Why I'm Long Uranium and Nuclear/Power Engineering


"No global warming policy should be taken seriously unless it includes significant outlays for nuclear energy."

Global warming will play an increasing role in economics/politics in the coming decades; however, current policy prospects for solving global warming stand just about a 0% chance of solving global warming.

The only economically feasible solution that stands any shot of tackling the global warming issue is nuclear power. No global warming policy should be taken seriously unless it includes significant outlays for nuclear energy. Yes it has tremendous upfront costs, but it is the lowest marginal cost provider of energy with the lowest emissions.

The current bull market in politics will keep on pace subsidizing corn ethanol production in an effort to earn the Iowa caucus votes and the subsequent political benefits regardless that this policy offers zero positives to society but it does provide tremendous costs for the world. Solar and other alternatives will once again re-emerge as an investment fad. Much like the tech bubble, these companies might soar up in value as the craze hits before ending much like the tech bubble ended.

When this collapse occurs, nuclear will finally emerge as the "duh" solution to solving global warming while expanding power capacity, thereby maintaining economic growth, for the world as well as the U.S.

All uranium consumed today goes into electricity generation, much of it for baseload capacity. Consequently, we should expect uranium demand to be utility—like in nature and only modestly impacted by economic weakness. Growth will be driven not only by global power needs, but also by market share gains. Nuclear power is competitive economically.

Despite a spike in uranium pricing in 2004–2007, mine production grew only 13.5 million lbs. during the 10-year period to 2007—a mere 1.4% annually. This reflects the industry’s challenges in both expanding existing operations and starting up new mines

Meanwhile, today’s uranium price provides limited incentive to explore for and develop new mines, while existing operations and known deposits face a myriad of challenges. The marginal cash cost for the uranium industry is believed to be in the US$45–$50/lb range, higher than today’s spot price. Adding in a reasonable return on investment suggests a minimum US$60–$65/lb contract price to justify investment in a typical new project.

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