Stock of the week -Uranium Energy Corporation (25.08.2022)

Further revelations of energy blackmail by Russia are beginning to prompt more countries to diversify their energy sources and return to nuclear power. Germany, the U.S. and even Japan are changing their energy plans, which favors uranium producers such as Uranium Energy Corporation (UEC.US), whose shares yesterday gained more than 16% following one landmark announcement from a country that recently suffered one of the worst nuclear disasters in history.

Energy Tactical Retreat 

Reopening nuclear power plants in the face of an energy crisis is also being considered by Germany, which until recently was hostile to nuclear power. The Diablo Canyon power plant, in California, which accounts for 10% of U.S. energy production, was supposed to be closed by 2024, but in light of the energy crisis, a shutdown seems unlikely, as indicated by California Mayor Gavin Newsom, among others. In 2021, imports from Russia and Kazakhstan amounted to 49% of the total supply (22.9 million pounds of uranium), but analysts point out that in light of the Washington-Moscow crisis, there is a growing likelihood of diversification of supply sources from allied countries like Australia, Canada and the United States, which continue to identify indigenous sources. However, it was the news from the Land of the Cherry Blossom that caused euphoria in the uranium market.

Pragmatism above all else 

Japan is returning to nuclear power in a significant policy shift as fuel prices soar. Prime Minister Fumio Kishida said Wednesday that Japan will restart idle nuclear power plants and consider developing a new generation of reactors.Kishida told reporters that he had instructed officials to come up with concrete measures by the end of the year.

The move is a significant change for Japan, which has restricted its use of nuclear power since 2011, when a tsunami triggered by a powerful earthquake caused water to hit the Fukushima Daiichi plant - leading to the world's worst nuclear disaster since Chernobyl in 1986. Since then, the public has been skeptical of nuclear power, and Japan has implemented strict safety updates at power plants across the country. In recent years, the country has also been importing larger amounts of natural gas and coal to meet its energy needs. Recent increases in fuel prices, partly caused by Russia's invasion of Ukraine, have prompted the government to announce more energy-saving measures. As of July 26, Japan had seven operating nuclear reactors, with three others shut down for maintenance, according to the Agency for Natural Resources and Energy.

Potential beneficiary of the "uranium boom"

Uranium Energy Corp (UEC.US) remains the largest producer and forms the largest diversified uranium group in the United States by far, making the company well positioned for a supply crisis. The company is completing the acquisition of UEX Corp. With the UEX deal, the UEC group has taken possession of all shares in UEX Corporation, the acquisition was approved by the British Columbia Supreme Court. The company has thus acquired a significant stake in the projects, Athabasca Basin, in the uranium-bearing area of Saskatchewan, Canada where it will partner with Cameco, Denison Mines and Orano. 

Uranium Energy Corp (UEC.US) share price chart, D1 interval

Source: xStation 5