WNS 2026 and the New Buyer

Podcast Transcript

Ed Coyne: Hello, and welcome to Sprott Radio. I'm your host, Ed Coyne, Senior Managing Partner at Sprott. Today, I've got two of our returning guests, John Ciampaglia and Per Jander. John and Per, thank you for joining us on Sprott Radio.

Per Jander: Thanks, Ed. Great to be back.

John Ciampaglia: Great to be back.

Ed Coyne: You just both returned from London, from the WNA World Nuclear Symposium. It's always fun to catch up with you, see what's going on there and check the temperature. John, let's start with you. What stood out this year compared to some of the other years that you've been at this event?

John Ciampaglia: Really interesting. We've been going for a few years, and I would say the biggest difference from our perspective, and we're not there as members, but we're there to really engage and educate the investment community, is that the sheer number of investors and banks that participated around the week of the conference was unprecedented. We've never had so many different institutions hosting various dinners and lunches, and not just a few people in the room; in some cases, 60 to 100.

If I think back to just a few years ago, it was Per and me running from office to office trying to meet individually with investors, and now banks have enough interest that they can get 100 institutions to come to a lunch and hear updates on what's happening. We have opportunities to engage and speak on panels. That, I think, is interesting. This is no longer a fringe or contrarian group of investors like it was a few years ago.

You're seeing more generalist investors, as well as investors that are trying to understand this whole value chain and how the industry works. The uranium market, in particular, is very different from other commodity markets. From an investment perspective, it's evolved enormously as the opportunity has become better understood, with market and price signals confirming it. We've seen a lot of capital come into the space in the last few years. From that perspective, I thought it was great.

The conference itself was built around this theme of turning bold ambition into action. That was the conference tagline. It's really well said in terms of how the industry has been setting itself up to get out of the starting blocks, having everything lined up, ready to go start that race, so to speak, in terms of moving forward with its bold ambitions to double or even triple nuclear energy globally by 2050. From a conference perspective, I think they're talking about moving forward with action rather than talk and MOUs, which are largely non-binding.

Ed Coyne: Talk about more institutions, banks, and so forth coming into the marketplace. What is the sentiment? Are they looking to now put dollars to work? Are they still educating themselves? What's the temperature right now from an investor standpoint?

John Ciampaglia: Yes, it's a good question. You need to answer it in two parts. In the medium to long term, I think people are very bullish and constructive on the sector. They're looking at all the different signals and connecting them, saying, "This is a bull market that's underway and still has a long time to go." We've been talking about this for five years, and counting: the market still needs to incentivize a significant increase in uranium production, and that is slowly coming and will continue to evolve.

I think the medium- to long-term mood is very constructive. People are looking at the shift back to nuclear energy and saying, "Okay, this has a lot of durable tailwinds behind it." In the short term, there's clearly some market distraction unrelated to uranium or nuclear energy, and it's related to the conflict in Iran. There is some anxiety about the direction of interest rates and inflation, and about what's going on in the Treasury market regarding debt levels and rising longer-term bond yields.

All of those things are macro-related and give investors some reason to pause, but, moving past the noise and distraction, sentiment right now is very bullish. The consensus amongst investors and utilities is that the direction of travel for uranium prices is only higher from here.

Ed Coyne: Speaking of utilities, that's a good time to pull Per into this. Per, you sit in maybe a little bit different chair than John does. John's spending more of his time from the investor standpoint. You're spending more time on the supply-and-demand dynamics and utilities. John just talked about enthusiasm from an investor's perspective. What are you seeing from a utilities perspective? How are they viewing this growth cycle that we're starting to experience?

Per Jander: Overall, there is a lot of activity. As John said, it's so much busier, not only on the investor side but also on the utility side, because the talk of tripling nuclear energy has really taken over the focus of the symposium. It's a very good success story for the industry. There are a lot of projects taking off. There's a lot of talk about new reactors, expanding programs and extending reactor lifespans. That has really become front and center.

The symposium started 30-40 years ago with just a bunch of fuel buyers and sellers getting together and kicking off discussions after the summer. It's my 21st this year, and certainly a lot of people have been there longer than I have. They were talking about how much it has changed over the years; now it isn't front and center on fuel.

It's more talk of reactors and how we're going to finance these reactors and how we're going to change regulations and harmonize regulations so we can bring out entire fleets of these new reactors. Extremely interesting, but fuel is no longer on the main stage.

Personally, I don't necessarily mind that. It's good to be able to run around and meet people on the sides. It's really turned into a much bigger event than it ever has been before. That's super interesting. As I said, it used to kick off negotiations, but I would say there's been a fair bit of activity from utilities over the summer as well. Now, we're waiting for a bunch of them to come out in the term market, and some of them have so much to do that they've decided to push out certain RFPs.

Maybe they were thinking about doing uranium conversion and enrichment at the same time, but they just realized we can't do this right now. They're postponing some components for a little while.

Ed Coyne: It started off talking basically about fuel, fuel procurement, all those kinds of things, and it's moved to the reactor side of things. You have to believe that if there are more reactors, you need more fuel. I have to believe the smart money understands that, right? If we're going to have all this additional demand out there, what does that look like from a supply standpoint? Is anybody talking about that right now?

Per Jander: Reactors take quite some time to build, but it's definitely in there because bringing a new mine online takes a lot longer than bringing a power station online, as crazy as that sounds, but it does. There are some significant mines that are falling off in the mid-2030s. If you're announcing a large reactor today, you'll be buying fuel long before 2035. Even though it sounds like it's a decade out, in a uranium world, that is probably tomorrow or at least next week.

Then there are things happening on the much nearer-term front as well, but we're not talking about a short little spike and then everything being beautiful after that. It is already a major structural supply deficit. It looks like, with all the demand coming on, it will grow unless people start finding more uranium, applying for permits and ramping up new production. It's certainly going to be a strain on the fuel cycle itself, and that is a challenge that is recognized and discussed a little bit as well.

There are producers saying, “We are going to build new conversion and enrichment facilities.” On the mining side, it hasn't been that. That probably is the neglected one, which is fascinating because a conversion and an enrichment facility you can build more or less wherever you want, but when you want to find that uranium, you've got to go to where the uranium is.

It is more complicated than building something from scratch. I'm not saying it's easy to build an enrichment facility, but at least you are more in control of how that facility is going to look and where it's going to be, rather than having to adapt to an ore body somewhere and then how to get to it and how to get the pounds out of the ground.

Ed Coyne: You just said something that I want to go back to because for newer listeners that are just entering this narrative of uranium in the mining space and so forth, I want to put some numbers behind what you said a minute ago. You talked about how long it takes to get a mine from discovery to production, compared with the timeframe to build a new reactor. It just seems like that supply-demand imbalance is only going to grow.

Can you put some numbers behind what that looks like? If the three of us found a new deposit today, what would that look like from a timeframe standpoint, versus the three of us deciding to build a new reactor today? What does that look like?

John Ciampaglia: Yes, happy to answer that, Ed. There's a real mismatch. In China, they can build reactors in five or six years, which is unbelievable given the supply chain and the repeatability of design and workforce. The West is looking at timelines that are probably double that. As the West starts building new reactors, we would expect those timelines to shorten. When it comes to bringing a new uranium mine online, some of the mines currently under construction were, sadly, discovered during the last cycle. They've been stuck in the ground for 15 years. Over the next five to six years, those projects will come to market, but that's a very long cycle. Just to put some numbers on it, we produce about 175 million pounds of uranium right now, and annual demand is about 200 million pounds. That number's only growing. If you just take the base case assumption of future demand of about 350 million pounds going out in the future, you're talking about essentially doubling production of uranium to meet that.

Now, how is the industry going to double production when it's taken 20 years to bring the current projects to market? It's a real challenge. There was a great line that Ben Finegold at OceanWall put in his report last week. I thought it summed up the issue really well. He said, "Uranium is the long lead item." You talk about pressure vessels and things like that, that they need to order years and years in advance in order to build new reactors, but the fuel is really another constraint in terms of making sure there's enough of it for everybody.

We know that government entities in China, India, and Russia are procuring large amounts of uranium to support their ambitious new-build programs. The West is just a steady state. They're in a status quo. They're not quite ready to ramp up because they haven't announced any new builds yet. They've announced the restart of power stations that were shut down. We just heard of another one: the Duane Arnold Energy Center in the U.S., which received a $1.9 billion loan from the Department of Energy to restart operations. We have other operations that are on the cusp of resuming.

In terms of the U.S., which everyone has been waiting for, these big announcements, we did hear some news from the Koreans saying that they're very keen to help with that build-out. I think once those announcements are made, it's going to be a very positive signal that the market has been waiting for.

Ed Coyne: John, you mentioned some of the restarts. Three Mile Island obviously got a lot of press, with Microsoft and real names involved. Do you have an idea where that is in the cycle? When's that going to be back up and running and functioning again?

John Ciampaglia: These plants typically take two or three years to refurbish and get back up and running. That is the fastest path to getting incremental power to the grid, which is why, whether you're a shuttered power station or a partially completed one, all these things are back under consideration for either being turned on or having construction finished. That's very exciting.

We're starting to see more announcements from companies like Google, and maybe Per can talk a little bit about Google's announcement of a Finnish utility to support its AI data center efforts.

Ed Coyne: Yes. Why don't you give us some color on that? That'd be great.

Per Jander: Yes, it was great timing because it was just around the WNA week, and the people were asking, “Big Tech is so interested in this, so when is it coming in?”

To John's point, there have been some project announcements in the U.S., but yes, this is in Finland. I just met with some Finns and Swedes yesterday, and I was discussing this at an event in Zurich, and we're super excited. Overall, it's a $15 billion program that Google will invest in Finland through data centers, and part of this includes a 22-year power purchase agreement from 2028 to 2050.

The reactor was expected to shut down within the next five years or so, but the agreement supports a significant life extension that is effectively sponsored and backstopped by Google.

Tremendously good news for Finland and the Nordic region as a whole. I always think it's funny when people talk about data centers and then, "Oh, we're going to build a data center in the Middle East, or we're going to build them in Texas or somewhere further south." The problem with the data center is that it runs hot, so why don't you build it somewhere very far up north, where it's cold all the time or at least most of the time, and then you're very close to cold water, which is exactly what this is. From a sustainability standpoint, it's a very good story. Great news in Europe as well on this.

Ed Coyne: That's awesome. John, you mentioned Duane Arnold. Where is that? I haven't heard that one yet. I missed that.

John Ciampaglia: That is in Iowa.

Ed Coyne: Iowa. That's another restart that we're seeing. Who's behind that one?

John Ciampaglia: Per, help me out with that. Who's the utility behind that one?

Per Jander: John, I don't know.

John Ciampaglia: I can't remember.

Ed Coyne: It's good that there's another one happening finally. We'll put Stewart to work on that one. I want to go back to you, John, for a second because we talked a little about the U.S., the West. We talked about Asia, the East and Europe. It seems like Asia's continuing to be the leader, with China really being the big gorilla in the room. If you can rank those as far as where the opportunities are, where the capital's flowing, where that supply-demand's happening. As investors look for opportunities, where are the hot zones versus the medium zones?

John Ciampaglia: Yes. You have to break it down into the current supply chain, which is very driven by Central Asia, with Kazakhstan, Uzbekistan, et cetera. We know that most of that material is staying in the East, with large purchases by China, Russia, and India. From a perspective on new projects in the works, Canada is clearly a region where the market is expecting significant incremental growth.

The Athabasca Basin already hosts some of the world's largest uranium mines, and several very interesting projects are just entering the construction phase. There's a lot of excitement about resuscitating uranium mining in the U.S. If we go back just three years, uranium mining was basically zero, and this year we may reach around 4 million pounds based on all the restarts underway. That's great to go from zero to 4 million, but to put that into context, the current fleet of reactors requires almost 50 million per year.

Interestingly, over the last few weeks, the U.S. government has issued a request for information. They're looking to procure 4 million pounds of U.S.-origin uranium per year from 2030 to 2040 for defense purposes. If you think about that, you're basically saying the U.S. government is going to procure around 100% of current production for the next 10 years. That puts more competition for pounds that may not go to utilities in the U.S.

It's a very interesting dynamic, and that news item slipped under the radar for a lot of people, and nobody was really thinking about another 40 million pounds in demand that needs to be baked into the forward forecast. There are a lot of interesting things going on. On the flip side, we're also seeing pressure on costs. If you think about sulfuric acid, which is a key reagent for a lot of ISR mining in the world, the cost of sulfuric acid due to disruptions in the Strait of Hormuz is meaningful. That's going to start to trickle through into higher costs.

We've heard from Kazatomprom that it is affecting its operations. We just saw today that Russia banned the export of sulfuric acid due to shortages. Our point has also been that the cost curve for uranium continues to go up because of key inputs like diesel, acid, labor, and taxes, things like mineral extraction taxes and royalties. All of this is going to push the cost curve for uranium up.

I think utilities are starting to accept this. The reality is that the cost structure for uranium production, because greenfield production, meaning developing a new uranium mine, is extremely expensive relative to restarting something that used to operate in the past. I think this is one of the reasons why the price of uranium has essentially tripled in the last five years. This cost structure has helped to pull it up.

Ed Coyne: What is the health and the state of mining right now within the uranium space?

John Ciampaglia: Yes, it's really healthy. That's because the pricing levels for new uranium are very supportive to bring new supply to market, and companies are able to raise capital, whether that's equity, debt, or convertible debt, and that's important. We're seeing some projects that are mostly financed for building their mines. Investors are obviously excited about those opportunities.

We recently took a quick look at how much capital has come into this space, using a simple proxy. We looked at global ETF flows and split the market into two buckets. One bucket was ETFs related to uranium mining and some of the downstream components of nuclear energy, and the second bucket was vehicles that hold physical uranium. I asked to go back to five years, when the Sprott Physical Uranium Trust commenced in July of 2021. I wanted to use that as the starting point; that's when we entered the market, and things got going. Just to put it into perspective, over that five-year period, for the first bucket, which is the broader mining and nuclear equity ETFs, there's been about $14.35 billion of net inflows into those ETFs globally, and for the physical vehicle entities, it's about $4.6 billion. That's about $19 billion over the last five and a bit years. Very exciting, because I can tell you that the previous five years were negative. Investors are obviously putting their money to work in the space.

If you take a step back and say that's nice, $19 billion after probably a 10-year drought, it's still a small amount of money relative to some of the things floating around in the marketplace with obviously enormous market caps for no revenue or questionable long-term prospects. Yes, investor capital is coming into the space. It is not a flood, but it is a slow, steady trickle. It's still not a crowded trade. We still see many general investors in the early stages, poking around and trying to understand market dynamics.

We think more capital needs to enter the space to accomplish all these ambitious programs that people are announcing. If the industry wants to double uranium production, from 175 million pounds, where we are, to 350 million, it is going to require a whole lot of new mines. Some of the existing mines will reach the end of their life over that same period.

You've got water coming out of the bathtub as you're trying to fill it up from the top, and this is a big challenge that the industry needs to address, and it's a huge opportunity. That's why capital is finally returning to the sector. All the signs point to a very bullish and constructive fundamental story.

Ed Coyne: I wonder if the generalists haven't even entered the market yet. To me, it sounds like it's still the alternative investor, the hedge fund investor, but the general investor really hasn't participated yet. Is that fair to say in your mind? You've been so deep in the trenches with this for the last half a decade, but is that fair to say that we're still just getting this thing started?

John Ciampaglia: I would say that general investors arrived about two and a half to three years ago. Now, is that widespread? No, but they are involved in the space. They're investing in the space. I would say over the last 18 months, we've seen more downstream investment in the space as people are looking at the whole supply chain as an opportunity, but it's still early days. This is not a crowded trade where everybody is overweight in the space. It's still something that is building, and that's why there's a lot of momentum still to come.

Per Jander: It's funny, when I started going to meetings with John, and we talked to investors, they're always like, "Where are we?" This always comes up as a baseball game. It's like, "What inning are we in?" It was one or two to begin with, and now it's maybe three, maybe four. Then at some point, if you keep saying you're in inning three, three years later, people are going to be like, "What the hell's going on?"

The way I see it now, talking about doubling or tripling capacity, we just went from a one-game series to a three-game series. We might be in inning three or four of the first game, but this is going to be a long haul. It's like all this new demand is coming in, and it hasn't even started being procured yet. It's just about adding games to this series. It still feels like we're early because everything is just growing.

Ed Coyne: Maybe we need to change the analogy to maybe a cricket test match, which lasts for weeks sometimes, apparently. I don't know enough about it, but I know they're very long. Maybe we need to switch the narrative a little bit and use cricket as our example. It is a growing sport, so maybe we can attract a larger audience for it. John, let's go back to the conference for a second. We started off talking about that. We went down the path of what's happening in the physical market, the utility market and with the miners.

I know you weren't specifically at the conference every day. You were having a lot of meetings around the conference. Any other things that really jumped out at you, you were like, "Wow, this is something I haven't thought of before. This is a new question that I haven't gotten before." Anything like that that you took a pause and said, "Okay, this is the next leg up." It's rare that I stump you, so this is good. Per, maybe you have one. I don't know.

Per Jander: No, but John alluded to it: that NNSA RFI that came out. There have been rumors about it before, but we've never seen anything in writing, and it came out right during this week. People haven't realized how big this is yet. It's essentially a utility that shows up with eight AP1000s, and they'll be ready to go in five years. We just moved to a five-year construction time for AP1000s here, thanks to the U.S. government.

Hopefully, we'll get that with the real reactors too, but this demand just came out of nowhere, more or less. We'll see. It's the government; things can change, all these other things, but clearly, having fuel for your subs and your aircraft carriers will be a priority for the U.S. government.

John Ciampaglia: Just add to that. The other question is: will we see a bifurcated market evolve, where, let's say, U.S.-origin uranium trades at a higher price than the rest of the world because of government incentives? That's not something we're saying will happen, but it could. We say that because if you think about how much reshoring of the mine supply the U.S. government is trying to incentivize, not just uranium, but many other metals, particularly rare earths and other critical materials.

We wouldn't be surprised to see a higher price, almost like a floor price, for U.S.-origin uranium to really move that 4 million-a-year production number to 8 to 10 to 12. It may require that. It may require a higher price for U.S.-origin goods than for goods from the rest of the world. I think this happened in the past, when we had bifurcated uranium prices between East and West, but that's something we're watching for.

Ed Coyne: You talk about governments in general. Is geopolitics driving or keeping investors away from this space? That's something that's hard to know, but you talk to a lot of people in this space. What is the temperature with things like the Iran War, and what's going on with Ukraine and Russia, and all these things that continue to get people to take a pause? Is that just making the narrative that much stronger, or do you think that's keeping investors away? What's your general take on that based on the conversations you're having?

John Ciampaglia: It's been positive because the world is now incredibly focused on energy security, and what that means depends on your situation and your resource endowments. With respect to things like uranium, governments want to ensure they have stable supply chains that aren't for one, two or three years, but for decades. You're not going to have a new power station that could operate for the next 80 years. You're not going to make those kinds of investments unless you have the fuel to power them.

Having the fuel and processing capacity is especially important, given the disruptions involving Russia over the last few years. Governments are thinking very holistically about the whole supply chain, not just building more reactors, but making sure they have the fuel. When you look at the reports, the government in the world that's being the most aggressive with stockpiling huge amounts of uranium is obviously China.

We just saw recent data showing that, over the past couple of years, they have continued to add to their strategic stockpile by huge margins compared to the rest of the world because they have the most ambitious program. The data indicates that over the last two years, China has added 68.2 million pounds of U₃O₈ equivalent to its stockpile. Whereas in the rest of the world, you could chalk it up to single digit millions of pounds. They are aggressively buying, and now we've got another very aggressive buyer in India following behind, who is starting to make very large commercial purchase arrangements because they have big ambitions as well.

Ed Coyne: The electrification of the globe in general is a real thing. You're seeing it. Forget AI and data centers, just getting a grid to give you light, energy, heat, cooling and stuff. That's not going away. The world may have incorrectly thought that wind, solar, hydro and other things were going to step up and meet that demand, and we're realizing that intermittent power isn't really going to get us to the finish line. Do you think it's the quality of nuclear that gives this 24/7 base-load energy source? Do you think that's why the world's woken back up to this space?

John Ciampaglia: Per, you want to take that one?

Per Jander: Sure. I think it's a combination. To John's point, clearly, the energy security aspect, certainly triggered by the conflict both within Ukraine and the Middle East, has pushed governments to be a lot more aware of making sure that we have power stations that are not as sensitive to supply chain shocks on the fuel side and on other sides, for that matter. Also, I think not only seeing what's going on in Germany, where their industry is just leaving the country because the electricity is too expensive and unreliable. You had a major power outage in Spain last year that shut down electricity across the entire Iberian Peninsula. They don't have enough grid stability because there isn't enough baseload power. I think it's a brutal wake-up call. That was talked about at the conference I went to yesterday. What it really is: physics is back in energy policy, and it's probably a relief to hear that.

Everybody can be idealistic or ideological, but at some point, the grid is not something that you put a little water on, and it grows, and it's sunny, and everything is great. It's a physical creation, and it's covered by physics. If you don't have enough power on that thing that is there and stable all the time, then you're going to get an unstable grid, and things will go wrong. That has certainly triggered a rebirth of interest in uranium and nuclear energy in general.

Ed Coyne: John and Per, this has been great. It's always great to get an update from both of you on what's going on in the marketplace and on the street. Before we sign off, is there any last thought you'd want to leave us with that may be interesting for our listeners about uranium in general, what's happening in the marketplace?

John Ciampaglia: Yes, we often get asked, "What catalysts should I be looking for?" Our message has always been that it's very hard to predict them. They tend to come out of left field, like this U.S. government RFI for the 40 million pounds of uranium that we saw in the last few weeks. The experience has been that the catalysts have been coming in the last few years. They do surprise us from time to time, but they're there. They're very supportive, and you have to be positioned in the space before those catalysts come because that's when the market goes on another run.

We have seen the market follow a staircase pattern over the last few years: things rally for 10 or 12 months, consolidate those gains for a number of months, then go on another ride. It's a very interesting pattern. I think trying to time the market is very challenging. I think you just have to get positioned with what you're comfortable with and wait for those catalysts to come because they will come.

The other theme I've been talking about since day one is investability. The challenge of investing in the space is that it's still in the process of recapitalizing and has a very small aggregate market cap relative to many other industries. A couple of interesting developments we're watching are the potential IPOs of both Westinghouse and Holtec, two companies more involved in the services side of the nuclear energy supply chain.

I think it's a good example that those companies are opting to pursue a public listing because they see investor interest growing in the space. If those companies go public, there will be more options for investors to get involved in the space, and it'll have a knock-on effect on investment and benefit the upstream part of the supply chain, namely uranium.

Ed Coyne: Excellent. Anything to add to that, Per?

Per Jander: The only thing that I'm hoping or keeping an eye out for is that we're on the verge of getting some announcements of large new builds in the U.S., some of those AP1000s that people have been talking about. I'm optimistic it'll be in the coming months anyway, and I think that can also trigger a lot of interest in the sector.

Also, I will go back to the Duane Arnold, the Iowa nuclear power station. It's operated by NextEra, which is headquartered in Florida, and it's Google that's behind them. Google is on a shopping spree here.

Ed Coyne: I love it. We got Google and Microsoft. It's amazing that this old-world energy narrative, combined with the new-world tech, is coming together, and one can't survive without the other. It's a powerful story that just seems to be getting started. Every time we do this, I learn more about what's going on in the space. I appreciate you taking the time to do it and being out there and learning for us. Thank you, as always, for joining Sprott Radio. It sounds like, as we get towards the end of the year, maybe we get an update if any big announcements come up, just to have a short recap of the year. I'd love to have you back on to wrap up the year, if you're available.

Per Jander: Anytime, Ed.

John Ciampaglia: That would be great.

Ed Coyne: Thank you all for listening. Once again, my name is Ed Coyne, and you're listening to Sprott Radio.