Europe could be heading for a “nuclear renaissance”, says Pierre Georges of S&P Global Ratings. With gas and power prices rocketing in the wake of Russia’s invasion of Ukraine, the appeal of atomic energy is only growing. Unlike other “lowcarbon alternatives”, such as wind and solar, nuclear provides “a stable, non-intermittent supply of power”.
The UK has announced plans to build up to eight reactors as part of its new energy strategy. France is also planning more reactors, while Belgium has shelved plans to phase out its nuclear plants in response to “a chaotic geopolitical environment”. The Netherlands, the Czech Republic, Poland, Estonia, Slovenia and Serbia also have new capacity in the pipeline, says Michael Brush on MarketWatch. Further afield, so do China and India.
Uranium is back in fashion
Uranium futures have soared by more than a third since the invasion, with shares in miners such as Canada’s Cameco rising a similar amount, says Jinjoo Lee in The Wall Street Journal. Shares in UK-listed uranium trader Yellow Cake are up 46% since 24 February. At $63 a pound, prices for the nuclear fuel are at their highest since 2011. That was the year when the Fukushima disaster prompted a global turn against nuclear energy, with Germany initiating a phase out of its nuclear power plants. Uranium prices slumped, falling as low as $18 in late 2016. The latest price rally has been driven by fears that supplies from Russia may be disrupted.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The enrichment bottleneck
Russia only accounts for about 6% of uranium-ore supply, behind Kazakhstan (40%), Canada (13%) and Australia (8%). However, the “major bottleneck” is not in the supply of uranium ore, but in the “conversion and enrichment processes” that turn the ore into usable fuel, says Justine Calma for The Verge.
Uranium ore must first be “refined” into yellowcake, a substance that resembles “yellow chalk” before undergoing “conversion” into a gas. Then it must be “enriched” to a level where it can be used as fuel rods in a reactor. This is a complex process and Russia has “43% of the global enrichment capacity”, followed by Europe (33%), China (16%) and the US (7%), say Alex Gilbert and Morgan Bazilian for The Conversation.
The result is that up to one-fifth of the annual US uranium supply is “at least partially sourced from Russia”. Kazakhstan may mine more ore, but much of that output “travels through Russia before it is exported to global markets”. Fuels are also “highly specialised and tied to specific reactor designs”. That makes it harder to shift nuclear suppliers at short notice. If sanctions or counter-sanctions on Russia cut the supply of enriched uranium, then “plants in the US and Europe could be affected within 18 to 24 months”.
-
Pension warning: one in five don’t know how much is going into their pensionHow to check your pension contributions and why it matters
-
50,000 power of attorney applications rejected – how to avoid common mistakesA freedom of information request shows that thousands of lasting power of attorney (LPA) applications are rejected due to errors. We explain how to avoid mistakes and reveal tips to make the process as straightforward as possible
-
Investing in a dangerous world: key takeaways from the MoneyWeek SummitIf you couldn’t get a ticket to MoneyWeek’s summit, here’s an overview of what you missed
-
DCC: a top-notch company going cheapDCC has a stellar long-term record and promising prospects. It has been unfairly marked down
-
How investors can use options to navigate a turbulent worldExplainer Options can be a useful solution for investors to protect and grow their wealth in volatile times.
-
Invest in Hilton Foods: a tasty UK food supplierHilton Foods is a keenly priced opportunity in an unglamorous sector
-
HSBC stocks jump – is its cost-cutting plan already paying off?HSBC's reorganisation has left questions unanswered, but otherwise the banking sector is in robust health
-
Lock in an 11% yield with SabreTips Sabre, a best-in-class company is undervalued due to low profits in the motor insurance industry. Should you invest?
-
Byju’s – the startling rise and fallIndia’s educational technology start-up Byju's attracted big-name backers and soared to vertiginous heights during Covid. It has now plummeted. What happened?
-
A bull market on borrowed timeWhile the US enjoys a bull market, it may not last. Will the US rate cut push stock prices down?
