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Uranium remains one of the only ways retail investors can bet on the nuclear power renaissance. That, however, is about to change.
The International Atomic Energy Agency (IAEA) recently revised its annual projections for global growth of the nuclear power industry for the second year in a row, reflecting the increasing acceptance of fission-based energy as key to a low-carbon economic transition. Most of the players in the advanced nuclear space are either privately held or state-owned, leaving uranium miners as essentially the only public market options for nuclear energy bulls.
But Jeff Geringer, director of commercial and corporate development at uranium miner Denison Mines Corp. in Toronto and a nuclear engineer by training, says many more investment opportunities are coming.
“In the next year or two, it’s going to be a regular occurrence to see public offerings or corporate spin-offs that are looking to provide direct investor access to the nuclear theme,” he says.
Right now, Mr. Geringer says the largest players in nuclear construction, maintenance and waste disposal are either privately held – such as Jupiter, Fla.-based Holtec International – or they ‘e part of large, diversified multinationals such as Bechtel Corp., Fluor Corp. FLR-N or Mitsubishi Heavy Industries Ltd. The spinoff process, he says, is already underway.
Irving, Tex.-based Fluor Corp. took NuScale Power Corp. SMR-N public in May on the New York Stock Exchange via a special purpose acquisition company. Corvallis, Ore.-based NuScale, which develops small, modular reactors (SMRs), has consistently traded above its initial offer price and has already secured a location for its first facility.
“We can all see the writing on the wall,” Mr. Geringer says. “NuScale will not be the only company to pursue this” route as other SMR-focused companies seek to “build nuclear reactors like they were airplanes and not airports.”
That means moving reactor construction “out of the field and into the assembly line,” he says. By allowing individual components to be built in controlled environments more akin to factories, Mr. Geringer says new reactors can be brought online much faster and for less money than traditional nuclear power projects.
One of those companies is Sunnyvale, Calif.-based Oklo Inc. While the company’s also privately held, co-founder and chief operating officer, Caroline Cochran, says new opportunities for public investors to invest in SMRs generally will arrive a lot faster in the next few years.
“We are moving very fast as the only company that has been allocated fuel in the near term for a non-light water reactor,” Ms. Cochran says, adding Oklo’s design involves using liquid metal as a coolant instead of water.
“Our idea is to start with a small plant that you can get through regulatory processes relatively quickly, build up a supply chain quickly and then mass deploy it.”
Timeline for development and investment
Meanwhile, Art Hyde, partner and portfolio manager at Segra Capital Management LLC in New York is preparing to launch a venture capital fund dedicated to the advanced nuclear space. NuScale, he says, “paved the way [for] a whole fleet of really interesting developers and service and support companies that will help this industry scale.”
The timelines are still misunderstood broadly by generalist investors, Mr. Hyde says.
“I would caution folks not to think of this as a 2040 story because you’re going to see significant scaling of these technologies in the 2030s and you’re going to see order books placed for them in the mid-2020s,” he says.
“You’re going to see on-grid power from, by our numbers, seven or eight different projects in the 2020s in North America alone, and that means you’re going to have significant derisking of business models through that process.”
For investors not willing to wait, Mr. Geringer of Denison Mines notes uranium is not the only mineable element expected to benefit from rising nuclear fuel demand.
“For the vast majority of all nuclear fuel produced in the world, uranium is put inside zirconium tubes,” he says. There are several publicly-traded mining companies with zirconium production around the world.
There are also two companies working on novel methods of uranium enrichment and both are publicly traded, Mr. Geringer says.
One is Centrus Energy Corp. LEU-A, which is developing advanced centrifuge technology, and the other is Silex Systems Ltd., an Australia-based company that’s working on an enrichment process using lasers.
Given the amount of financing advanced nuclear power companies are going to need in the coming years, Mr. Geringer says many of them will have no choice but to go public.
“Right now, we are still in our infancy in which a lot of non-nuclear folks are asking the right questions, doing the right research, and are discovering the great potential here,” he says. “Unfortunately, right now it is a private equity game, but that’s going to change.”
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