The drive to shut down coal-fired power stations is gathering momentum, and nuclear — “as the most environmentally friendly source of base-load electricity available to man” — is the only alternative, Far East Capital analyst Warwick Grigor says.

“The push to alternative and ‘green’ energy is in full swing and there is no going back, but solar and wind power can never provide that reliable base-load electric source that we need,” he says.

“The drive to shut down coal-fired power stations is gathering momentum, but you can’t just shut them down without providing an alternative, and the only alternative is nuclear.”

Grigor say its is one thing to decarbonise the modern world but it is a “completely different, and disastrous proposition, to de-electrify the world by making it dependent upon irregular and unreliable power sources.”

He’s not the only one.

Ethical and ESG focused funds will be facing a dilemma because they have traditionally blackballed coal-fired power stations on environmental grounds. It remains uncertain if and when they will embrace nuclear power and be “guided by good science universally, rather than selectively”.

“When they do so, it will be an important step towards better acceptance of nuclear power,” Gregor said.


Uranium price slowly improving

For the most part the uranium sector has had the best year since 2011, and  — while there is no immediate plans to bring them back into production — life is being breathed back into many companies, Grigor said.

“It is currently around US$32/lb, but still a long way short of the historical high of US$140/lb that inspired the uranium bubble in the noughties,” he said.

“It is still well below the price generally seen as necessary to justify new mines and restart old mines, of around US$50/lb. Yet, there is a groundswell of growing interest in the uranium sector coming from brokers and investors.”

Grigor says this could be because the anticipation and expectation – or speculative phase — is the most fertile in terms of trading profits.

“You can make more money out of ideas and ‘what if’ scenarios than you can out of the production phase of any mine,” he said.

“We are currently in that earlier speculative phase that always has imperfect links with industry realities, and money is being made by speculators even with a low uranium price.”

Uranium players could be poised to benefit

Even if every single idled mine and planned project goes into production, by 2030 there will not be enough uranium to meet demand. Here’s a list of ASX companies set to benefit.

Grigor points to Laramide Resources (ASX:LAM) – which has uranium projects in the USA, Queensland and the Northern Territory – as one uranium player to keep an eye on.

Other key players include  Lotus Resources (ASX:LOT) who today reported that testwork at its Kayelekera uranium project has exceeding expectations, with ~500kg of ore showing uranium grades increasing by up to 100% when compared to the feed sample.

GTI Resources (ASX:GTR) recently kicked off uranium drilling in Utah, where it has about 1,500 hectares of land holdings within the prolific Colorado Plateau uranium province that has historical production of over 92 million pounds of uranium and 482 million pounds of vanadium.

And just last week Canadian explorer and developer NexGen Energy (ASX:NXG) listed with its 239.6 million lbs Rook I project.

LAM, LOT, GTR and NXG share price charts