The price of uranium is still in the doldrums, but that will change soon—and violently, says Rob Chang of Cantor Fitzgerald Canada. In this interview with The Energy Report, he explains that electric utilities will begin to run short of fuel even before 2020, when 33 additional reactors are expected to come on line. With that in mind, Chang predicts that prices could triple in the next few years, and highlights a half-dozen equities that will likely supply the increased demand and thereby deliver multiples to investors.
The Energy Report: Does cheap oil depress uranium demand?
Rob Chang: It shouldn’t, because uranium is feed for nuclear power, whereas oil is more of a transportation energy source. Oil isn’t commonly used as a source of base-load power supply. However, we have noticed that uranium equities seem to be greatly influenced by the oil price. For some reason or another, it does occur. But I wouldn’t attribute the decline in uranium equities entirely to the decline in the oil price. There has been of late a flight from all commodities.
TER: Would you say the price of oil serves as an index of the strength of the world economy?
RC: Oh, absolutely. As global activity picks up, we see more construction and a greater use of transportation. And you need oil to make that happen.
TER: Do you expect nuclear power usage to grow despite the global economic lull?
RC: I do. China is moving forward with determination on nuclear power. Not so much for the power it needs now, but for the power it will need to accommodate future growth. We could be seeing an economic slowdown in China, but it remains robust compared to other countries. China will have a voracious demand for uranium as the number of its nuclear reactors increases from 36 today to …read more