Special Edition Uranium (Part III): The Western Supply Dilemma - Fat Tail Daily

Former geologist James Cooper continues with his special three-part series on uranium. Today’s edition continues with uranium’s hidden vulnerabilities in the global supply chain.

The election results are in. No Dutton means no nuclear for Australia.

But will that impact global demand for nuclear power and, hence, uranium supply?

Not a chance!

Australia is a fly on the wall when it comes to global energy consumption.

What matters here is the construction of nuclear power facilities across Asia and the potential revamp of stations across Europe and North America.

So, today, I’ll finish our three-part series on the uranium market with a special focus on supply chain vulnerabilities.

As I detailed last week, recent events in Niger highlight a kink in France’s energy fortress. Niger has supplied the French economy with abundant uranium supply fuelling the countries energy independence.

But as I mentioned, the new Junta government is far more aligned with Russia and China, meaning France’s access to this valuable supply could expire soon.

And that could arrive precisely as other major energy consumers pivot to a nuclear solution to meet future power needs.

But as always, the West continues to overlook the upstream segment of the global supply chain: Mining.

Kazakhstan, the world’s largest uranium producer, is already heavily committed to Chinese contracts.

It’s unlikely to shift these, given that China is a major investor in the country and its mining firms.

That includes Kazatomprom, the world’s largest uranium-producing company, which accounts for around a quarter of global supply.

Then there’s Namibia… Another important uranium hub.

This country has become a choice destination for ASX plays like Paladin Energy [ASX: PDN], Bannerman Energy [ASX: BMN], and Deep Yellow [ASX: DYL].

But here, too, problems fester…

Water scarcity proved a major hurdle for Paladin’s ability to process ore last year.

And in a sign of the times today, the Namibian government recently expressed interest in nationalising its resources.

No doubt that will keep ASX management teams awake at night.

Discussions about bringing its mines under state control have subsided for now.

However, as I keep reminding readers, resource-rich nations tend to elevate this agenda when the commodity cycle turns upward, and resource prices rise. We’re seeing this worldwide, from copper, gold and uranium.

And the geopolitical risk extends to Australia, too

Take Toro Energy’s [ASX: TOE] partially ‘stranded’ Wiluna uranium deposit.

The West Australian government has blocked new uranium projects, which could limit Toro’s ability to expand and increase the life of its future mine.

Meanwhile, the Federal government has also barred certain uranium developments in the Northern Territory.

That leaves perhaps one secure option for investors here in Australia… South Australia’s Boss Energy [ASX: BOE].

Could this be a prized uranium investment opportunity?

Perhaps, but Boss has its problems, too.

The board infamously offloaded its holdings in the stock during some challenging production periods last year, soon after the mine restarted operations.

In response, the company’s share price cratered 60 percent!

No doubt, Boss will come through this.

But I’m trying to point out that the uranium market is not an easy arena for the stock picker! That’s why I’ve been watching it (mostly) from the sidelines.

From the boom in 2023 to a major correction in 2024.

But I firmly believe NOW is the time to seriously consider opportunities in the uranium market. Uranium stocks have cratered to multi-year lows; this is a sector swimming in bargains!

If you’d like to find out the name of the long term uranium play I’m recommending to my paid readership group, you can do so here.

Until next time.

Regards,

James Cooper,
Editor, Mining: Phase One and Diggers and Drillers

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

James Cooper has been a working geologist in mines across Australia, Canada, and Africa since the early 2000s. He’s led the operations of tiny explorers through to huge producer outfits. He’s seen booms and busts firsthand and he also understands the cyclical nature of individual commodities. For example, James was right there when Barrick Gold launched an enormous $7.5 billion takeover bid for Equinox. That was the peak of the last cycle.

With his background as a geo and finance professional, he brings a unique insight and experience to Fat Tail Investment Research. He writes the broader resource-focused investing letter Diggers and Drillers and the ultra-speculative explorer-focused trading service Mining: Phase One.