Geopolitics, Trump Driving Changes in Uranium Market
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Uranium prices have settled after a quick jump because of geopolitical news and the aftermath of Donald Trump's election victory in the U.S., the overall situation, "while stressful on the nuclear industry, is positive for the uranium industry," Red Cloud Analyst David Talbot said in a uranium sector update note on November 21.

According to Talbot, among those companies that could benefit is Skyharbour Resources Ltd. (SYH:TSX.V; SYHBF:OTCQX; SC1P:FSE), one of several "good stories from the Athabasca Basin."

"The market is telling us, at least right now as geopolitical issues are driving the equity markets, it doesn’t much matter if you are looking at uranium producers, developers (who might have the current advantage right now) or explorers," he wrote. "But if you are going downstream, investors should best be on the lookout for companies with better stories" like Skyharbour.

"We believe that buying a basket of junior exploration companies is a sound way to reduce risk for investors," Talbot wrote.

Russia Halts Exports

News last week of Russian halting exports of enriched uranium to the US led to a US$3/pound spot price increase on Friday alone, Talbot wrote, although those gains have dissipated.

A prior U.S. decision to stop imports earlier this year was being phased in with exemptions for some utilities.

"However, the Russian uranium enrichment ban enacted by Russia is a much more abrupt action," Talbot noted. "This could have numerous and immediate effects on the U.S. uranium industry, impacts that the US Russian uranium import ban let slip through the cracks."

He said some of those impacts could include supply challenges for utilities with possible shortfalls starting next year, dependence on alternatives that could take years to develop, national security concerns over reducing reliance on foreign sources for critical materials, and national security and energy strategy concerns.

"The U.S. has initiated funding to bolster domestic uranium processing and enrichment infrastructure (US$2.7 million provided by Biden), but more will be needed," the analyst said.

The Trump Effect

Talbot also noted Trump's election will lead to some short-term volatility as markets determine which areas will be focused on the new administration.

Trump's "administration is expected to significantly impact the U.S. uranium mining industry by promoting domestic production and reducing reliance on foreign uranium supplies," he wrote.

Some key impacts could include modernizing the Nuclear Regulatory Commission, increasing support for domestic mining, rolling back regulations and streamlining, focusing on energy security, and encouraging strategic stockpiling and imposing tariffs or sanctions on foreign competitors.