There is no wall of supply: Why the uranium opportunity is still in its infancy

There is a fundamental principle in economics known as the supply and demand equilibrium.

It refers to the point at which the quantity of a good or service supplied by producers equals the quantity demanded by consumers. At this equilibrium point, the market is considered to be in balance.

It follows that if supply is greater than demand, prices will gravitate lower, towards a new equilibrium. Equally, if demand is greater than supply, prices will gravitate higher, until such time as more supply becomes available.

The principle is irrefutable. Yes, it can be corrupted by government intervention (tariffs and subsidies) and it can take a long time for a market to move back into equilibrium, but it is irrefutable nonetheless.

And it is this principle that makes investing in the uranium and nuclear opportunity market so interesting right now. The World Nuclear Association just released a report modelling uranium supply and demand out to 2040, envisaging three scenarios;

• the Lower Scenario (lowest demand scenario), which assumes delays in implementing these plans
• the Reference Scenario (expected demand based on information from government and utility targets and objectives)
• and the Upper Scenario (underpinned by more favourable conditions, largely reflecting the targets announced in many countries to achieve net-zero carbon emissions, and the acceptance that nuclear power will play an indispensable role in reaching this goal).

As Guy Keller, Head of the Tribeca Nuclear Opportunities Fund points out;

The supply that the World Nuclear Association models is barely able to meet the requirements of the lowest demand scenario. There is no wall of supply that has come on.

In this interview, exploring one of the hottest commodities in the market right now, Keller further explains the supply/demand dynamics in uranium, talks through other areas of opportunity in the nuclear space and highlights some companies that he particularly likes. 

He also explains why this opportunity is still in its infancy and could last for decades to come. 

Note: This interview was filmed on Thursday 9 November 2023

Time codes

0:20 – World Nuclear Association modelling and what it means
1:05 – Potential massive undersupply – where will it come from?
2:33 – Uranium vs lithium: compare and contrast
5:08 – Is the opportunity still available for investors?
6:40 – The outlook for uranium prices?
7:59 – How many players in the game?
9:03 – Portfolio structure and stock names
10:38 – The lifecycle of a company and ideal time to invest
12:20 – What’s next for nuclear energy: small modular reactors
14:56 – Nuclear reactors in Australia?
16:22 – View from the Top