Nuclear power and uranium are on the move

The final quarter of 2021 was a momentous one for the uranium outlook, with a series of events confirming that nuclear power is again on the march.

Probably top of the list would be, just at year’s end, the European Union issuing a draft energy plan which states that “it is necessary to recognise that the fossil gas and nuclear energy sectors can contribute to the decarbonisation of the Union’s economy”.

In a statement on 1 January, the EU said it sees nuclear energy (and gas) “as a means to facilitate the transition towards a predominantly renewable-based future”.

Both Germany (which is phasing out nuclear) and Austria criticised the EU plan.

EU nod to nuclear is no outlier

But history would not appear to be on the side of those two German-speaking republics. In fact, Germany has just closed three more nuclear plants, removing 4 gigawatts of generation capacity.

In its latest quarterly report, emerging South Australia uranium producer Boss Energy (ASX :BOE) pulled together a list of events in the three months ending 31 December showing that the EU move is no outlier.

As reported on Small Caps last week, Boss Energy is rapidly advancing toward re-opening the Honeymoon mine.

Meanwhile, the Japanese government has adopted a new energy policy to achieve net zero by 2050 which not only recognises nuclear as clean energy but commits the country to a target having nuclear provide between 20% and 22% of electricity.

Finland commissions first reactor in 40 years

In 2021, six new reactors began commercial operation globally, two of them in the final quarter.

One of those, Unit 3 at the Finland’s Olkiluoto power station, came online in December — the first Finnish commissioning of a new reactor in more than 40 years.

In the last quarter of 2021 Poland selected the site for its first nuclear power plant — this from a country long wedded to coal for electricity generation.

In the December quarter, French President Emmanuel Macron also confirmed new nuclear reactors will be built for net zero goals as well as to reduce the country’s independence on foreign energy supplies (for which, read Russia).

President Joe Biden signed into law a US$1.2 trillion (A$1.7 trillion) infrastructure bill that includes US$6 billion (A$8.4 billion) to support nuclear power plants that are under threat of early closure.

Meanwhile, uranium supply tightens

As Boss Energy reports, primary uranium supply remains tight as producer discipline is maintained.

Kazakhstan, the world largest uranium exporter, will extend its existing production cuts into 2023, meaning a 20% reduction of what Kazatomprom had previously advised.

Meanwhile, Canadian miner Cameco is purchasing from the market to fill existing uranium supply contracts.

On top of this, the recently formed Sprott Physical Uranium Fund has bought more than 24 million pounds of uranium oxide since August, causing a further squeeze on the market.