duke Energy Corp. (NYSE:DUK), Exelon Corporation (NASDAQ:EXC), and Southern Co. (NYSE:SO).
As Uranium Energy Corp. (NYSE:UEC) CEO Amir Adnani told Fox Business’ Maria Bartiromo, “This nuclear report is really historic. It is the strongest policy statement made by the U.S. government in support of nuclear energy and uranium mining since the Eisenhower Administration in the 1950s. The President and the Trump Administration should be commended for addressing the pressing national security challenge.”
“The reason it’s a national security challenge is if you consider that uranium is key to 20% of the U.S. power supply and multiple vital defense needs. Yet, we’re producing none domestically and importing everything. We need a reliable American supply chain. It’s unimaginable the United States is now 100% dependent on uranium imports.”
Other related developments from around the markets include:
Cameco Corp. (NYSE:CCJ) reported its consolidated financial and operating results for the first quarter ended March 31, 2020 in accordance with International Financial Reporting Standards (IFRS). “We are living in unprecedented and challenging times.” said Tim Gitzel, Cameco’s president and CEO. “The impact of the coronavirus (COVID-19) pandemic has changed the world.“For more than 30-years protecting the health and safety of our employees, their families and their communities and supporting local businesses has been a priority for us. That is why, consistent with our values, we have made a number of proactive decisions to protect our employees and their communities, and to help slow down the spread of the virus. Despite the disruptions to our operations as a result of COVID-19 and the prudent decisions we have made, we expect our business to be resilient. We will continue to provide the fuel required to power the nuclear reactors that will be part of the critical infrastructure needed to ensure hospitals, care facilities and other essential services are available during this pandemic.
Duke Energy Corp. (NYSE:DUK) released a pair of data-driven reports outlining the company’s recent accomplishments and path to advance its critical environmental, social and governance (ESG) initiatives. The company’s Sustainability Report details the company's performance in four key areas – customers, growth, operations and employees. Duke Energy’s 2020 Climate Report discusses how the company is addressing climate change by reducing carbon emissions and making its electric grid more resilient. “Our commitment to ESG has delivered strong results for our customers and our shareholders – and we’re focused on maintaining this level of performance and transparency as we work to achieve net-zero carbon emissions by 2050,” said Lynn Good, Duke Energy’s chair, president and CEO. “These two reports showcase the significant progress we’ve made in these areas, and our plan to help address the challenges from climate change.”
Exelon Corporation’s (NASDAQ:EXC) Board of Directors of Exelon Corporation declared a regular quarterly dividend of $0.3825 per share on Exelon’s common stock. The dividend is payable on Wednesday, June 10, 2020, to shareholders of record of Exelon as of 5 p.m. Eastern time on Friday, May 15, 2020.
Southern Co. (NYSE:SO) reported first-quarter 2020 earnings of $868 million, or 82 cents per share, compared with $2.08 billion, or $2.01 per share, in the first quarter of 2019. Excluding the items described in the "Net Income – Excluding Items" table below, Southern Company earned $825 million, or 78 cents per share, during the first quarter of 2020, compared with $730 million, or 70 cents per share, during the first quarter of 2019.Earnings drivers for the first quarter 2020 were positively influenced by constructive regulatory actions completed at the company's state-regulated utilities in 2019, partially offset by mild weather. "Southern Company's strong start to 2020 will be beneficial as we look to overcome sales impacts from the coronavirus," said Chairman, President and CEO Thomas A. Fanning. "Our top priority remains keeping employees healthy and safe, even as our subsidiaries continue to provide clean, safe, reliable and affordable energy for customers. To date, our operational performance during this challenging time has been exceptional, and we have not experienced – nor do we anticipate – any significant supply chain disruptions for our utilities or construction efforts."
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