Uranium investors need to pay attention to geopolitics. Most uranium supplies are in unstable regimes in Africa or the former Soviet Union. That means the slightest provocation could decimate supply. Suddenly US nuclear utilities would be unable to get uranium. However, one of the most promising growth areas is in the Athabasca region of Canada. Promoting the development of these sources, and improving cooperation with Canada is key to America’s future. It also helps that a lot of Americans have investments in Canadian miners. The Athabasca region will become critical to US energy security in the near future. Trade war talk puts the US power grid at risk.
Here are some interesting facts about how important this bilateral relationship is. Canada supplies 25% of US uranium, and in the future could supply more. Its not just uranium. Canada is an important supplier of 13 of 35 minerals that the US has identified as critical to economic and national security. These include rare earth elements, which are key components in electronic devices on which the entire economy depends. Canada is also the largest supplier of potash, indium, aluminum and tellurium, and is the second largest supplier of niobium, tungsten, and magnesium.
Fortunately, US and Canadian policymakers have been working on improving collaboration on critical minerals. According to the official announcement:
With $2.6-billion worth of goods and services moving between Canada and the U.S. every day, both of our economies are better off when we work together. By finalizing the Canada–U.S. Joint Action Plan on Critical Minerals Collaboration, we are advancing secure access to the critical minerals that are key to our economic growth and security — including uranium and rare earth elements — while bolstering our competiveness in global markets and creating jobs for Canadians.”
According to World Nuclear News:
The Action Plan will guide cooperation in areas such as industry engagement; efforts to secure critical minerals supply chains for strategic industries and defence; improving information sharing on mineral resources and potential; and cooperation in multilateral fora and with other countries. It outlines a range of joint activities including research and development cooperation, supply chain modelling, and increased support for industry.
Granted its only an action plan. Maintaining access to uranium will be a key diplomatic challenge for the US. Investors need to watch this space when determining which miners to buy, and how much to allocate to junior miners vs explorers vs producers with existing assets.
A big geopolitical question that impacts people’s portfolios is whether the Canadian-US relationship will remain steady. If it does, expect companies with resources in the Athabasca region to surge. They do after all have the best resources. Objectively speaking, ignoring politics, a mine in the Athabasca region is probably going to have higher concentrations of uranium and be more productive in other countries. That part is geology. However there is also the risk that Trump could be so obsessed with promoting domestic production that he puts tariffs on Canadian production. In that case US miners are better. Probably the best option for most investors is to diversify by jurisdiction.