The price of uranium continued its bullish streak this month hitting over US$65 per pound1, a high brought on by the commodity’s 10th winning week in a row and a benchmark not seen before the Fukushima accident of 2011.
It would appear that the crowd lining up behind uranium is growing and, like night following day, a shift in public sentiment may well see a change in political sentiment that could have a large ramification for a commodity, which has previously been found in abundance in Australia in the political “too-hard” basket.
Decarbonisation goals and a cost-of-living crisis fuelled (pardon the pun) by the seemingly ever-increasing cost of fossil fuels could force a review of Australia’s domestic stance on uranium’s exploration, mining and use.
Of course, it should be noted that even though the current price is still some distance off the high of June 2007 (the commodity reached an eye watering US$140 per pound) it is still at an altitude sickness inducing level for many, but not yet at the US$80/lb mark which WA’s largest wealth management firm Euroz Hartleys believes is required to incentivise greenfield projects into production.
Before we ponder things further closer to home, it’s worth considering the state of play globally.
Around the world, uranium investors are kicking goals, with several prominent uranium-based investment vehicles gaining over 30 per cent already in 2023 and many confident that tight supplies and strong demand will keep the ball rolling.
As has largely always been the case, even with global uranium consumption set to consistently outstrip supply over the coming years, the sector is still disproportionately tied to the decisions of governments, which have the most powerful say over the long-term prospects of the energy source.
However, the winds of change are certainly blowing. China is expected to build another 32 nuclear reactors by the end of the decade, while Japan has approved plans to restart multiple plants and build new facilities. Furthermore, the United States has recently opened a new nuclear power plant with more on the way.
Perhaps most notably has been the policy reversal on nuclear power from Finland’s Green Party, a longtime opponent of nuclear power. It flipped in 2022 and voted overwhelmingly to rewrite its party manifesto and categorise nuclear power as a form of sustainable energy.
The significance of that change extends well beyond Finland’s power market, which receives over a third of its electricity from nuclear and has become one of the first countries in the world to champion its commitment to being carbon neutral by 2035.
Make no mistake, it is only through nuclear power that Finland is able to be so aggressive in its decarbonisation stance, and it’s the same reason why other political backflips on nuclear power have materialised, including in Spain, Belgium and, most recently, Sweden, where a government energy target was reworded from “100% renewable” to “100% fossil-free” to allow for greater use of nuclear power.
Which returns us to WA where, despite an uptake in solar panels at evangelical levels, WA’s emissions levels are still rising and clearly there needs to be a circuit breaker.
It is well known that since taking power in 2017, the WA Labor government has maintained a “no uranium” condition on future mining leases.
Only four uranium projects that had received ministerial approval under the previous Liberal Government were given five years to demonstrate “substantial commencement” of their plans on site.
Of those four, just one project — Deep Yellow’s Mulga Rock north-east of Kalgoorlie, acquired from Vimy Resources in August 2022 — has received notice that it has satisfied conditions and is able to proceed.
For those with carbon emissions at the front and centre of their future thinking, it is worth pondering the comments of the Vimy interim chief executive Steven Michael in 2021 when he said: “Once developed, Mulga Rock will produce 3.5 million pounds of uranium oxide per annum and will power eight nuclear power stations, which is equivalent to 70 per cent of Western Australia’s greenhouse gas emissions, or 12 per cent of Australia’s total emissions.”
Given the current WA Labor Government has bent over backwards to appear a friend of the resources industry after the reputational damage brought on by their Federal counterpart’s “mining tax”, it seems perverse that one commodity would be singled out for the pariah treatment, especially when it has the potential to solve the carbon emissions and energy prices conundrums in one foul swoop.
While it may continue to be an academic question in the short term, should the price of uranium continue its journey north, come the State Election of March 2025 the uranium debate could back on the agenda but with those arguing for the commodity may find themselves with a whole new raft of supporters.
1 https://tradingeconomics.com/commodity/uranium
White Noise communications is provided a fee for service working with companies which may have exposure to commodities or securities mentioned in these articles. All articles are the opinion of the author and are not endorsed by, or written in collaboration with, our clients.
