According to the iFeng Finance app, CICC International has released a research report stating that it maintains a "buy" rating for CGN Mining (01164) due to the positive market outlook on US nuclear power demand which may strengthen its supply-demand fundamentals. The bank believes that US nuclear industry owners are still awaiting the election results before deciding on future development progress. The Republican Party is generally considered more supportive of nuclear power and may accelerate approvals, especially environmental approvals, making the market more bullish on nuclear power and natural uranium. With only two weeks left before the election, the bank advises investors to refocus on the natural uranium sector and prepare for event-driven trades.

The main viewpoints of CICC are as follows:

Tech giants are entering the nuclear power sector one after another.

On October 16th, AWS announced a partnership with Dominion to deploy SMRs near the North Anna nuclear power station in Virginia. According to media reports, nearly half of the US data centers are located in Virginia, with 70% of global internet data traffic transmitted through the Data Center Alley in the northern part of the state.

On October 14, Google announced a power purchase agreement with SMR developer, Kairos Power, aiming for the first unit to start operating in 2030.

When will the first small modular nuclear reactor be completed in the USA?

After Microsoft reached an agreement with Constellation Energy to restart the Three Mile Island nuclear power plant, the United States has very limited traditional nuclear power plants that can be restarted. In the future, the incremental nuclear power plants may mainly come from next-generation nuclear power plants - the last two traditional large pressurized water reactors took a full ten years to complete, only in the past two years have they been completed and put into operation by Southern Co. This construction cycle is difficult to meet the rapidly growing electricity demand driven by generative artificial intelligence under fast iteration.

Therefore, small modular reactors are considered the most feasible route for the future of nuclear power in the USA. Investors familiar with this industry know some of the drawbacks of this technology route: higher upfront costs on a large scale, longer regulatory approval and deployment cycles, and potential risks of nuclear proliferation. Currently, the only reactor type approved by the U.S. Nuclear Regulatory Commission is the 50MW module from Nuscale.

For data center applications, small modular reactors can be deployed near data centers, skipping the grid queue process, making it more easily accepted by technology companies, especially against the backdrop of significant increases in data center rental costs. However, considering the approval and technical challenges, the industry assumes in a base scenario that the USA will not have any additional small modular reactor units in the next five years, and speculates that by 2035, there may be 10GW of small modular reactors operating globally.

The impact on natural uranium

In the longer term (after 2035), small modular reactors may become a driving factor for natural uranium demand. The bank currently forecasts a uranium supply gap of 8500 tons in 2035 (considering several greenfield projects successfully put into operation). To fill this gap, a higher uranium price is needed to stimulate exploration and development. Any progress in small modular reactors in the United States may further drive supply-demand imbalances, thereby driving up uranium prices.