Peak Uranium: It’s Not Chess. It’s Poker

When Energy Secretary Rick Perry stated to employees at a coal-fired power plant in Maidsville, West Virginia, “Here’s a little economics lesson: supply and demand. You put the supply out there and the demand will follow,” he wasn’t flubbing a fundamental lesson of economics. He was setting his gunsight on the world’s largest uranium producers.

Developing nations determined to grow and developed nations committed to energy security are calling uranium’s bluff while making tentative commitments to coal. Uranium isn’t chess. It is poker. And the major producers are concealing their peak, plateau and especially their decline statistics by folding. Unless a nation with nuclear bargaining power can be assured of rigorous and demonstrable future supply, it will not build-out. Instead, it will stretch present military and civil stockpiles and phase-out, as is the case presently (Voluntary: South Korea, United States, Germany; Involuntary: Japan).

Uranium isn’t an intuitive industry or investment: higher prices are only guaranteed if producers are able to prove a sum of reasonably assured and inferred resources that will meet demand to 2100 and beyond. Unfortunately, they can’t. Although we may have been wrong about Peak Oil, Peak Uranium may be a reality.

Make no mistake about it, Perry’s riff on “build it and they will come” was squarely aimed at Cameco and Kazatomprom, the last two heavyweights at the table. In other words, he looked up over the rims of his Jean Lafont’s and said, “I call.”

If the major producers continue to fold, the coal industry will be the chief beneficiary, here in the United States and abroad. Is Trump’s Paris pullout making sense yet?

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