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Uranium One, Inc. is a uranium mining company that trades on the Toronto Exchange. The ticker symbol is UUU on the TSX. The company is a rapidly-growing producer. UUU is not as large as household name Cameco. However, it is poised to be a big player in Kazakhstan.
In an effort to pursue uranium mining in Kazakhstan, the company sold a majority of itself to a Russian company. The move was designed to enhance negotiations and logistical concerns since a Russian company would be largely involved. Russia is heavily involved in Kazakhstan. This connection lends promise to the endeavors of Uranium One in that country, as do the trends for uranium demand in general.
Uranium One Is Feeding The Nuclear Power Appetite
Uranium One stands to benefit, as do all uranium miners, from the fact that uranium is slated for a boom in the next 5-10 years. The boom could even come sooner. Asia is growing at a phenomenal pace. As the standard of living rises, so does the demand for power. Increases in demand for electricity stems from widespread distribution of air conditioning, refrigeration, and a smattering of electronic gadgets.
Asia, led by India and China, seek to fuel their electricity needs through nuclear power. In the decade between 1997 and 2007 alone, nuclear power increased 15%, largely due to reactors in Asia. It’s reported that the combined growth in China and India could amount to over 100 new reactors in the next 20 years. The voracious need for uranium is demonstrated by the fact that those two countries could consume nearly half of the amount of uranium mined today once their plans roll out!
Uranium One Is Benefiting From Asian Natural Gas Shortage
The suitability, and economic feasibility, of nuclear reactors in Asia stems from the relative paucity of alternatives. Countries such as the United States have an abundance of natural gas. With low natural gas prices, it makes little sense to build nuclear reactors. Nuclear power requires a huge capital outlay in infrastructure. It’s more sensible for the U.S. to simply use natural gas, rather than using it in concert with uranium for nuclear power creation.
By contrast, Asia doesn’t benefit from an abundance of natural gas. While places like China have some shale fields for natural gas, there is nothing significant in the way of current production. As a result, the upfront infrastructure costs of nuclear reactors makes more sense. It is a long term investment for nations like China and India. Thus, the projected demand for uranium is strong. This bodes well for companies, such as Uranium One, who are positioned well as established and growing producers of this critical ingredient.
Uranium One And The Factors Supporting Company Growth
Aside from the economic feasibility of uranium as a long-term power source, nuclear energy has other favorable qualities. There is obviously some debate about just how clean nuclear power is. Critics complain about concerns over nuclear waste. In any event, nuclear power does not emit carbon. By contrast with coal, which has come under attack, nuclear power finds favor with the anti-carbon camp.
In addition, nuclear power is consistent. Other “clean” energy alternatives do not share this level of reliability. Wind and solar power are alluring options with some degree of promise. However, there’s not much you can do when the wind calms down or the clouds cover the sun. Similarly, hydro-electric sources are limited in the need to be established next to a water way. Nuclear power plants can be constructed nearly anywhere.
Uranium One And Factors That Could Derail Profitability
Amidst the advantages and support behind nuclear power, there are some drawbacks to be aware of. Nuclear power is a political hot potato. As noted above, nuclear energy does carry with it a certain degree of risk. Toxic waste is at the forefront of most vocalized concerns. Less inevitable events, like what happened in Japan, can send companies into a tailspin. While it makes them volatile stocks to buy, periods of disfavor such as this make them some of the best stocks to buy now. Any setback is short term as nuclear power is sure to be a big source for developing nations.
These drawbacks are in some ways unique to uranium producers like Uranium One. Even if waste is disposed of in a manner acceptable to all, there’s no getting around the fact that accidents happen. Two of the most prominent countries on Earth witnessed catastrophic accidents with Chernobyl and Three Mile Island. A mishap of this magnitude could easily trigger a massive reversal in nuclear power’s appeal and uranium could take a hit as a result. Since not all uranium deposits are as rich as others, high uranium prices are what make mining even possible in some cases and with some companies. Whether or not it would happen to Uranium One in particular, a sharp fall in the price of uranium could put some companies in the bleachers, if not out of business.
