Advances Bipartisan Nuclear Energy Bill from Capito, Carper, Whitehouse
Comment of the Day

September 15 2023

Commentary by Eoin Treacy

Advances Bipartisan Nuclear Energy Bill from Capito, Carper, Whitehouse

This press release is the primary reason uranium prices are jumping this week. Here is a section:

The ADVANCE Act would:

Facilitate American Nuclear Leadership by:
Empowering the Nuclear Regulatory Commission (NRC) to lead in international forums to develop regulations for advanced nuclear reactors.
Establishing a joint Commerce Department and Energy Department initiative to facilitate outreach to nations that are seeking to develop advanced nuclear energy programs.

 Develop and Deploy New Nuclear Technologies by:

Reducing regulatory costs for companies seeking to license advanced nuclear reactor technologies.
Creating a prize to incentivize the successful deployment of next-generation nuclear reactor technologies.
Requiring the NRC to develop a pathway to enable the timely licensing of nuclear facilities at brownfield sites.

 Preserve Existing Nuclear Energy by:

Modernizing outdated rules that restrict international investment.
Extending a long-established, indemnification policy necessary to enable the continued operation of today’s reactors and give certainty for capital investments in building new reactors.

 Strengthen America’s Nuclear Fuel Cycle and Supply Chain Infrastructure by:

Directing the NRC to establish an initiative to enhance preparedness to qualify and license advanced nuclear fuels.
The bill identifies modern manufacturing techniques to build nuclear reactors better, faster, cheaper, and smarter. 

Eoin Treacy's view

The primary objection to nuclear energy is cost. Anything that reduces the capital intensity of the construction process is good news. That’s why the streamlining of the regulatory process is so important.

The environmental and safety argument is easily addressed through multiple studies that highlight how safe nuclear power plants are. The challenge is most existing reactors were designed with nuclear bombs in mind. The risk of proliferation twinned with safety scare mongering has been enough to sour the sector in the minds of consumers.  

In January, at the Future Minerals Summit, I had a meeting with a UK-based lithium refinery startup. I was particularly interested to hear he had been a nuclear scientist and had given up on the sector. His fervent belief was that it would be impossible to reduce the cost of production and small modular designs are not sufficiently powerful to be profitable. I was reminded of Donald Coxe’s saying “those who know it best, love it least, because they have been disappointed the most”.

The investment community is waking up to the potential and some very bullish commentary is appearing as prices break higher. Thanks to a subscriber for this piece from Praetorian Capital 

I went to a conference and expected participants to be concerned, maybe even spooked about the accelerating deficits, along with the increasing inability of Western consumers to access Eastern materials. The bifurcation of the market is a severe risk to every player with an offtake and even to the functioning stability of the industry. Instead, everyone sort of shrugged and said that prices cannot go up. As a veteran of inflection investing, I can assure everyone that prices can become irrational, far more irrational than anyone thinks is possible. Had I seen fear and panic, I would have known that we were in the end-game where utilities chase pounds. Instead, I realized just how early in this process we still are. There were hardly any finance guys, no bankers and certainly no booth babes. Just a few oddballs like myself who don’t understand how the deficits can stay this large for years into the future without an accident. The fact that no one else seemed to care, sure got me excited.

The global supply chain for processed uranium fuel for reactors runs through Russia. That’s why Rosatom has not been sanctioned. The optionality on uranium investments is that the war in Ukraine will continue to escalate, which will eventually force sanctions on Russia uranium products. It’s possible but not likely.

The more convincing long-term trend is small modular reactors will be sited anywhere a now defunct coal power plant is situated. Thorium liquid salt reactors are being commercialised. They have non-proliferation and anti-meltdown characteristics that address most of the fears. I am particularly interested in the Seaborg business model which will put compact molten salt reactors on ships. The company has partnered with Samsung Heavy. That share has first step above the base characteristics. . Incidentally, that is also bullish for the tanker and container ship building sector.

Meanwhile Cameco is very overbought, so the risk of mean reversion is elevated.

NuScale remains in a downtrend as Flour’s efforts to sell its stake move forward. The company will have to raise additional funds to carry it through to first revenue is several more years. 

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