Uranium Alpha

Renaud (0:00)

OKLOW, they're working on a small modular reactor that is, I'm sorry to be a bit technical, but they want eventually to use plutonium, which is the thing which is used for atomic bombs, which is radioactive for 140,000 years. So that's typically the kind of thing you want in your backyard. And their cooling system is based on liquid sodium, which has the property to explode when there is a leak, and it comes into contact with either air or water.

George Noble (0:46)

This could be a problem.

Renaud (0:48)

Yeah, this could be a problem. So these guys are trying to build a reactor on this technology, that they want to put, because it's a deci-bar, like 200 yards from where you live.

George Noble (1:01)

Renaud, if we say an X, what could possibly go wrong?

Renaud (1:05)

Nothing, nothing.

George Noble (1:06)

Go on, go on.

Renaud (1:10)

And if it were not enough, if you were a terrorist, you can have a backlog of plutonium there, which you can use to make a dirty bomb. So nothing. Go on, keep going. So I came to a meeting from the General Fusion meeting, and I told them, you know, I thought I had reached the sum of bullshit in my previous meeting.

But with you, I discovered that bullshit has no limit.

George Noble (1:41)

Renaud, how are you, my friend? Never a dull moment. Every week, something crazy is happening.

Renaud (1:46)

Absolutely.

George Noble (1:47)

Absolutely. So I understand you were just recently at a big uranium conference in London. Let's start there.

What's top of mind for you?

Renaud (1:57)

Well, actually, it seems that all the stars are aligned. The only thing which is not aligned is the price of uranium, which since the conference went down, and uranium mines went down as well.

It's a bit bizarre because everybody seems convinced that given the plans to build new reactors, the consumption per reactor, which is known, the electrification and transition, which is a given fact, somewhat independent from the fate of the economy today. So a classic real momentum for the next 20 years. The price is not moving when everybody in this business knows there will be a shortage within the next two to three years. So I tried to find some explanations, and I think that I found three explanations possible for the kind of volatile moment we are in uranium. The first one is it's a very thin market, as we discussed many times. So I guess very few people are involved or interested, and there's no derivatives of futures or liquid futures market on it. So the big trading houses, except for Mercurier, are not there. So Trafigura, Gunvor, all these guys are not in uranium. It's a $15 billion market for uranium itself, excluding the mines and the companies.

And $15 billion, when you think about it, is 1.5 days of oil treading. So it's something.

George Noble (3:37)

Hold on, repeat very slowly, please. So just for everyone watching, it's very important since you just... Yeah, yeah. Entire uranium market is only $15 billion is only... How much did you say? Per year, per year, $15 billion. $15 billion in one year?

Renaud (3:52)

In one year, for the mineral. I'm not talking about the mines and the nuclear stocks, which is somewhat bigger. But if you look at uranium as a commodity, like you look at gold or you look at silver or you look at copper or oil, uranium is $15 billion of...

George Noble (4:13)

Really? Yeah. Wow.

Renaud (4:15)

So it's very small. And typically, in a nutshell, a reactor needs 150 to 200 tons of uranium per year. Okay. These 200 tons of uranium are converted into 20 tons of Enriched Uranium. And Enriched Uranium is the fuel for these reactors.

So 200 tons times 400 reactors, you do the math. And at roughly $200 per kilogram, you do the math as well. So it's a very thin market. We have no derivatives, no futures, no options. So only cash.

George Noble (5:03)

Can I interrupt you, please, once we go any further, just because for those watching you, they aren't as expert in uranium. Could you just remind folks, I know the math roughly speaking, but the cost of the uranium in comparison to the fixed cost of the reactor and everything else is very small, no? I mean, the uranium is tiny. Could you go through the math with these?

Renaud (5:22)

Absolutely. So the strange thing is that utilities, which are the main buyer of uranium to the 90 percent of uranium, is bought by utilities. The other market being the army, but it's a tiny market. And most of the bombs have been built yet. And medical with isotopes to treat different type of cancers. So let's say 90 to 95 percent market is comprised of utilities for their nuclear fleet, nuclear reactor fleet. Utilities know about and utilities represent 80 percent of the buyers of uranium.