David Talbot of Dundee Capital Markets forecasts uranium demand growth of about 6% compounded annually through 2020, which ought to be more than enough to kickstart depressed U3O8 prices. Nuclear energy is part of a growing trend away from fossil fuels toward green energy and things like lithium-ion batteries for cars and energy storage. Talbot explains that lithium demand is expected to grow even faster than uranium demand, and the market is already undergoing a supply deficit. In this interview with The Energy Report, he offers his top picks in the uranium and lithium spaces, as well as a graphite name, all poised to ride the green energy trend higher.
The Energy Report: Global uranium demand was about 172 million pounds (172 Mlb) in 2014, according to the International Energy Agency, but you have written that the commissioning of new reactors in China and the restart of reactors in Japan following the long shutdown post-Fukushima could push demand higher in the coming years. How much do you expect uranium demand to increase?
David Talbot: We forecast uranium demand growth of about 6% compounded annually out to 2020, when we expect demand to reach about 219 Mlb. This compares to about a 4.2% compounded annual growth rate for uranium supply to about 206 Mlb over the same period. With this kind of growth, at least a $65/lb uranium price is required to develop new mines.
Ux Consulting calls this an inventory-driven market, which is probably right, though not all that inventory is readily available to endusers. Stockpiles aren’t growing at most power plants, but many governments are adding to their strategic stockpiles.
“Fission Uranium Corp. has added meaningful pounds at the R600 West and R780 zones.”
We believe uranium market pressures will continue, and we see …read more