Demand for nuclear is incredibly strong amid supply concerns: NexGen Energy CEO
Kazakhstan is the world’s largest uranium supplier, accounting for roughly 40 per cent of the global supply. The Central Asian country has been experiencing several days of violent protests in response to rising fuel prices, which has investors fretting whether uranium production will also be disrupted.
RBC Capital Markets Analyst Andrew Wong said in a note to clients on Wednesday that while there hasn’t been any news of production interruptions yet, “we expect recent protests and political turmoil in Kazakhstan to be a near-term catalyst for higher spot uranium prices and could prompt increased utility activity in the term market due to concerns over security of supply.”
“We also note that Russia has significant interests in Kazakhstan, which could prompt Russian government involvement and complicate the matter,” he added.
As a result of the Kazakhstan protests, shares in Canadian uranium companies such as Cameco Corp., Denison Mines Corp. and NexGen Energy Ltd. were among the top performers on the S&P/TSX Composite on Wednesday.
“It’s highly significant on the supply side,” Leigh Curyer, president and chief executive officer of NexGen Energy Ltd., said in an interview Wednesday.
“Historically, when there’s a concern over the security over supply for such a key fuel to power electrical grids, and power it in a clean manner, utilities often adjust and amend their purchasing strategy. They get far more strategic with respect to their purchasing of future inventory supplies,” Curyer said.
Uranium prices have steadily risen in recent years because of increased demand for nuclear energy around the world. More recently, European Union lawmakers are currently debating whether to brand nuclear as an environmentally-friendly energy source, a move that could further impact uranium prices.