Cameco - Uranium

 

Suppy - Demand deficit is continuing, because the numbers of largest Uranium mines are running out of ore, 2 of them in Australia is closed, vast Uranium producer in Kazakhstan by the nature of deposit, they have a depletion tail, the rate of production from big deposit start to decrease. The gap of Suppy - Demand would be widen further

1. World largest economy- USA committed to carbon neutral by 2050

2 The growth of electricty itself in "electricfication" of everything

in foreseeable future that economy is transforming into digital pattern, also for "electrification" of transport

3. China have big potential for Uranium consumption by 2040

Uranium Has That Healthy Glow Again

Uranium’s future demand growth is hard to predict, but a couple of years’ worth of supply discipline has provided reason for optimism

It has been just over a decade since the Fukushima disaster and the nuclear-fuel industry is cautiously betting prospects for its products have finally recovered.

Some of the optimism can already be seen in the share price of Canadian company Cameco, CCJ +2.39% one of the largest miners of uranium behind No. 1 producer Kazatomprom, a state-run company in Kazakhstan. Cameco’s U.S.-listed shares have risen almost 180% over the past year, to levels not seen since 2014.

The last time Cameco saw year-over-year net income growth was 2015, when the spot price of uranium oxide hovered above $35 a pound for most of the year. Since then, the commodity’s price has mostly stayed below $30 a pound, though it seems to be recovering quickly. As of Monday, the spot price was $29.60 a pound, up 7.3% in one week, according to data from nuclear fuel market research firm UxC. Uranium is mostly sold on contracts with utilities rather than via the spot market. Jonathan Hinze, president of UxC, notes that among nonsubsidized mines, the all-in cost of production can range anywhere from $10 a pound up to $38 a pound.

The supply-demand picture appears unchanged from last year, but this masks the underlying dynamics of an opaque and long-cycle industry. In 2021 global uranium demand is expected to shrink slightly to 178 million pounds from 2020’s 181 million pounds, with supply—both from mining and from secondary sources—staying constant around 166 million pounds, according to UxC. Though the numbers make it seem like demand exceeds supply, there are significant uranium sources that utilities, suppliers and intermediaries have stockpiled over the years.

Another source of uncertainty is in fuel supply from secondary sources, including so-called tailings from previously processed uranium that can be enriched. Some countries also supplement their uranium needs by reprocessing used fuel rods rather than buying uranium newly mined from the ground.

While estimating the exact global stockpile is tricky, there are some indications that inventory is starting to get depleted. Over the past five years, roughly 815 million pounds of uranium oxide equivalent have been consumed in reactors, while 390 million pounds have been locked up under long-term contracts with the uranium producers, according to UxC’s estimates. Expectations for so-called uncovered uranium requirements, the amount that nuclear power plants require but don’t have contracts for, aren’t very high for 2021 but are expected to reach 33% of demand in 2025 and 81% by 2035.

The panic is a reminder that modern life needs abundant energy: without it, bills become unaffordable, homes freeze and businesses stall. The panic has also exposed deeper problems as the world shifts to a cleaner energy system, including inadequate investment in renewables and some transition fossil fuels, rising geopolitical risks and flimsy safety buffers in power markets. Without rapid reforms there will be more energy crises and, perhaps, a popular revolt against climate policies.

 

Tight markets are vulnerable to shocks and the intermittent nature of some renewable power. The list of disruptions includes routine maintenance, accidents, too little wind in Europe, droughts that have cut Latin American hydropower output, and Asian floods that have impeded coal deliveries. The world may yet escape a severe energy recession: the glitches may be resolved and Russia and opec may grudgingly boost oil and gas production. At a minimum, however, the cost will be higher inflation and slower growth. And more such squeezes may be on the way.

That is because three problems loom large. First, energy investment is running at half the level needed to meet the ambition to reach net zero by 2050. Spending on renewables needs to rise. And the supply and demand of dirty fossil fuels needs to be wound down in tandem, without creating dangerous mismatches. Fossil fuels satisfy 83% of primary-energy demand and this needs to fall towards zero. At the same time the mix must shift from coal and oil to gas which has less than half the emissions of coal. But legal threats, investor pressure and fear of regulations have led investment in fossil fuels to slump by 40% since 2015.

 

Gas is the pressure point. Many countries, particularly in Asia, need it to be a bridge fuel in the 2020s and 2030s, shifting to it temporarily as they ditch coal but before renewables have ramped up. As well as using pipelines, most import liquefied natural gas (lng). Too few projects are coming on stream. According to Bernstein, a research firm, the global shortfall in lng capacity could rise from 2% of demand now to 14% by 2030.

Fossil fuels include coal, petroleum, natural gas, oil shales, bitumens, tar sands, and heavy oils. All contain carbon and were formed as a result of geologic processes acting on the remains of organic matter produced by photosynthesis

The second problem is geopolitics, as rich democracies quit fossil-fuel production and supply shifts to autocracies with fewer scruples and lower costs, including the one run by Mr Putin. The share of oil output from opec plus Russia may rise from 46% today to 50% or more by 2030. Russia is the source of 41% of Europe’s gas imports and its leverage will grow as it opens the Nord Stream 2 pipeline and develops markets in Asia. The ever-present risk is that it curtails supplies.

 

The last problem is the flawed design of energy markets. Deregulation since the 1990s has seen many countries shift from decrepit state-run energy industries to open systems in which electricity and gas prices are set by markets, supplied by competing vendors who add supply if prices spike. But these are struggling to cope with the new reality of fossil-fuel output declines, autocratic suppliers獨佔供應者(類似俄羅斯天然氣公司) and a rising share of intermittent不穩定 solar and wind power. Just as Lehman Brothers relied on overnight borrowing, so some energy firms guarantee households and businesses supplies that they buy in an unreliable spot market.

 

Governments need to respond by redesigning energy markets. Bigger safety buffers ought to absorb shortages and deal with the intermittency 供應量和價格上不穩定 of renewable power. Energy suppliers should hold more reserves, just as banks carry capital. Governments can invite firms to bid for backup-energy-supply contracts. Most reserves will be in gas but eventually battery and hydrogen technologies could take over. More nuclear plants, the capture and storage of carbon dioxide, or both, are vital to supply a baseload of clean, reliable power.

 

A more diverse supply can weaken the grip of autocratic petrostates such as Russia. Today that means building up the LNG business. In time it will require more global trade in electricity so that distant windy or sunny countries with renewable power to spare can export it. Today only 4% of electricity in rich countries is traded across borders, compared with 24% of global gas and 46% of oil. Building subsea grids is part of the answer and converting clean energy into hydrogen and transporting it on ships could help, too.

 

All this will require capital spending on energy to more than double to $4trn-5trn a year. Yet from investors’ perspective, policy is baffling. Many countries have net-zero pledges but no plan of how to get there and have yet to square with the public that bills and taxes need to rise. A movable feast of subsidies for renewables, and regulatory and legal hurdles make investing in fossil-fuel projects too risky. The ideal answer is a global carbon price that relentlessly lowers emissions, helps firms judge which projects would make money, and raises tax revenues to support the energy transition’s losers. Yet pricing schemes cover only a fifth of all emissions. The message from the shock is that leaders at cop26 must move beyond pledges and tackle the fine print of how the transition will work. All the more so if they meet under light bulbs powered by coal