The last quarter of 2021 was pivotal for the outlook for uranium, with a series of events confirming that nuclear power is back on track.
At the top of the list would probably be, just at the end of the year, the European Union publishing a draft energy plan which states that “there is a need to recognize that the fossil gas and nuclear energy sectors can contribute to the decarbonisation of the Union economy”.
In a January 1 statement, the EU said it viewed nuclear power (and gas) “as a means to facilitate the transition to a predominantly renewable energy future”.
Germany (which is phasing out nuclear power) and Austria have criticized the EU plan.
The EU’s nod to nuclear power is not aberrant
But history does not seem to be on the side of these two German-speaking republics. In fact, Germany just shut down three more nuclear power plants, eliminating 4 gigawatts of generating capacity.
In its latest quarterly report, emerging South Australian uranium producer Boss Energy (ASX:BOE) listed events in the three months to December 31 showing that the EU’s decision n is not aberrant.
As reported on Small caps last week, Boss Energy is making rapid progress towards the reopening of the Honeymoon mine.
Meanwhile, the Japanese government has adopted a new energy policy to achieve net zero by 2050, which not only recognizes nuclear as clean energy, but commits the country to a goal of nuclear providing between 20% and 22% electricity.
Finland commissions its first reactor in 40 years
In 2021, six new reactors entered commercial service worldwide, including two in the last quarter.
One of them, Unit 3 of Finland’s Olkiluoto power plant, was commissioned in December – Finland’s first commissioning of a new reactor in more than 40 years.
In the last quarter of 2021, Poland chose the site for its first nuclear power plant – this one in a country long tied to coal for power generation.
During the December quarter, French President Emmanuel Macron also confirmed that new nuclear reactors would be built for net-zero goals as well as to reduce the country’s independence from foreign energy supplies (for which, read Russia).
President Joe Biden has signed into law a $1.2 trillion (A$1.7 trillion) infrastructure bill that includes US$6 billion (A$8.4 billion) to support nuclear power plants at risk of early closing.
Meanwhile, the uranium supply is tightening
As Boss Energy reports, the supply of primary uranium remains tight as producer discipline is maintained.
Kazakhstan, the world’s biggest uranium exporter, will extend its existing production cuts until 2023, meaning a 20% reduction from what Kazatomprom had previously advised.
Meanwhile, Canadian miner Cameco is buying on the market to fulfill existing uranium supply contracts.
On top of that, the recently created Sprott Physical Uranium Fund has purchased more than 24 million pounds of uranium oxide since August, causing further pressure in the market.