[Music] I'm Charlotte McLoud with investing news.com and here today with me is Ben fold he's director at Ocean wall where he runs uranium research thank you so much for joining me great to have you thanks Charlotte no problem at all really good to be speaking with you and of course we want to look forward into 2025 in terms of what's coming for Uranium but I thought before we go there looking into the future we could take a look back quickly at 2024 if you had to use a a word or phrase to sum up the uranium Market this


past 12 months what do you think it would be uh interesting I think that it's probably maybe been the year of uh the year of the utility more than anything when you look across the sort of equity Universe uh the utilities of certainly uh outperformed the commodity um whether those are traditional sort of large US utilities constellations vas um Etc all the sort of SMR developers the sort of nextg nuclear companies like new scale um oo and you know they're still about 30 40% off their Highs but they've had


an amazing year so yeah I would say 2024 has been really the year of the utility I think that um you know we saw equity in uranium have a really strong sort of four or five years and have sort of taken a little bit of a breather this year um which I think a lot of commodity Cycles have but um for reasons that I'm sure we'll discuss uh we think that this is sort of a short-lived um uh speed bump um as it were in the uranium Universe okay okay really good to get into that and of course yes we have a


lot of different paths to go on right now I was thinking we we last spoke back in May and there's been so much going on but I want to start with Russia's ban on uranium exports to the US which was announced last month and the reason I want to begin there is ocean wall had released a note calling it uranium cigar Lake moment which I thought was pretty interesting so I thought maybe you could explain what that means for for those who don't understand that reference and go into why this is so important so so


really you know the US sanctions that came out against Russia initially in May um they sort of came with this um almost the asteris of we're not going to actually see this ban implemented until 2028 the difference with the Russian ban and the reason why we think it's so significant is because it was a ban an almost immediate ban and we've now seen two uh shipments leaving uh Russia which did not have Russian eup loaded on board so whereas the US ban is something that I think has legs and and is going to be


meaningful down the line the Russian ban was so significant because it was it was an immediate threat to uh us utilities um so when we talk about the cigar Lake moment I think that it held that level of significance uh we we all did at Ocean wall thought that it held that level of significance because of the sort of um potential Panic that it could cause utilities now as your listeners will be familiar as as all of us in the spa you know who look at this space in detail are familiar nothing tends to


happen that quickly in nuclear um so so we're going to start to see the impact of these s trickle down um you know with an immediate impact on eup enrichment and then conversion and really that's been the sort of theme of the last two years since Russia invaded Ukraine has been utilities uh really uh have been so focused on the procurement of of enrichment and conversion services that we've seen um you know youth 308 really become sort of a tertiary priority um you know if you sort of look fact three


years ago before Russia's invasion of Ukraine it was completely the opposite because it made sense to procure your Downstream Services before your Upstream Services uh people utilities would look to contract you 308 conversion and then enrichment sort of in that order that's completely been sort of flipped on its head um given the realignment of priorities of utilities understanding that Russia really do have this sort of dominance across conversion and enrichment so I think that again you


know we're going to see the the the uh we're going to see that impact uh become more and more profound in 2025 and really over the next several years as particularly the West tries to wean itself off uh Russian uranium um conversion Enrichment Services and also uh the sort of bottl that they have on on you 38 in terms of Transport okay okay interesting to take a look at those Dynamics and maybe a little bit more on the note of utilities so when we talked back in May I think it was there hadn't


really been too much contract at that point so have the utilities woken up since then are they starting to get maybe a little bit worried or concerned about what's going on so so yes we've seen higher levels of Contracting in this Home Market towards the end of the year we'll probably finish the year at about 110 115 million pounds you 308 contracted um your sort of uh your um more well-versed listeners will know that's slightly uh lower than last year well we saw about 160 million contracted


um there's a couple of things to unpack there first of all uh we have two uh almost identical situations in that there were two contracts this year one this year one last year that were sort of 30% of volumes for the entire year last year it was kamico and and the Ukrainian utility anatom um and then this year was quite late in the year the the agreement between the kazaks and the Chinese for again around sort of 30 35 million pounds um I would expect us to see a more significant ramp up in turn volumes


towards the start of next year this year has been quite difficult in terms of certainty for utilities I don't think the utilities have had much certainty into who they are able to contract with I think the sanctions might have confused people slightly more than they actually gave people Clarity because there were so many um sort of uh nuances around it like waivers and even when we were speaking to utilities almost immediately after the the US sanctions were were put into place there was confusion among utilities as to what the


waiver process would be like whether this would sort of be a a rubber stamp process or whether this would um you know really take some time and I think again that's a key difference between the US ban on Russia and the Russian ban on the US is that it does seem like the US waivers had pretty much been rubber stamped but that's not what's occurring in Russia at all um we're yet to see at a government level any sort of waivers being handed to us utility um I think that ultimately you know it's


in Russia's interest to to start to ship eup back to the US at some point um but um you know our view at Ocean wall was always let's say that it's a billion and a half dollar uh market for them selling EU into the US each year in the grand scheme of things uh it's not uh a huge contributor to the coffers in Russia especially amid uh you know an ongoing war with Ukraine so we just didn't see the incentive for them to keep um for them to keep keep uh basically sending this strategically imperative material


to a customer that was going to cut it off in in three or four years time so I think geopolitics has always played a pretty prominent role in this sector I don't think there's many uh Commodities in the world that have been more geopolitically weaponized than uranium uh and I only see that sort of you know geopolitics itself playing a more prominent Factor over the next few years yeah I think you can really see the uncertainty just as you describe it there and I want to ask what role Trump's second term could have here


because of course I think leading up to the election a lot of the conversations I had were it didn't really matter who was going to be elected president in terms of nuclear because both sides have become pretty pronuclear and it's a bipartisan issue but you know Trump also has this very interesting relationship with Russia so how do you see that playing out in the future I definitely don't think I mean again I guess the reference there is some industry participants are talking about um sort of a complete lifting of


sanctions um to give some context as to what that could mean for Uranian prices we saw Uranian prices rise I think a dollar on the day that the US announced sanctions on Russia and Uranian prices have actually Fallen about sort of $6 or $7 since Russia announced those balit sanctions on the US so that gives you an idea as to how things might impact u38 um should under what I think is quite unlik scenario uh these sanctions are just completely um lifted so from a geopolitical point of view yes there's


likely to be a sort of stronger relationship between the US and Russia at least stronger offered incredibly low base of what it is today but um maybe a more General Point around Trump and nuclear you know we see Trump presidency being incredibly positive for nuclear what's always been great is that you know regardless of of who got in uh into power in the US there's always been at least for the last sort of five or six years there's been bipartisan support for nuclear in the US I know uh Trump


had mentioned specifically Advanced nuclear and I think that you know that is when you look at you know what's happened this year maybe almost going back to your first question the year of the utilities has really also been the year for big Tech as well um and I think that you know Trump is very um sort of pro uh Pro business um and I think that he obviously has you know these sort of Max seven these very very large uh us companies that control a massive amount of the flows into the us into US markets


um sort of in his ear sort of understanding that these guys have got a massive massive problem which is a power problem and when you look at your list of options of clean Basel load um Alternatives it really is sort of nuclear is the only um is the only um possible solution at their disposal now in the US specifically uh we see sort of 80 to 90 GW of licensed capacity which is capacity that was licensed but never actually got built on so um you know and also one of Trump's main uh focuses on


is on deregulation and trying to reduce that red tape there's probably no industry in the world that needs deregulating more than the nuclear power industry it's been massively overregulation for far too long um and and this has a really profound impact on build times licensing permitting um you know these things can take decades in the Western World in my home country in the UK uh there sort of a poster child for the issues around nuclear um and in the US I think Vogal three and four was


you know again over well over a decade so I think that Trump will um hopefully in a way that makes sense for nuclear and that does not in any way impact the safety um uh the sort of safety regulations that that need to be impa that need to be imposed on the nuclear industry I think that he's going to massively streamline the process for new nuclear um whether it's a gigawatt scale nuclear power plants or whether this is Advanced nuclear following on from that you know this interest from Big Tech in


nuclear power has been a huge story I think in the second half of 2024 do you see more of those deals like with the Amazon's and that kind of thing is that going to continue in 2025 and and what could that look like 100% I don't see that slowing down because they haven't even scratched the surface in terms of their power requirements I mean you talk about Facebook trying to lock up 4 gwatt of nuclear capacity again that doesn't it really doesn't um doesn't make a meaningful impact in terms of um the


sort of verocious appetite of their of their power hungry data centers so I think that we're going to see announcements in advanced Nuclear So Partnerships between big Tech and the sort of oos new scales um uh Terra powers of this world but then also I wouldn't be surprised if we see a return to this sort of gigawatt size uh nuclear builds in the US it's one of those very rare Industries where we've actually regressed in the Western World in terms of our ability to build so in the 70s


and 80s the US was amazing at building nuclear power plants they did it at a rate of knots that they're really not capable of doing today the same really in most of the Western World Now sort of look to the East and we're seeing China potentially approving a 100 reactors in the next decade um they're building sort of eight new reactors a year they're really starting to I guess walk the walk in terms of their pledges to to ramp up nuclear capacities so I think that big Tech as I mentioned they sort of this


has been the year where there's been a conflict emerging over the past several years which is um a conflict between their AI Ambitions and their ESG Ambitions um historically um meta Amazon Oracle Google Microsoft they call out their local grid they say we're building a data center here um we're going to need 250 megawatts from the grid um they have a conversation with their local utility and and it was a fairly straightforward process it could not be a more um a more polar opposite um


landscape today you're calling up uh utilities and states in the US where they're saying no to new data centers unless you bring behind the meter um Solutions so completely off- grid and also uh you have various pledges from these large setch companies that are saying that we be you know be be operating all of our operations at Net Zero by 2030 that does not leave a lot of leeway in terms of being able to to expand capacity that probably points more towards Advanced nuclear because uh of the um massively expedited build


times that are meant to be associated with Advanced nuclear versus large scale but it's a trend that is set to continue for short it's a it's a it's a trend that will continue to provide strong Tailwinds for the nuclear industry and also for for Uranium um again I think that we saw equities have quite a large run off the back of these big Tech pledges and then I think the market realized that actually this doesn't really have an impact on near-term uranium demand and when you're dealing


with markets which are in my in my view fundamentally broken in terms of pricing Dynamics spot and turn prices uh it just didn't have the impact on prices that I don't even think that we expected I we didn't expect to see prices fall off the back of towards the end of the year as much as they have but um I know that we'll sort of talk about you know why that is yeah I think can you go into a little bit more about what you mean there when you say the the dynamic is broken I I know we've talking about the


difference between spot and term pricing before but but if you can just elaborate sure so so you know I think most people that look at this space understand that the spot Market has really just become a market for speculators it's incredibly shortterm pounds change hands fairly regularly s of 35 million pounds has traded this year so less but still you know it's been primarily driven by Traders um it's kind of people that operating on a completely different time Horizon into utilities even or or or investors in


this space so when I talk about the spot Market being broken you know we are seeing one of the the strongest environment uh fundamental environment for Uranium ever I still believe it is the number one storying commodity markets and yet we've seen Uranian prices go from 106 in January to sort of 74 73 today so um in that respect I think that this sort of near-term delivery it's very very a liquid and it's pretty much dominated by by Traders and um you know Financial speculators who have got uh storage accounts in


terms of term I think that even we had sort of looked at term over the past couple of years as this um it was it provided investors and also those actually operating in the space real clarity as to what is utility uncertainty around future demand so in my mind every time I see the ter price go up I know that the only people operating the only um parti participants in the term Market of utilities when I see volumes ramp up in in the term Market I understand that is genuine utility demand so we're now at 28 months


of um the term price either staying the same or Rising we're at about $81 today it's trading nearly $10 higher than the spot price today but the reason that that also in my mind remains fundamentally broken is because of the way that it's reported so ter pric is reported on a monthly basis this is for delivery 12 months plus um and the price that is reported is the lowest price of any contract that occurred that month so we understand that um that uh a large term contract from last from November


was signed at about $85 and then what is public information is that um the nextg um contracts was signed at a $79 floor and $150 ceiling those kind of um uh pricing mechanisms on not uh fed through at all to uh to the ter price that that is reported by a lot of the Brokers well I say a lot the only two two or three Brokers that actually exist in this space so I think that you know it's not people being fed false information I just think that it's it's you're kind of picking and choosing U uh you know the


lowest price of the month as opposed to actually what is reflective of the current term price for that month so you know I think that the way that it needs to be reported is that you report floors and ceilings for everything that was signed in the term Market that month now as everyone listening to this will know it's an incredibly opaque Market um and whether that's you trying to get a gist of pricing or inventories um or or or or procurement or you know even new nuclear build outs it you know there's a there's a lot of


secrecy around this market so it is sort of quite difficult to get an accurate gauge on that but again you know what's public is look at next gen filings and the floors and ceilings that are occurring there um and it makes sense as why companies like a U or um you know are looking at maintaining their gearing to Rising uranium prices um U are not looking to contract any uranium uh you know forward because they want to maximize the upside from higher prices in the future so I think that that's that's quite a compelling


strategy and it's also you know sort of putting your money where your mouth is in terms of um understanding the the fundamentals of the market but spot and term it's what we have so um you know it's we sort of you have delivered it to an extent but um it also you know knowing um or looking at it in the level of detail that we do it does provide quite a lot of comfort when you do see stocks equities off sort of 15 20% over the last month some of them even more than that um it does provide a level of


comfort understanding that really the fundamentals are as strong as they've ever been so um you know in the last uh three years for example we've seen eight double digit Corrections across the uranium sector this is U another one of those um what we've seen over the last month um there was an interesting report uh article published today around hedge funds sort of taking some money off the table having had quite a strong year investing in nuclear stock specifically so I think there's an element of that as well okay


okay really good to go into those Dynamics as you say we're we're working with what we have but just understanding it I think provides a lot of help for investors so so keeping in mind the complexity is there anything you can say about the direction prices in this coming year so we have a a year uh well 2025 end of year uh Target for term of around 95 to 100 um I mean I think you could really see that in the first quarter of next year I mean we're already seeing some contracts being


signed at those levels anyways so ter prices I think we see hit um uh three figures at some point next year um in terms of the spot price um if this year sort of taught me especially the sort of second half of this year was caugh me anything it's that it's a really really difficult Market to guess and to understand where prices are going um if the spot Market was based off the fundamental of the sector then the spot price should be 125 Plus at the end of next year um if we see uh I mean you can


see a million pounds unloaded into the swap market and see prices for5 $10 so uh it really is uh it's very very difficult to make ACC Cate guesses in that but um for the sake of uh giving you a number I would say uh well over a 100 uh for the spot price for next year okay okay certainly appreciate a number at least to to look for there really good to go into that and if we if we look over to the company side right now as well where are you focusing next year I remember before you've talked about


developers and producers that's what you like to see is there any changes you've made as the market develops any color that you can add there yeah I mean you know we've tended to avoid sort of exploration companies given our um sort of in the underlying thesis but there are some really interesting companies who have got quite Diversified portfolios of exploration assets um so in terms of exploration that's where we look developers you know we love North American um developers we think that


there should well there has to be a premium applied to um uranium coming out of the West um I guess the same thing applies to producers you know the US produce 180,000 pounds of uranium in the first half of this year versus 4550 million pounds of consumption so they're pretty much producing about half a percent of their domestic requirements the reason for for sort of going into that is because why you know I can see a future where you have an East versus a West uranium price we're seeing so much of


this kazak production now being locked up in the East um I think over 70% of sales this year will be uh directed domestically into Russia and China so um us developers high quality names with proper management teams and also proper uh mining teams dedicated mining teams um and then in terms of The Producers you know you really don't have many names I mean I know paladins come off quite a lot as well kico's had a pretty good run this year up sort of 40% um or sorry up about 22% um but I think that for me it's


always been a basket of names um but but really trying to be quite selective in terms of uh you know the companies that have had you know have had very good runs and then we've also looked at some picks and shovels plays um sort of next gener ation fuel um and also trying to lock up that the sort of fuel cycle for for Next Generation reactors so companies like aspis toes we've looked at and also lightbridge uh Corp as well uh but then I think having an allocation to some of the utilities maybe let them


sort of cool off a little bit um again looking at my screen now um SMR which is new scales up 500% this year and that's 34% off its highs uh this month so you know those uh a lot of the utilities had an amazing run this year um so maybe uh sort of seeing how they perform in the first quarter before sort of diving into those I think probably makes a bit of sense so again on the company side are you expecting more m&a activity in 2025 I think it's kind of top of mine for me right now because we just saw palad and


get approval for the fishing deal so any any thoughts there yeah I think that we will I mean it's already a pretty Consolidated sector um sort of you know again I think quite a well-known statistic was there was 600 listed names back in the 07 bll Market versus sort of 85 today so um you know the sector has Consolidated a lot but I I definitely see um you know particularly in the exploration and development sort of phase or of of the um of the equities that you're going to see some more


consolidation there um I I think that you know the Paladin fision deal has been a sort of poster child for that um in terms of you know that there there are some obvious synergies but I really think that it also provides the the sector with another large liquid name um with a few hundred million pounds in the ground you have a development arm and a producing arm so um you know I think that I've I've said on this um channel before how much we love the fion uh project um and and the management team


there so I think that yeah you'll see some more of it particularly um among sort of Juniors I think in this space okay and just briefly you know the develop developers and producers they are looking to bring more Supply online right now so just just quickly your thoughts on how that is going are we seeing what we want to see there what should we be looking for this coming year yeah it's an interesting point because really the the laggards in this sector this year have been the companies


or the developers that had sort of promised production this year or next year who have ended up having to cut back um those expectations whether that's on a volume basis or whether that's an actual time delay so particularly in the US we've seen um a lot of those um sort of smaller producers um having to really cut down expectations I think that you know I've heard numbers like 25 million pounds out of the US by 2030 I think it's going to be really really difficult to to get


meaningful volumes out of the US this is a country that used to produce sort of 30 40 million pounds a year um but hasn't done it for three decades this dates back to the megatons to megawatts program in the 90s between Russia and and the US which just meant that the US shut down pretty much all of their domestic mines uh conversion Services Enrichment Services so I think that you know keeping an eye on the us a lot of the sort of uh cide research that I read has got the US ramping up production


fairly meaningfully I think that the infrastructure there from a personl point of view in terms of Labor doesn't really exist at least not to a level where which can support five or six um decent sized producers and then uh looking at um Paladin as well you know they announced that quarterly increase in costs of I think over 40% um so uh uranium mining is hard um is a quote that I often see and I think that it's something that people uh need to remain very aware of is that um if you bring


online every project whether that's Vision nexgen um Greenfield mines and cod uh all of ubc's Mines boss if you bring online all of these minds they all come online on time which history has proven is highly highly unlikely you still have pretty large deficit so I run a bull bare and base case model in my bare Case Model I bring all of those mines online uh and I still see multi hundred million pound deficit between now and 2035 I think it's about 230 million pounds even if you bring online all of these assets


so um what I expect to see is the more these announcements sort of start to creep in obviously when the larger uh producers announce those kind of production cuts it has a more meaningful impact on prices maybe just with that at the top of my mind you know I wouldn't be surprised to see kazaan prom anoun a production cut towards the beginning of next year um they're looking at sort of ramping up production um sort of about 15% 10 15% from where they are today I think it's going to be uh incredibly


difficult and I wouldn't be surprised if we saw another downgrading guidance there okay that's definitely something to watch for then and I'll let you go but before I do just any final thoughts that you would leave investors with heading into the new year I know we started 2024 with such exuberance and uranium does have a very dedicated investor base but I think some people are looking at it right now and might need some words of encouragement yeah I think that you know these stocks and the uranium price had


an amazing run you know from sort of lows of 19 um all the way through to the start of this year um I did not think that I would be as bullish as I am sort of Five Years on Five Years on from having started looking at this sector um the fundamentals remain in my view the most compelling in commodity markets I think that as well this is going to be massively exacerbated by big Tech's um appetite for clean Basel load power the beauty of the uranium trade is that uranium feeds a power source that is


completely and utterly unique in its own right and it is absolutely perfect for big Tech um this new generation of AI model trading data centers uh you need 95 to 100% capacity factors uh the constellation Fleet in the US ran at a 98% Capac Factor this summer you cannot get clean base load uh in in this scale and this size from other energy sources so you have to remain true to again the reason that we got so interested in this sector was the nuclear Renaissance that still forms you know the base of of our


interest in this sector the fundamentals um are going to continue to to improve I think as we see whether we see production Cuts or whether we don't but I just think on the demand side we're going to see outsid growth versus even base case assumptions of sort of 3% a year I think that we're going to see nuclear growth of around four to 5% a year one of the highlights for this year was cop 29 where we saw uh now 31 countries who have pledged to Triple nuclear capacity by 2050 so I think for


those listeners that are potentially looking at their screens and seeing a bit of pain over the last sort of quarter especially um you're invested in a in a a commodity story that I think is very very unique um the thing that makes it so unique in my view are those sort of two things are that it is completely unique nuclear power is completely unique in terms of its attributes but also um the thing that makes this special is the lack of a supply side response it's very very rare that you


see a supply deficit widen over a period where the price has risen three to four times so um we remain really excited about uranium not just next year but but really over the next several years and um and and in terms of commodity stories this is where we're we're placing our own bets okay well I think that's a really good place to wrap up thank you so much for coming on to take a look back at 2024 and of course forward to 2025 this is really valuable no problem thanks Charlotte of course and once again I'm Charlotte


McLoud with investing.com and this has benfold with ocean wall thank you for watching if you like this video make sure you hit the like button and subscribe to our Channel we'd also love to hear your thoughts so leave us a comment below [Music]