Keller is the portfolio manager for Sydney-based Tribeca Nuclear Energy Opportunities Strategy and having studied the sector, he sees the scrappy uranium junior explorers of today becoming the peers of the multi-billion dollar lithium developers in the near future, far from the pariah stocks they have been since the end of the last uranium boom.
Delivering the keynote speech at the PAC Partners Uranium Forum yesterday, Keller said uranium stocks should be on a growth trajectory that matches the lithium boom given the International Energy Agency’s most conservative outlook shows that all the uranium mines being considered need to be developed to try to meet demand, with a shortfall more likely.
Nations around the world are increasingly looking to build new capacity or keep existing plants operating behind their original design life, particularly since Russia’s invasion of Ukraine sparked the global biggest energy crisis in decades.
He said the world has been forced into a rethink on energy security, and must act quickly, given the time between extracting the ore from the mine to being fed into a reactor is around two years, and the uranium oxide market is already in deficit.
“I think we are at the beginning of a multi-decade acceptance of nuclear,” he predicted.
Keller’s modelling suggests the generally accepted incentive cost for new developments had moved from US$40 per pound to $60/lb, but he believes it should be even higher.
“I look at everything, and $75 is where I am starting,” he said.
The spot uranium price, now around $51/lb, has a little more transparency these days, with US fund Sprott moving into the space and soaking up spare inventory, and it has only helped make it clear the spot market is “misfiring”.
It is also the “market of last resort”, and the real action is between producers and utility with higher-price long-term contracts.
He is a firm believer that small modular reactors will increasingly be adopted in the 2030s, increasing demand.
Keller noted governments with are investing much more in baseload technologies than grid-scale batteries, and nuclear is the ideal fuel to power the electrification of the transport sector and reduce reliance on fossil fuels.
He also noted that the European Union had recently given nuclear power a “big green tick”.
With utilities seeking to secure supplies with no links to Russia, smaller explorers today, especially with advanced projects such as ASX-listed Aura Energy and Bannerman Energy, should get noticed.
But there is one major risk Keller can see to wider uptake of nuclear power: a black swan event in Ukraine, where Russia escalates the conflict around the Zaporizhzhia plant, the largest nuclear power plant in Europe.
Keller doesn’t think it likely, given a bunker buster bomb would need to be deliberately deployed, choosing to escalate the invasion into nuclear conflict, and potentially World War Three.
He said recent fighting reports of righting around the Ukrainian plant, which is occupied by Russia, are “a buying opportunity” for stocks.
Overnight, the United Nations said there had been “one of the most intense” attacks on Zaporizhzhia, with shells falling near reactors and damaging a radioactive waste storage building.
It was described by the International Atomic Energy Agency as “a close call”.
So, perhaps the risk of another Fukushima-style setback isn’t off the table.
