By Jon Markman
The war in Ukraine brings a restart to the energy sector. Governments in the West are reconsidering their countries’ dependence on Russian oil and gas, and this development marks a great opportunity for investors.
The British Prime Minister Boris Johnson announced last week that Britain will develop small-scale nuclear power plants with modular reactors. The new energy trend will favor uranium, and investors may need to consider buying shares in Canadian Cameco Corp., the world’s largest listed uranium producer.
The emergence of nuclear energy as a clean source of energy seemed unlikely. Nuclear power has been criticized for four decades. The number of nuclear power plants reached its peak in 1996, when 17.5% of all electricity was generated by such facilities. Subsequently, public opinion hardened its stance on nuclear energy and the political will to maintain these units weakened.
The “decline” of nuclear energy came from a combination of events.
In the 1970s, environmental movements began to resonate around the world, and nuclear power was the “bobblehead”. Radiation poisoning was invisible and deadly. This parameter was exploited in 1979 by “China Syndrome”, a Hollywood movie with a big budget, which “prophesied” the nuclear accident on Three Mile Island, a unit in Pennsylvania. Although epidemiological studies did not show an increase in cancer cases in the area, people were now afraid to live near nuclear facilities.
In 1986, the Chernobyl nuclear accident forced 68,000 people to permanently leave the 1,000-square-mile area in northern Ukraine where they lived. In 2011, 154,400 Japanese people fled their homes after the Fukushima nuclear plant was damaged by a strong earthquake and tsunami.
Nuclear power plants around the world have begun to close. Today they produce only 10.3% of the world’s electricity. The strange thing is that nuclear energy is clean, green, sustainable and statistically much safer than most other forms of energy production, according to research by Our World in Data.
Nuclear power plants are essentially “giant tea kettles”. The process of energy production begins when a uranium atom decomposes and releases a huge amount of energy. Rods of decomposing material are cooled in water, creating steam that spins a turbine and generates electricity.
Most coal or gas power plants operate in the same way. The difference is that uranium is a more efficient source of energy. A set of firewood-sized rods for the fireplace contains enough energy to power 100 homes for a year. In addition, uranium is “purer”. Its use to generate electricity does not release carbon into the atmosphere. Parameter particularly important, as the global community is moving towards zero emissions.
Britain was once a hub for innovation in the field of nuclear energy. The United Kingdom had 15 nuclear power plants in operation in 1997, generating 27% of the country’s electricity. By 2024 there will be only two units left. With the help of Rolls Royce, Boris Johnson wants to reverse this trend. The goal is to build smaller power plants based on Rolls’ nuclear submarine engines.
The BBC points out that this could be the solution for an economy that wants to get rid of carbon dioxide emissions and become independent of Russian oil and gas.
Cameco Corp. can benefit from both the current geopolitical crisis and the inevitable return to nuclear energy. The Canadian uranium company owns the largest deposits in the world and its executives are strategically “removing” supply from the market in an effort to maximize the value of these assets.
In February, via teleconference, Tim Gitzel, CEO of Cameco, told analysts that since 2016, Cameco has removed 190 million pounds of uranium from the spot market.
Gitzel noted that the Netherlands, the Czech Republic, Poland, Estonia, Slovenia and Serbia are now considering their “nuclear options”. In addition, the European Union has described nuclear power as a climate-friendly investment, giving the green light to ESG funds to start investing in the industry.
The price of uranium climbed to $ 63.50 per pound in 2022, recording a rally of 46.1%. Cameco is licensed to produce 53 million kilograms of uranium a year. The current market capitalization is just $ 12.1 billion and all these factors put Cameco at the center of investment interest.
Read also:
* Britain: Plans to build seven new nuclear power plants
* The British plan for the country’s energy independence
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
