Let’s start with some background into your professional experience and work with WMC.
I did electricity trading for a couple years to begin, then I joined a Swedish utility company and one of the rotations was to go to a nuclear power station. That was about 20 years ago, and I never left. So I’ve been at a Swedish utility, I’ve been at a Swiss utility, I’ve been at a trade association in London as well to work on nuclear energy and climate change.
The majority of my career in the nuclear fuel space has been with Cameco, the large Canadian uranium miner. In 2019, I joined WMC. We’re a Dutch commodity merchant that started out in nuclear fuel, but we have since expanded into battery metals, copper, and other energy transition materials. So that’s where we are now. And we’ve grown from five employees in 2019 to around 40 today.
What is the connection of WMC with Sprott’s Physical Uranium Trust?
Sprott took over their Physical Uranium Trust from their predecessor, UPC, in 2021. And while Sprott are really good at running physical commodity funds and trusts, they did not know much about nuclear fuel or the uranium market, so they needed a technical advisor. As technical advisor, we manage the physical inventory of uranium that Sprott has, and we also buy their uranium. We’ve been working together for over three years now and have bought about 50Mlbs. It has certainly kept us busy for the first few years.
Uranium has been a major topic of discussion lately. We’ve got the growth of AI and data centres and the huge amount of clean energy that’s needed to fuel all of this. What’s your opinion on the overall outlook for uranium and the nuclear industry?
It’s extremely positive. It feels like now it is really catching speed like never before. It was a struggle after the financial crisis and Fukushima. There’s certainly been some dark ages, but now it’s really looking good.
AI is certainly part of the story, but I would say that this thesis looks good on its own. The demand drive from AI is really the icing on the cake, and it is a lot of potential icing too. But, more generally, it’s the need for electrification and the transition to clean energy. As we’re looking at it today, unless you have large scale hydro assets in a country, nuclear is really the only clean source of energy that can provide base load for the backbone of any grid system.
I love renewables and think we should have as much solar and wind as we can, but we have to realize where the limitations lie and construct our grids accordingly. So that story on its own is very good for nuclear energy in addition to the potential explosion of demand with AI.
There’s a lot of different opinions on the role that nuclear should play as part of the energy mix. Are you seeing more countries getting on board? Are there still some holdouts globally?
You can certainly see a major shift. You’ve always had the big nuclear proponents like France, for example, which has 80% of its electricity coming from nuclear energy. They’ve had an amazing fleet of nuclear power stations which create that stability that all of Europe needs in order to not have a situation like we did recently in Spain.
The US has always been a strong supporter as well. And in the last couple of decades, China has been the leading star. If we have around 60 nuclear power stations being built around the world today, half of those are in China. And at this point, they have built so many of them that they’re very good at it. So they just keep pushing them out on time, on budget, and that’s exactly what a programme should be like. France did it in the 1970s and China is doing it today.
Belgium made a decision to phase out nuclear energy, then did a complete turnaround. South Korea is certainly on their way to doing the same thing. Kazakhstan and Uzbekistan are going to build plants for the first time. So, regardless of where you start, it’s all shifting in the same direction.
The one outlier is Germany. Their current biggest political party went into the latest election on the promise that they’re going to look at restarting their nuclear power stations. Now, in order to form the government, they had to be in coalition with the social Democrats who were one of the main driving forces behind the phase out of nuclear energy in Germany. And I don’t think that that party can accept a restart. So that’s the only thing that’s stopping in Germany now, which is unfortunate, but it almost comes down to personal politics at this point and they don’t want to lose face. Taiwan is another good example where you have one individual who is against nuclear energy while the majority of the country is actually for it. So we’ll just have to wait and see what happens.
There’s been some news out of the US that President Trump is also fully backing nuclear energy. Do you see that really lifting off?
It was a very big announcement, considering the sheer ambition and size of it. These are just executive orders, so they can still be reversed, even though there is bipartisan support for nuclear energy. But these are very large decisions and they are very ambitious.
Trump is aiming to quadruple nuclear energy by 2050. The US realizes that they are not the leading force of nuclear energy today. They were once upon a time, but they’re not anymore. China is on track to surpass them in a few years.
So, they are firing up on all cylinders. If they are going to make all these plans happen, then the nuclear fuel chain is going to need to be beefed up and reactors need to get licenced faster. They’re going to have a bunch of reactors already under construction by 2030. It’s a very ambitious goal, but the resolve is there. I don’t think we need to look very far back in history that when the US puts all its efforts behind something, it’s quite amazing what they can achieve.
With the growth in demand for nuclear energy, how does that relate to the production of uranium? Is there interest in investing into this industry?
I would certainly say so. I think the commodity itself is the simplest thing to invest in and certainly has the most options to invest in. One of the good things with nuclear energy is the predictability of it; once you build the nuclear power station, there is no substitute for the fuel. You have to use uranium.
This demand is not going anywhere. If you compare to a gas power station where 70% of your operating costs are the fuel, if gas doubles or triples in price, that’s going to affect your bottom line and your operating parameters. So, you might scale back or even shut it down. With nuclear energy that number is 5 to 10%. So, even if uranium prices go up, you’re not going to shut that station down. You’re going to keep operating it.
Now, when we have such strong demand, supply needs to follow. And the problem is that it takes time to build uranium mines. Look at Saskatchewan or Canada’s Athabasca Basin where you have some of the best assets in the world, but the licencing is taking a very long time. Canada has said that they will start looking at speeding things up, just like the US. I think they are realizing that we can’t afford to have any bottlenecks on nuclear fuel.
The uranium is certainly there. We can get it out of the ground. It is more a matter of at what price, and we’re already seeing an indication of where price is sitting today. You have an Australian miner, Deep Yellow (ASX:DYL) who already announced that they’re not advancing their project at these prices. They need to be higher than what they are. So I think that’s an indication of what we need to see to incentivize these new mines to come online.
What are some key opportunities for those that are looking to get involved either on the uranium or the nuclear side of the industry?
I think that the complete market cap of all listed companies that are investible is about US$50-60B. It’s still a very small universe. I don’t think there are a lot of surprises that can come out of it. Junior miners are risky, but there is also a big return potential. So, on one side, you have the junior miners who might still be in exploration, and on the other side you have bigger companies like a Cameco or even a Sprott Physical Uranium Trust, where there is no mining risk because the uranium is already out of the ground. But of course, that moves in lockstep with uranium prices itself. So, you don’t have the multiple you’re looking at on a junior miner.
But you can also step out and look at the reactor vendors themselves. Westinghouse is obviously part of Cameco, so you get some exposure to that. But even Constellation, NextEra, and Vistra are good US utilities that have significant nuclear assets. So the universe of investment opportunities in the nuclear energy space is growing and is certainly worth keeping an eye on.
