You have probably heard of the “critical minerals” list… Many of the top economies like the US, EU, Canada, Japan, Australia etc have one. And it’s exactly what it sounds like. A document that lists all the key minerals needed for things like renewable energy and infrastructure development. Minerals such as lithium, cobalt, nickel, tin, and more than 40 others.

However, recently, a new “mineral” was dubbed “critical” and added to the list. One that is seeing an epic supply shortage. I’m talking about… Uranium!

At the beginning of February, an article in Mining Magazine, revealed that, “Japan’s government has added uranium to its list of critical minerals, citing the threat to supply raised by Russia’s dominance of the mineral”.

I’m not surprised.

After all, Japan is the third largest consumer of uranium (after the US and China).

More importantly, the country is planning to kick-start its nuclear energy program again by restarting reactors that have been dormant since the Fukushima crisis.

So it’s going to need to a reliable supply of uranium.

But this is where today’s problem in the uranium market lies…

***

In my latest issue of South African Investor out now, I reveal three small Uranium stocks with BIG profit potential. You can the full details on each of these stocks. Just claim a copy here.

***

There’s simply not enough uranium to go around

Since the last uranium bull market (2000s), there’s been little new investment in mines.

This makes sense. Why invest with prices so low?

Secondly, inventories at the largest producers have become dangerously low.

Back in the 2000s, inventories stood at around +30 million pounds. Today, that figure stands at HALF – 15 million pounds.

And it’s not getting any better…

Big production misses from the two largest uranium producers globally

At the beginning of February, Kazatomprom (KAP) announced its earnings and production update.

KAP is no small fry in the world of uranium mining.

In fact, the company is the world’s largest producer of uranium controlling around 20%.

So, it’s a big deal…One that uranium analysts and investors keep a close eye on.

In its announcement, Kap warned about production delays and escalating shortages of essential chemicals (Sulphuric Acid) needed for extracting uranium.

As a result, production at most of its uranium-mining operations will fall around 20%.

For perspective, KAP missed its 2024 targets by 9 million pounds. This is around 6% of global uranium production, in a market with a massive structural deficit.

Aside from lower production numbers, KAP’s uranium inventories have also worsened.

Last disclosed inventory levels were 8,000tU. Meanwhile, today analyst’s estimate a 37% drop in inventories to around 1,500-2,000tU.

Then, one week later, Cameco’s (world’s second largest uranium producer) announced its earnings update.

Just like KAP, total production at Cameco’s facilities were 1.1 million pounds below estimates.

Combined, these uranium giants control around HALF of global supply.

Continuous disruption to product exacerbates uranium epic supply shortage.

However, it does mean one thing…

Uranium prices still have significant room to rise

Ultimately, the uranium price is expected to continue higher in 2024 with estimates of between $130-$150 per pound – as much as 40% higher from today’s prices.

However, don’t be surprised if uranium hits $200 in 2024 as supply worsens.

So investors keen on making profits from the new uranium bull market, you’re certainly not too late.  If you want to know where to invest in uranium, then sign up to South African Investor.

Not a subscriber to Money Morning?
You can get free daily recommendations like these with Money Morning eletter. Just sign up here.
MoneyMorning