Uranium: New Market Star

By Goehring & Rozencwajg Associates

In 2018, uranium assets were widely considered to be stranded assets. Following the 2011 Japanese earthquake and tsunami, utilities closed nearly one-third of all nuclear power reactors. At precisely the wrong time, Kazakhstan, responding to high prices between 2000 and 2010, brought on almost 20 mm lbs of low-cost in-situ uranium production. The market shifted into severe surplus, and prices collapsed nearly 90%, from $140 to $18 per pound between 2011 and 2018.

We wrote our first bullish essay in the fourth quarter of 2017, with spot uranium trading at a 14-year low. We explained how the price of uranium had reached unsustainable levels. What made us so sure? Only two primary uranium producers were left; spot prices had left significant amounts of their production below their cash operating cost.