The Magazine for Asian Investors
Coal, gas, and, more recently, uranium has seen peak prices since the 2020 COVID-19 shutdown. The price of natural gas rose by 167.50%. The price of coal even increased by 234.26%. Supply shortages are one reason for the rising prices of coal and natural gas. Mine stops, port closures, or recurring lockdowns drive the prices.
Fossil fuels have become very unpopular since the push for green energy, especially among government leaders and environmental activists. Many are calling for an immediate phase-out of coal energy and a switch to clean energy. Despite the calls, many countries see the shift to decarbonization in the long term. Especially in Asia, coal power is still the preferred energy source. According to DW, about 600 new coal-fired power plants are already being planned.
Some countries see that there is not enough capacity available in the short term due to clean energy. Natural gas could help with this transition. According to the U.S. Energy Information Administration, natural gas is now the most important source of energy in the U.S., accounting for 40%. Although natural gas also produces CO2 emissions, these can be reduced by nearly 50% compared to coal-fired generation.
Recently, the price of uranium also gained momentum. The price rose by a respectable 63%.
The reason for the recent increase is mainly due to the new uranium trust from Sprott. Sprott Physical Uranium Trust buys physical uranium from the market with the aim of providing an investment alternative for investors interested in the uranium market. The Trust has already purchased 24.2 million pounds of physical uranium and has now a NAV (net asset value) of $1.02 billion.
The uranium market is not expected to see a rapid increase in supply. Earlier this year, the world’s largest uranium producer, NAC Kazatomprom JSC, announced that it would keep its production capacity at a low level this year and next.
Canadian producers will need more time to ramp up mines. Since the price drop after the Fukushima disaster, many mines have been shut down for economic reasons. Most producers could not economically produce at a price below $30.