Fossil fuels such as crude oil, natural gas and coal have been used for more than a century, which makes them the biggest polluters of the environment as well as the biggest culprits of climate change. Unlike fossil fuels, nuclear energy is a zero-emission clean source of energy. This means that nuclear energy doesn’t produce greenhouse gases, which greatly contribute to climate change.
Uranium is the most common fuel used in nuclear fission power stations to generate power. As the use of nuclear energy increases, uranium stocks are expected to boom. Below are some reasons to support the belief that uranium is set for a bullish run in the coming years.
Need to hit zero emission targets
As countries around the globe work to reduce the carbon emissions through the adoption of clean-energy solutions, uranium will increasingly be used because of its low-carbon emission properties.
Countries such as China, Korea, Japan, the United Kingdom and the United States, as well as those in the Middle East and the European Union, are currently focused on increasing their nuclear energy capacity.
Increasing construction of nuclear power plants
Brandon Munro, CEO of Bannerman Energy, stated recently that the war in Europe had underscored the need for energy security, which nuclear energy provided. His remarks are based on Russia’s invasion of Ukraine, which caused significant increases in the prices of energy, leading to shortages.
This instability prompted countries such as the United States to focus on growing their nuclear industry. The U.S. recently received $30 billion in tax credits for the continued operation of its nuclear reactor fleet.
China, which sees nuclear energy as a crucial pillar in its energy security and decarbonization strategies, also plans to build 10 reactors in the next decade or so, thereby increasing the demand for uranium.
Investments in the uranium sector are increasing
Mergers and acquisitions in the uranium sector have increased these past few years. For instance, Vimy and the Deep Yellow recently concluded a merger. Denison and UEC are also competing to acquire UEX, a uranium mining and exploration firm.
It is expected that as the sector begins booming, more M&A activity will be observed.
Long-term contracts will be the norm
It is expected that as the demand for uranium increases, more utilities will enter into long-term contracts with miners and near-term miners to secure their supply.
However, while the demand outlook for uranium is bright, supply tells a different story. At the moment, there’s a big gap between current supply, projected supply and the amount of uranium needed in the future. Companies such as Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) may be well positioned to capitalize on this revived interest in nuclear energy to expand their operations and tap a bigger slice of the global market.
NOTE TO INVESTORS: The latest news and updates relating to Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) are available in the company’s newsroom at http://ibn.fm/UUUU
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