Since the beginning of this year, the international price of natural uranium has fluctuated frequently and violently, breaking the low level of nearly a decade in the past two months. The spot price of natural uranium rose 65% from $30.75 / lb in August to $51.12 / lb in September. It then fell gradually, falling to $37.25 on Oct. 11, close to its pre-rally level. On October 12 and 13, uranium prices surged again to $47 / lb in just two days. They have fluctuated slightly in the past half a month and are still around $47 / lb. As "net zero emission" has become the goal of all countries, nuclear power, which is regarded as clean energy, has sprung up again, and uranium mining has also become the focus of investors.
Since the Fukushima accident in 2011, uranium prices have entered a 10-year downturn due to the adjustment of market expectations and the decline in demand for nuclear fuel caused by the shutdown of nuclear power plants in Japan, but the global wave of "carbon neutralization" that began in 2021 is expected to stimulate sustained growth on the demand side of nuclear energy. A report released by the World Nuclear Association in 2019 predicts that global demand for uranium will grow by 26% between 2020 and 2030. According to the UxC Natural uranium Market Analysis report (2020), it is predicted that the growth rate of China's demand for uranium for nuclear power will be higher than the global average in the next 15 years.
From the point of view of the relationship between supply and demand of uranium, while the demand continues to grow steadily, the growth of the supply side is very scarce. As uranium prices have continued to consolidate at the bottom in the past few years, most mines have been closed or closed because of losses, and very little capital has been invested in the construction of new mines. The uranium supply gap in 2020 is 25 million pounds U3O8. With the decommissioning of the Ranger uranium mine in Australia in January and the Cominak uranium mine in Niger in April, a similar gap is expected in 2021, with industry supply continuing to decline. On the other hand, the development cycle of natural uranium mines is 48 to 60 months. Even if we start to invest in mines now, the supply side will not increase greatly in 4-5 years, and the construction of new mines can only be opened with higher uranium prices. This will widen the scissors gap between supply and demand.
The raw uranium market has begun to recover, and the current and future period is a critical period for China to move from a nuclear power to a nuclear power, and companies with natural uranium reserves are expected to benefit.
China Nuclear Power (601985) has taken a stake in China uranium Industry Co., Ltd., which is owned by the controlling shareholder, further strengthening the company's natural uranium reserve capacity.
Hainan Mining (601969) as of October 7, the company still holds 400.925 million shares of CGN shares. As the only listed company in the pure uranium industry in the Asia-Pacific region, China-Guangzhou Nuclear Mining Industry is also the only listed company in the pure uranium industry in the world that relies on the nuclear power group, and it is also one of the two listed uranium enterprises in the world that have made profits.
China General Nuclear Corporation (003816) provides natural uranium development and import services through its controlling shareholder, Zhongguang Nuclear uranium Industry Development Co., Ltd. The company's subordinate enterprises have signed a long-term nuclear fuel supply contract with the uranium Company.