The Nuclear Renaissance: Junior Uranium Mining
Introduction
With governments worldwide discussing climate change and fossil fuel emission targets they aim to achieve, securing an efficient, safe, and realistic energy transition is paramount. Historically, uranium has provided superb impacts on energy efficiency in countries like Japan. Nuclear reactors accounted for approximately 30% of their Japan’s total electricity until 2011. Elevated efficiency undoubtedly brings along volatility and unpredictability, such as the infamous 2011 Fukushima nuclear incident that raised growing concerns in the uranium mining market. In avoiding another major accident, uranium demand fell significantly and other energy-storing methods, such as large-scale batteries, began taking the spotlight. Despite the skepticism of uranium and the demand shifting even faster to other energy transition metals such as copper, nickel and cobalt, uranium has secretly exploded over the past couple of years, and is projected to become even more lucrative. As of January 29th, 2024’s, the closing price of uranium was the highest it has been since 2009, two years before the Fukushima accident in 2011, at US$106.25. Since January 29th, the closing price on each day has not dipped below US$83.10, indicating a sustained increase in the uranium market is imminent, due to various reasons. Although renewed interest has created a boom for junior uranium mining, the projected long-term benefits and the absolute necessity of meeting energy demands and net-zero carbon goals will continue to drive this resurgence. Although these trends are present worldwide, there is a significant focus on Sweden due to their government lifting the moratorium on uranium mining, which a top junior uranium executive, Garrett Ainsworth, outlines in an exclusive interview with the McGill Business Review.
Exclusive Interview - Garrett Ainsworth, Markus Marosits
Why the Resurgence?
The demand for uranium has grown significantly due to it recently being regarded as a necessity for energy efficiency, being a clean energy source that can produce sufficient baseload power. There is a growing recognition of nuclear power as a reliable and low-carbon energy source that continuously evolves with newer and safer modes and methods of distributing said power.
In an exclusive interview with District Metals Corp’s CEO, President, and Director, Garrett Ainsworth outlines the importance of uranium, stating that there has been a “uranium supply deficit since 2018”, and with the worldwide demand for uranium rising exponentially, mining executives like Ainsworth are anxiously waiting for governments to follow suit and eliminate the necessary moratoriums and restrictions.
Focusing more on the social demand aspect, these pricing trends go beyond how close society is to achieving net-zero carbon goals. According to rough estimates by Ainsworth in discussion with other producers, The demand for uranium will truly become explosive in the long-term, projecting having “a 130% increase in demand by 2030 and a 200% increase by 2040”. Sustained growth in steel production, electric vehicles, cryptocurrency mining, additive manufacturing and other markets are going to require substantial quantities of electricity which only nuclear sources, such as uranium, can efficiently sustain, especially because the global population is expected to continue growing for the foreseeable future. “Renewables won’t be enough…and the wind does not always blow, and the sun does not always shine”, proving to previously skeptical governments after 2011 that consistent storage and production of clean electricity is paramount.
Government Intervention and Global Support
Ainsworth, who directly communicates with the Swedish government about their intentions and desires with renewable energy released some important news regarding viewing uranium as a necessity. According to Ainsworth, Sweden’s primary goal in adopting nuclear energy revolves around meeting net-zero goals rather than sheer efficiency. With the government realizing the importance of nuclear, they switched their new energy policy from having 100% renewables to 100% fossil-free. Sweden lifting the moratorium is quite significant as its output accounts for 27% of Europe’s supply.
In 2022, Sweden, where District Metals operates, had the third highest gross nuclear electricity production in the EU, behind just France and Spain at approximately 51,944 gigawatt hours. Alongside lifting mining moratoriums, other governmental supports that have allowed for increased production can come through either direct funding or providing loans, as recently seen in the United States with the uranium enrichment industry receiving approximately a “$2.7 billion infusion in a government funding bill” on March 3rd, 2024, to bolster domestic production and lessen reliance on foreign nations, such as Russia, where geopolitical tensions and conflict could easily derail supplies.
Governments can also develop infrastructure to support uranium mines in remote areas, increase R&D efforts, approve newer mining technologies and techniques, and much more to achieve a net-zero carbon goal quicker. These will also improve logistical capabilities in remote areas, allowing for more clear and efficient mining practices, even in-depth mining where uranium could be extracted up to two kilometers deep. Increased production will subsequently improve trade cooperation with countries in similar industries. As Ainsworth mentions, France and Sweden initiated discussions that exemplify this point, where France could potentially build Sweden additional uranium reactors in exchange for slight access to Sweden’s domestic uranium supply.
On a corporate level, joint ventures, technology-sharing agreements, and trade partnerships bolster both attention and collaboration between junior uranium mining companies and international stakeholders, enabling knowledge transfer and resource optimization more efficiently.
New and Improved Technologies
The new and improved technologies can be properly divided into two overarching categories: nuclear reactor technologies, and uranium extraction technologies and tools. Gen IV reactors and Small Modular Reactors (SMRs) have made substantial headway into the mainstream technology conversation. SMRs particularly are more efficient cost-wise and distribution-wise. Reactors are considered small when under 300 MWe and become more efficiently used when employed on mass. Presently, there is a trend towards the development of smaller power reactors, influenced in part by the substantial capital expenses associated with large-scale reactors operating on the steam cycle, alongside the necessity to cater to smaller electricity grids of around 4 GWe or less. These smaller grids are more prevalent in more remote and less developed locales, thereby having the electrical capacity for SMRs to benefit their society. Generation IV reactors are making headway particularly due to the many challenges they solve involving waste management and proliferation resistance. They generate energy more effectively as they extract more energy from a given volume of matter, thereby reducing the amount of waste generated. This is mostly because they can produce electricity at extremely high temperatures. Additionally, they have historically merged well with intermittent renewable energy sources, such as wind and hydropower to double-down on production, thereby creating methods of also decarbonizing energy-intensive industries, such as water desalination. Although the intricacies are still being improved, newer Gen IV designs capable of ‘fast neutron spectrum’ can directly use nuclear waste as fuel with the burning of long-lived radioactive isotopes, essentially creating a circle-supply system while continuously minimizing waste. Fast neutron spectrum reactors essentially work when fission chain reactions by carrying fast neutrons as opposed to slower thermal neutrons. With increased R&D support, technologies like these can be combined and improved to maximize output and minimize costs.
According to Ainsworth, technological advancements concerning uranium extraction have mostly revolved around different geophysical techniques that are being improved every year, with consideration of each mine’s attributes, including “the conductivity of the rock, the magnetism of it, and the gravity”. As an exploration geologist, Ainsworth notices that the surveying technology has become more detailed, and is more powerful, with better resolution to locate the minerals further beneath the surface. He mentions that “all the low-hanging fruit is pretty much gone. They've been discovered and probably mined, so there's deeper targets. In the Athabasca Basin in northern Saskatchewan, for instance, you've got a lot of explorers that have staked up claims where the depth to the target is about 1,500m or 1.5km. That's a really long drill hole. In order to facilitate this deeper drilling, I'm seeing more and more usage of directional drilling. It seems like it's more money on paper, but it actually ends up being cheaper because you drill one deep hole and then from that same hole.” Directional drilling ultimately increases reservoir contact and can therefore maximize mineral recovery with higher permeability, whilst simultaneously not requiring multiple well pads, making it less costly and more safe. Ainsworth also mentions that surveying technologies to determine where minerals are located have improved. With every mine having wildly different properties, the versatility of evolving directional drilling methodologies will increase efficiency drastically.
General Takeaways
Fueled by a trifecta of rising demand due to increasing population size, ambitious net-zero climate targets, and evolving technologies requiring immense amounts of energy, the uranium market is poised for a dramatic upswing, presenting an opportunity for investors in junior mining companies.