The Biden administration's clean energy agenda, which includes plans for nuclear energy development, has boosted the fortunes of America's uranium producers. A strategic stockpile of uranium, advancements in SMR technology, and potential military-uses of nuclear energy are all on the table.  Meanwhile, the global supply of uranium has been shifting toward a shortage for several years now, amid planned declines in output from several major producers. COVID-19 accelerated those drawdowns, helping uranium spot prices jump to a 4-year high above $30 per pound. However, that may still be too cheap to slow further production cuts ahead. Related ETFs: North Shore Global Uranium Mining ETF (URNM), Global X Uranium ETF (URA)
Nuclear Power Makes an American Comeback Earlier this month, Bank of America noted that the planned closure of 12 US nuclear power plants in the current decade could be postponed beyond 2030, thanks to President Biden’s clean energy agenda – one that specifically carves out a place for nuclear energy. As Barron’s reported, delays to planned nuclear plant closures in the United States could increase uranium demand projections by 26 million pounds a year. BofA analyst Lawson Winder also wrote that “The US Nuclear Regulatory Commission (NRC) is reportedly studying the technical implications of extending nuclear power plant licenses to 100 years… Successful license extensions to 100 years would allow all 94 US. nuclear plants in operation today to continue operating until at least 2069.” That was the second blast of positive news for US uranium producers in the last year, following the establishment of a large strategic inventory of domestic supplies. As MRP wrote back in September, the Trump administration had asked Congress for $150 million per year over the next decade to establish a stockpile of American uranium. While that was whittled down to $75 million for an initial year of funding when finally passed by congress, the bill’s passage would still result in an inventory draining 2.5 million pound purchase of American uranium, according to Investor Intel. That amount is well-above annual domestic production, which was only 174,000 pounds of U3O8 (uranium oxide concentrate) in 2019 and declined even further in 2020. The bill, inherited by President Biden, is now awaiting his signature. Biden’s energy platform mentions advanced nuclear as part of “critical clean energy technologies” and lists “reclaiming” domestic uranium mining as a goal. Nuclear energy provides about 55% of carbon-free power in the United States and has effectively prevented around 506 million metric tons of CO2 emissions. As the largest consumer of global uranium production, the US accounts for nearly 30% of worldwide demand, but little of that uranium is sourced internally. Popular Mechanics notes that Biden has also laid out his support for developing new nuclear energy technologies – in particular, “small modular nuclear reactors (SMRs) at half the construction cost of today’s reactors”. Toward the end of 2020, the US Department of Energy said it would be awarding an initial $30 million in "risk reduction funding" to five SMR developers. The cash is part of a $600 million matched-funding package being paid out over seven years from DOE’s Advanced Reactor Demonstration Program (ARDP). “The goal of the Risk Reduction program is to design and develop safe and affordable reactor technologies that can be licensed and deployed over the next 10 to 14 years,” DOE said in a statement, cited by greentechmedia. The global market for SMRs is expected to be worth up to $300 billion a year by 2040, according to Seamus O’Regan, Canada’s Minister of Natural Resources. Another aspect of nuclear power policy that the Trump administration left behind in the final days of his presidency was an executive order aimed at pushing the Department of Defense toward quickly developing and producing small nuclear reactors for military use — and to see if they could be used by military space vehicles. While the use of nuclear power is not a new idea for the DoD...
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