Freakish Midwest tornados, devastating wildfires, extreme droughts, abnormal floods – all signal the onset of a changing global climate. There’s overwhelming concern about climate change, but it’s difficult to achieve consensus on actions to mitigate it. The COP 26 UN Climate Change Conference last November was a step in the right direction, spurring global commitments and serving a clear notice that the era of coal is rapidly coming to an end. Three dozen countries, including the United States, pledged to stop funding fossil fuel projects abroad by the end of this year, and more than 40 countries promised to phase out coal-fired power, the planet’s most carbon-intensive energy source.
Largely due to capitalism, the shift to renewables is building a real head of steam. However, renewables alone cannot meet global energy needs. Solar and wind provide clean renewable energy when the sun is shining or the wind is blowing, but, if it’s cloudy and calm, they don’t produce much of anything. Since the technology hasn’t been developed to easily and cheaply store electricity in large quantities, other energy sources must fill this intermittency gap. Without 24/7 base-load producers, there currently isn’t enough consistent uninterrupted energy to sufficiently supply the grid, no matter how many solar or wind facilities get tacked on.
Excluding fossil fuels, there’s currently only one real viable option for reliable 24/7 base-load electricity – nuclear power. Clean, safe and affordable, nuclear power is the only known low-carbon reliable power source that can meet both current and future base-load electricity demands while reducing air pollution and mitigating climate change. U.S. nuclear power plants already generate nearly 20% of the U.S.’s electricity and 55% of its carbon‐free electricity.
Nuclear power requires use of U3O8, the most stable form of uranium oxide. It is commonly found in nature, but extraction is only economically viable from rich deposits. The largest producer of uranium in the U.S. is Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR).
The leading U.S. diversified uranium miner, Energy Fuels is also the country’s leading conventional producer of vanadium and, importantly, began production of rare earths in 2021 at a stage more advanced than any other U.S. company. These are all designated as critical minerals by the U.S. government for national security as well as economic growth and stability.
Energy Fuels’ uranium production portfolio stands apart in the world. The company has more uranium production facilities, more production capacity, and more in-ground resources than any other company in the United States. In fact, the company’s assets have produced over one-third of all U.S. uranium over the past 15 years and are uniquely positioned to increase production to meet new demand – and demand is expected to surge along with uptake.
There are substantial direct drivers to increased uranium demand. Nuclear already provides a large portion of the nation’s electricity, and any real increase in electricity demand would require significant new nuclear capacity. It’s also the only known clean, safe, reliable base-load provider of carbon-free electricity in the transition to renewables. In addition and of substantial note, China is planning at least 150 new nuclear reactors in the next 15 years and has started building its first small modular reactor (“SMR”). Small modular reactors represent a new approach and could change the landscape of nuclear power.
This “new generation of nuclear reactors could hold the key to a green future”, as heralded and headlined in a recent Time magazine article. Current nuclear power plants run most efficiently at full blast, which makes it difficult to adapt to a grid increasingly powered by variable sources (again, not every day is sunny or windy). This next generation of nuclear technology will be more flexible, able to adapt and respond quickly to the ups, downs and intermittency in supply and demand. The new generation of reactors differentiate from old-school reactors in size, scale, approach, safety, and application.
With few operators in the space, the technology and opportunity have attracted notable interest and financial backing from Silicon Valley, Bill Gates, and the U.S. Department of Energy. Smaller reactors could be built in factories, ensuring quality control, and deployed to remote locations that lack wind, sun or other resources for energy production. They also can be purpose built to need, customized for use, and easily scaled. This exciting new technology to achieve carbon-free energy has potential to supplement other energy sources or even become a dominant method of energy production. Uranium demand should increase in lock step as the technology scales.
In its annual long-term analysis on the future of the energy economy, BloombergNEF outlines three climate scenarios that achieve net-zero emissions by 2050. Each of Bloomberg’s scenarios describe major transformations in the primary energy supply, and nuclear remains a critical portion of all three scenarios. In the scenario that reduces fossil fuel use the most, nuclear makes up a whopping 66% of primary energy in 2050, compared with 5% today.
This all adds up to a nuclear power renaissance, and demand for uranium is likely to remain unabated as the entire world continues to decarbonize. Much maligned uranium could be what ultimately saves the planet.
For more information, visit the company’s website at www.EnergyFuels.com.
NOTE TO INVESTORS: The latest news and updates relating to UUUU are available in the company’s newsroom at http://ibn.fm/UUUU
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