As nuclear energy surges back into the limelight, promising a smoother transition away from fossil fuels, long-stagnant uranium markets have been booming. The once-obscure commodity is increasingly gaining the attention of investors looking for a new way to trade the clean energy transition. To learn more about uranium and what investors new to the space need to know, Benzinga sat down with the Director of ETF Product Management at Sprott Asset Management, Steven Schoffstall.
Uranium prices have soared this year, outperforming other metals. Can you talk about why this is happening now and where you see uranium prices headed going forward?
There are a couple of things that are at play here. Year-to-date through the last couple of days or so, [physical uranium] is up about 55%. Uranium tends to be much less sensitive to shorter-term economic noise. So when we see slow-down discussions about what's going on with the Chinese economy, that tends to affect other commodities more than what we see flow over into uranium.
There is a really strong case for uranium and the future growth of the price as well as the sector going forward. If you were to look back at uranium prices about five or six years ago, they were somewhere around $20 a pound. Now, we're sitting closer to $74 or $75 per pound.
The incentive price is really important to look at when we look at uranium. That is the price at which producers can produce uranium and still turn a profit. That's currently around the $75 to $80 range. That would suggest that, at least in the short term, there is some additional room for the price of uranium to move.
When you look over the longer term, there is a severe supply-demand imbalance that we see developing. If you go out to 2040 or so, you see about a cumulative 1.5-billion-pound shortfall in the supply of uranium. So, we think over the longer term, that's going to be conducive to much higher prices in uranium.
As demand for uranium increases, what is the outlook on the supply side? What should investors be watching here?
I mentioned the longer-term supply shortfall that we're expecting. What it's really going to take to get us there is to get more mines up and running. There are a couple of things that really impact that.
One would be the permitting process. To go from finding a mine or developing a site that hasn't previously been mined, it can take 10 to 15 years or longer. That's something that ...Full story available on Benzinga.com
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