Uranium’s price is 'too low' at $75; here’s where the price needs to go to incentivize mining - Amir Adnani
According to Amir Adnani, $75 per pound of uranium is too low to encourage the production of the metal.
Adnani is CEO of Uranium Energy Corp and Chairman of GoldMining Inc. He spoke with David Lin, anchor and producer at Kitco News, at the Vancouver Resource Investment Conference.
Adnani remarked that the Russia-Ukraine conflict would impact uranium markets. Russia is one of the world’s top uranium producers.
His comments come as the Uranium market saw some of the most volatile price movements in recent history, rising from $30 a pound last September to $50 in a span of two weeks, then hitting close to $65 a pound by April before falling back down to $47.8.
“[We’re] completely dependent on Russian uranium and enriched uranium for the fuel to generate emission-free electricity, which is nuclear power,” said Adnani. “… The U.S. is producing zero uranium domestically, no uranium mines are operating. And the biggest source of enriched uranium coming into the U.S. is from Russia… Uranium supplies from Russia are still entering the U.S. right now. There is a proposed bill, in the U.S. Senate and the House… that’s proposing to ban the imports of Russian uranium and utilities coming into the U.S.”
According to the U.S. Energy Information Administration (EIA), roughly 20% of the electricity generation in the U.S. comes from nuclear power, and 16% of the U.S. uranium supply came from Russia in 2020. Adnani mentioned that corporations may morally hesitate to invest in Russian uranium. He went on to stress that one in five U.S. households uses nuclear power.
“Demand for uranium is inelastic,” he said. “There are incredible mineral endowments in the West, in particular where my company is based, that could be developed, and become reliable sources of uranium in our own backyard.”
Adnani added that even if Russia were to impose retaliatory sanctions on the West by restricting uranium exports, American nuclear power plants would still have enough inventory on hand to last a while.
“I believe the energy market in terms of availability of electricity and energy will be just fine, because most U.S. utilities carry two to three years of forward demand in terms of inventory on hand,” said Adnani.
Uranium Energy Corp is based mainly in Texas and Wyoming. Last year, the company acquired Uranium One from the Russian government.
Adnani predicted that uranium’s price will rise over the next few years.
“Supply… has just been declining over the last decade,” said Adnani. “Meanwhile, demand has been increasing over the last decade… You’re talking about… over 440 reactors operating around world and over 30 countries that need uranium, year-in and year-out… With uranium, there’s probably a handful of companies with legitimate capability to produce uranium.”
Politically, there appears to be support for U.S. nuclear power.
“[Biden’s] Infrastructure Bill did have a provision in it of $6 billion as a tax credit to be given to U.S. based nuclear power plants,” said Adnani. “It’s in support of the stated net-zero objectives that the government has announced… and also, where there’s bipartisan support, is for a $1.5 billion program to establish a national uranium reserve.”
He affirmed that $65 per pound does not incentivize the building of new uranium mines.
“Two years ago, three years ago, you would have heard companies talk about $50 per pound as being potentially a level to incentivize the development [of mines]. But that was before we ended up in a world today that’s ravaged with double-digit inflation, and supply chain bottlenecks, and a tight labor market.”
To find out where Adnani believes the uranium price needs to go to encourage miners, watch the above video.
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