THE ELEMENTAL UPDATE

We are at the beginning of an epic rally for uranium.

This article was published in “The King’s Mind 2024” in the current form.

"All the waste in a year from a nuclear power plant can be stored under a desk." Ronald Reagan

The Elemental Update

Nuclear is a theme that I got right this year, although it felt like I was a little bit late to the party.

From all the ETFs or companies I flagged in “Call me Elemental”, the physical uranium ETF has been the best performer – it is a pure play on nuclear adoption.

Uranium is now trading way above what it was before the Fukushima disaster. 

There is a huge shift towards nuclear. At COP28, 110 countries committed to tripling renewable energy capacity by 2030, and 22 to tripling nuclear power generation, amongst them the US, UK, France, Sweden, Finland, and South Korea.

This is a very ambitious agenda, and the only way to have a chance to reach these numbers was always  to embrace nuclear power at scale.

So unless we get a black swan event like Fukushima, uranium is set for a hell of a run, especially taking into account the supply chain bottleneck. This gap will close.

For now, electricity production from coal is at an all-time high, mainly because of China and India. Combined they account for 66% of electricity generation from coal.

China and India will face significant challenges in moving away from fossil fuels. Meanwhile, Japan's shift back to nuclear energy could become more rapid. At the start of the century, nuclear energy made up 30% of Japan's total energy consumption, six times higher than it is currently.

The Asia & Pacific region is dedicated to exerting effort on the nuclear front. This region is set to gain the highest number of new nuclear plants and will ultimately become the leading global energy producer.

Asia, with its commitment to expanding nuclear energy production and the involvement of large economies aiming to triple their nuclear output, along with countries like Japan transitioning back to nuclear power, is sufficient to explain the uranium supply/demand shock anticipated to persist until 2027.

Conclusion

The story is straightforward:

To meet global green energy goals in a timely manner, the world must transition to cleaner energy sources, with nuclear energy being the most promising option.

As concerns about nuclear power risk diminish, an increasing number of people are recognizing its potential to swiftly boost green energy production.

This long-term trade is something I'll monitor consistently.

Moreover, this theme is set to expand independent of economic conditions.

Governments are bound by their commitments to swift environmental changes; and regardless of contrary opinions, nuclear energy stands as the most feasible option for achieving these targets.

We are at the beginning of an epic rally for uranium.