Uranium Rising

I’ve been learning about vanadium lately. It’s an interesting sector: the price is up tenfold in two years because supplies are tight while demand is ramping up based on more stringent rebar standards in China, which means the world will need about 20% more vanadium.

Like I said, an interesting sector. Vanadium is produced mostly as a by-product from iron ore, so price has little impact on output.

There are primary vanadium mines but some are being shuttered because of emissions (the ore has to be roasted). And there are some vanadium projects but few that are advanced. It does seem to spell opportunity and I would be lying if I said I wasn’t diving into a few projects more deeply. But I bring this all up now because several vanadium folks I talked to of late specifically bashed uranium, calling it a boring, oversupplied market. I beg to differ. For one, boring is good. Vanadium isn’t boring…but I have no idea how long the price will hold its tenfold gains.

I’ve seen all manner of specialty metals spike and then fall back off in my decade-plus of resource investing (remember molybdenum at $40 a lb.?). As a result I prefer bigger, more established markets. Uranium is that, relative to vanadium. And its trajectory doesn’t depend on changing Chinese building codes.

Uranium demand depends on nuclear reactors, which are massive investments that don’t usually stop once started. And there are hundreds under construction.

As for being oversupplied, here’s an interesting chart.

This shows Cameco’s uranium production and purchases (grey bars) versus its contracted delivery volumes (blue bars). Check out 2018 – proof that Cameco is doing what it said, which means cutting 4 way back on production and meeting its delivery contracts by tapping into its inventory (red line) and buying in the spot market.

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