Uranium’s Supply Crunch Is Getting Worse — And Prices Could Go Much Higher

Justin Huhn (0:00)

The biggest bottleneck that we see in the coming years is Uranium. We believe it's gonna go minimally to $150 to $200 pounds during the cycle and probably higher. We think this is gonna be a very, very long term secular bull market.

Maggie Lake (0:17)

Joining us today, Justin Huhn, founder and publisher of Uranium Insider. Hey Justin, great to have you with us.

Justin Huhn (0:23)

It's a pleasure to be back and very nice to see you today.

Maggie Lake (0:25)

I wanted to get your take on a development in the nuclear space, which on the surface, looks super bullish. We love when we see headlines like this because we know our audience reacts to them. Google and Consolation agree to bring 890 megawatts of new nuclear power capacity to PGM grid.

Consolation stock jumped initially on the news, about 12% or so, but does this kind of news move the needle? What should investors be focusing on when they see this kind of story? What are you looking at?

Justin Huhn (0:57)

Sure, so I would argue that the nitty-gritty details of this particular announcement are less bullish than the market is reacting, but of course, we're coming off of extremely oversold conditions and really, really terrible sentiment across the uranium and nuclear spaces leading into this headline. But on its face, it reads as hyperscalers want more nuclear. And that's kind of what the sector is reacting to here. So to have the biggest nuclear operator in the United States, make a deal with one of the biggest companies in the world for adding capacity.

This additional capacity is 100 percent via upgrades. So these are existing operating nuclear power plants and that 800 and something megawatts is across 11 reactors. So what they're doing essentially is investing over $4 billion in these upgrades. So these are significant improvements to these plants.

This is primarily in upgrading the steam generators and in the turbines and other operational elements infrastructure at these plants. So generally speaking, these upgrades don't actually equal significantly more uranium demand. So on the uranium side of things directly, this doesn't really change much. But narrative wise, it's a very, very bullish headline and it does just increase the amount of, well, the de-risking of all of these plants, the significantly increased likelihood that a company like Constellation, when it comes time, will be paying up for their fuel because they're operating into a dream environment as far as selling electricity and having the wealthiest companies on the planet be buying it from them. So it's bullish for the space. I'm not complaining whatsoever. But of course, I think the size of the moves that we're seeing today are on the heels of really poor sentiment across the space. So that usually, you know, shorts covering and terrible sentiment and all the weak hands getting washed out over the last couple of months, that usually is fuel for a day like this and hopefully some follow through as well.

Maggie Lake (3:07)

Yeah. Listen, I think that's such an important distinction. And that's exactly what we want to do is sort of get underneath and sort of help everyone be smart about, you know, kind of what's the reality versus, you know, what's kind of the knee jerk reaction in the headline, I think it's safe to say.

So do you think that when you see something like this kind of announcement from from Google, and presumably there will be others, right? This is just, you know, I think we're going to get used to this kind of thing because we know there's energy and we'll talk demand, we'll talk more about that. But is this the logical progression as everyone tries to square that sort of energy supply equation? Or is this a sign that building new reactors is just still too hard?

Justin Huhn (3:52)

I wouldn't say that it's a sign of building new reactors too hard. What it is, is the hyperscaler companies are essentially trying to secure as much firm clean power as they possibly can and signing power purchase agreements and power off takes for the next 5, 10, 15, 20 years from the actual incumbent producers that have operating fleets that can be life extended and are being life extended for that period of time. That's really the low-hanging fruit. It's kind of the absolute best-case scenarios. Oh, this reactor is already built. Well, let's buy power from it for the next 20 years. And maybe we'll put some money up front that will help them either go through the licensing process to extend the life, the operating license of these reactors, which in the United States, every single reactor is going to go to 60 years.