The head of Yellow Cake, a London-listed uranium investment vehicle, warns that the West is falling behind in the race to acquire uranium as Chinese companies buy into the market, sign long-term contracts and buy uranium mines.
Updated on 11 December 2023 09:01 Financial Times reports by Harry Dempsey in London.
The head of Yellow Cake, a London-listed uranium investment vehicle, has warned that China is aggressively targeting the radioactive commodity globally at a time when countries around the world are scrambling to acquire the nuclear fuel.
André Liebenberg, chief executive of the company, which is listed on London's Alternative Investment Market (AIM), said that after uranium prices hit 15-year highs, the West is falling behind in the race to acquire uranium as Chinese companies buy up on the open market, sign long-term contracts and buy uranium mines.
For any mineral they need, they will seek lock-in**. "China's efforts to secure ** will certainly create competition for resources, and given limited resource opportunities, these efforts will challenge the ability of Western utilities to access **," he said. ”
Uranium was one of the best-performing commodities this year,**70% at US$81 per pound, the highest level since 2007.
This strong rally is supported by measures taken by countries to support nuclear energy, a stable, low-carbon energy source, following last year's natural gas surge, including extending the life of existing nuclear power plants and considering the construction of new reactors.
More recently, at the 28th United Nations Climate Change Conference (COP28) in Dubai, 22 world leaders announced a commitment to triple the world's installed nuclear power capacity by 2050 to 2020 levels. This adds another fire to an already hot market.
Yellow Cake was boosted by nuclear fuel***, which was founded in 2018 and aims to give investors access to uranium to benefit from an expected round of uranium price gains. Liebenberg said there was a "good chance" that uranium prices would break the $100 per pound mark next year.
Uranium prices have now returned to strength after a decade of underinvestment in new production projects and a multi-year surplus of uranium** caused by the global tapering of nuclear power following the Fukushima nuclear disaster in 2011.
Yellow Cake has signed a 10-year** agreement with the world's largest uranium producer, Kazakh State Atomic Energy Company (Kazatomprom), to purchase $100 million worth of uranium ore from the company annuallyYellow Cake stores these minerals in storage facilities in Canada and France. The company currently holds nearly 20% of the world's annual ** inventory.
Yellow Cake's share price has been 54% this year due to soaring uranium prices, bringing its market capitalisation to £1.3 billion. The company said last week that its net asset value had jumped to $1.8 billion from $1 billion in March as of early December.
In order to make a profit, the company would need to either hold more uranium than it bought, or it would be acquired by a utility company that needed it.
China is the world's second-largest producer of nuclear power and has half of the world's reactors under construction.
The Chinese are looking everywhere for new **, Liebenberg said, "if they want to achieve their nuclear power development plans by the end of the decade, they will need new uranium**."
Beijing, for its part, has set the goal of guaranteeing nuclear fuel**, with the goal of meeting one-third of its uranium needs through domestic production, obtaining the other third by investing in foreign mines, and buying the remaining one-third on the market.
A subsidiary of China National Uranium Corporation and China General Nuclear Power Corporation (CGN) has taken stakes in uranium mines in Niger, Namibia and Kazakhstan. China's uranium industry is also building a warehouse in Xinjiang, near the border with Kazakhstan, in an effort to make the warehouse a large hub for uranium ore.
China's efforts to snap up uranium ore** have added to the headaches for the West, which relies on Russia for the nuclear fuel. Russia owns nearly 50% of the world's uranium enrichment capacity.
Liebenberg said that if Russia cuts nuclear fuel to the West, it will take five years for utilities to build a chain independent of Russia, during which time theirs will suffer.
Translated by He Li.