Thematic Investors Thematic Investors: Why Institutional Investors Should Consider Uranium
Oct 2, 2023
Darren Heitman and Chris Gillespie from Azarias Capital Management dive into uranium as a promising investment for institutional players. They explore the pressing global energy demands and how nuclear energy can address climate concerns. The duo breaks down the intricate supply-demand dynamics and geopolitical implications affecting the uranium market. They highlight the resurgence of nuclear power and bipartisan support in the U.S., while contemplating the lessons learned from Germany's nuclear phase-out.
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Commodity Priced Below Production Cost
- Uranium price remained below marginal production cost for years, keeping supply below consumption and creating a long-term shortfall.
- Darren Heitman argues this persistent deficit sets up the commodity for a dramatic future price spike.
Visible Supply Gap Emerged
- Global demand is ~195–200 million pounds while current supply runs ~150 million pounds, creating a 40–50 million pound annual gap.
- Chris Gillespie explains inventories built after Fukushima have been drawn down and now the market is eating into a cumulative deficit.
Contracting And Inventories Delay Price Moves
- Price spikes lag physical shortages because excess inventories and contracting rhythms delay market recognition.
- Darren Heitman notes industry participants must decide there's not enough supply before the price truly resets.