What is Uranium?
Uranium is a radioactive material that can be located and extracted in many countries throughout the world. It is part of the process of powering nuclear fission, which accounts for over 10% of the world’s electricity. Uranium is a relatively clean burning source, as a tiny amount can produce the same amount of power as coal, without the same harmful emissions that coal releases into environment.
Misconceptions About Uranium
There are a lot of negative misconceptions surrounding uranium and nuclear power. Nuclear power is often viewed by the general public as a dangerous or unstable process. This perception is often based on three global nuclear accidents, its false association with nuclear weapons, and how it is portrayed in popular television shows and films.
In 2011, Japan’s Fukushima power plant was hit by a severe earthquake and tsunami in the region, causing the most severe nuclear accident since the Chernobyl disaster. This resulted in the meltdown of its reactors and discharge of radioactive water, forcing residents to evacuate their homes. Following this disaster, Japan’s nuclear power production dropped from 30% to just 2%. All nuclear plants in the country were either closed down or operations were suspended, and other countries became wary of nuclear power generation also, cutting down on their own operations.
Because of this, the price of uranium was basically halved after 2011 and had been struggling for a while since then.
A 25-year price chart for uranium is shown below:
Although, over the last year and a half, the price of uranium has started to regain some of that lost ground, rising from $20 to $50, as society becomes increasingly aware of the importance of nuclear energy's role in achieving a green economy.
The truth of the matter is that Uranium is one of the cleanest and safest sources of energy out there and if we as a society plan to transition to a green economy, nuclear energy will need to play a bigger role. The electricity and power needs of the world cannot be met with solar, wind, and geothermal energy sources alone. These sources simply cannot produce enough power.
A recent example of this is California’s Diablo Canyon Nuclear Plant, which just received a $1.1B grant from the US government in order to extend the plant’s operations — currently set to end in 2025 — to meet electricity demand at a time of intensifying climate events.
Sen. Dianne Feinstein (D-Calif.) celebrated the announcement, saying in a written statement that the federal investment “will allow Diablo Canyon to continue producing carbon-free energy until 2030, giving the state the time it needs to bring additional renewable energy sources online and eventually replace the energy produced by the nuclear plant. This short-term extension is necessary if California is going to meet its ambitious clean-energy goals while continuing to deliver reliable power.”
Nuclear Energy is the Most Reliable and Cleanest Energy Source
The chart below shows the “capacity factor” for various different energy sources in the US. Capacity is the amount of electricity a generator can produce when it’s running at full blast.
As you can see, nuclear energy has by far the highest capacity factor of any other energy source. Nuclear power plants are producing maximum power more than 92% of the time during the year, which is nearly 2 times more than natural gas and coal units, and almost 3 times more than wind and solar plants.
This is because nuclear power plants require less maintenance and are designed to operate for longer stretches before refueling (typically every 1.5 or 2 years), while natural gas and coal capacity factors are generally lower due to routine maintenance and/or refueling at these facilities. Renewable plants are considered intermittent or variable sources and are mostly limited by a lack of fuel (i.e. wind, sun, or water). As a result, these plants need a backup power source such as large-scale storage (not currently available at grid-scale)—or they can be paired with a reliable base-load power like nuclear energy.
The reality of the situation is that Nuclear Energy is the largest source of clean power in the United States. It generates nearly 800 billion kilowatt hours of electricity each year and produces more than half of the nation’s emissions-free electricity. This avoids more than 470 million metric tons of carbon each year, which is the equivalent of removing 100 million cars off of the road.
How to Invest in Uranium?
Unlike other commodities and raw materials such as gold, silver and crude oil, it is not possible to invest in or trade on physical uranium, due to its radioactive nature. Instead, an alternative way of gaining exposure to this commodity is via the stock market.
There is one particular uranium stock that I have been following which recently just hit a groundbreaking discovery hole. Word on the street is that this company could be tracking a MASSIVE uranium deposit, similar in scope to that of Nexgen Energy’s Rook 1 Project. For some perspective, Nexgen currently has a market cap of $3 billion, and the market cap of this particular company I will be showing you, is still under $100M. The company I am referring to will be doing some additional step-hole drill holes in the coming weeks and if they hit on these, I think the share price could go nuclear, pun intended.
I will be revealing the name of this company in the next few days.
Stay tuned.
-SmallCapInvestor