The market has not yet digested just how big a policy boost is coming for the uranium industry. Commentators were fatigued from the 232 disappointment, but they are missing the bigger picture. Although it must balance the competing needs of the nuclear utilities, US government is 100% behind the domestic uranium industry. As one Uranium company CEO said, a policy boost like this doesn’t come every decade. Seeking Alpha reported: Immediate relief prepared for uranium miners, The market is waking up. Uranium stocks will soon reverse the sea of red.
A major announcement coming
Uranium Investors have been waiting for too long. More importantly the beleaguered US uranium industry is a national defense weakness. There have been rumors that the executive branch would do something to fix this. At last an announcement is scheduled for today. A press briefing will cover what the Trump Administration plans to do to support the US Uranium industry. It is expected to include a plan to restore America’s nuclear leadership.
This might entail making it easier to build and operate nuclear power plants, and/or building up a strategic uranium stockpile. Lets speculate a bit on how the US government might boost the domestic uranium industry.
This could have huge implications for the price of Uranium. Stay tuned.
This coming announcement could have huge implications for the price of uranium, and for investors in uranium stocks.
How Trump might support the US uranium industry
Simply put, the US as a country because of its inability to produce uranium domestically. It relies too much on semi hostile countries to supply its uranium. Yet 20% of the US power grid uses nuclear, much of it in major cities that are essential to the national economy. Why can’t we produce domestically? Because prices are too low for US based companies to survive mining domestic uranium.
The executive branch could fix either the supply side or the demand, side, or both. On the demand side the US government might decide to build a strategic stockpile exclusively from domestic sources. IF US based producers are assured they have someone to sell to they will continue to mine. Building a strategic stockpile will be good in the long term for two reasons. One is because it keeps miners alive. The other is because it means we always have enough uranium in case nuclear utilities are suddenly unable to buy. Another way Trump could support the uranium industry is by supporting the nuclear industry. IF it were easier for new nuclear power plants to get approved, and for existing nuclear power plants to stay open, then it ensures long run viability of domestic uranium industry. This indirectly has huge long term environmental benefits as well.
On the supply side the issue is cheap foreign imports. Trump seems to love tariffs, and that is one way of rasiign the cost of foreign uranium and supporting domestic miners. Another option is import quotas. All of these methods would distory the market but might be necessary to keep the uranium industry alive in the US.
The specific nature of the Trump administrations plan to restore uranium will have major implications for stocks. Some companies will fare better than others. As we have said before on this site, geopolitics is a key factor for uranium stocks. Stay tuned for big changes in this space.