@TerraPower's Natrium reactor is designed to work hand in hand with solar power, with a built-in thermal reservoir to efficiently store energy for later use while solar dominates the daytime grid. [It's a reactor custom-built for California.]
Nuclear power is adapting to the modern grid. As we move into a critical period of energy development, existing & new reactors are ready to meet the challenge of the modern electricity grid.
But if we don't advocate for nuclear today, we can't meet global decarbonization goals.
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Not exactly a revelation, but the #uranium daily prices are often indicative and sometimes move on zero volume. *Literally* zero volume. And this has been true recently for small price movements in both directions.
We want a daily price, but it feels like a “data vs. information” situation. Unlike, say, a front-month oil price which carries location, specification, and timing information, uranium is fuzzy.
Spot is 15 days out? A month? A year? Price is only one datum we need to understand.
100,000 pounds U3O8 (standard volume) is 0.06% of annual requirements.
As a percentage of total volume, that’s like an oil future being 800,000 barrels rather than 1,000.
It’s not worth comparing the spaces too deeply, but a few dozen shares of SPUT is more “future-sized.”
Been a real Tale of Two Conferences for me lately - first to Montreal with the nuclear fuel buyers and sellers, and then to PDAC in Toronto with the broader mining industry and its many investors.
As far as #uranium is concerned, the vibes couldn't have been more different.
Montreal was a tense room. It's the first big get-together since the Russian invasion of Ukraine, so its implications to the world nuclear fuel market dominated the program.
What was true before is doubly true now: we need greater nuclear fuel capacities across the entire cycle.
The industry is at an impasse.
Who funds new production (esp. conversion & enrichment)? Uncertainty over future Russian deliveries prevents many buyers from going all-in on long-term contracting. But so too are many producers unwilling, warry of the recent cycle of overcapacity.
seeing more discussion on #uranium inventories, so remember that:
1. utilities use different accounting methods, so trying to evaluate inventory using book value won't yield useful comparisons b/w utilities 2. "strategic inventory" and "pipeline inventory" aren't the same thing
regarding #2 - if someone says "utilities have 16 months of inventory," they mean that *in addition* to the pipeline of material which is being purchased to fabricate fuel on an 18/24-month cycle, there is additional material in reserve equal to 16 months of requirements
contrast that with end of year inventory numbers from the EIA UMAR report, which don't distinguish between EUP sitting ready to put into fuel next january and EUP being held as a hedge against missed deliveries/disruptions
year to year trends in the UMAR are important, of course
Spent some time tonight updating my #uranium enrichment graphics. A monolithic SWU price doesn't really tell us anything without context. I'll walk through a few examples below.
Tails assay is the residual uranium-235 contained in enrichment facility waste ("tails"). Over the last 10 years, average tails assay has crept down from 0.30% to 0.18% (or lower).
Tails assay governs the ratio of uranium to enrichment work (SWU) used to make enriched uranium.
To produce one kilogram of uranium mass (kgU) contained in enriched uranium product (EUP) at 4.5% enrichment assay, the amount of uranium and enrichment required varies based on the tails assay.
[Handy tip - 1 kgU of UF6 contains 2.61285 pounds of U3O8.]
(1) I’m no trader, but I think it’s fair to characterize a uranium equity’s value as the sum of:
(a) value of asset(s) at current U price
(b) value of contract book & permits
(c) mgmt knowledge/experience
(d) an option on higher uranium prices
Very few developers have much value in categories (a) and (b), and (c) can be noteworthy but de minimus in some cases.
It begs the question: if a uranium equity currently has a market cap in the hundreds of millions, how is the market valuing this “uranium option?”
This uranium option feels like a probability distribution. The chance that uranium hits $40/lb, $50/lb, $70/lb, etc. confers speculative value on the developer’s assets at those prices. The market cap of many of these companies feel entirely composed of this type of speculation.