Uranium prices have been soaring in recent weeks, re-energising Australian producers and developers in an industry that's been on life support since the 2011 Fukushima disaster.
The naturally occurring radioactive element traded at a 12-year high of $US73 a pound in early October, and while prices had eased slightly below $US70 by week's end, that's still a more than 40 per cent jump year-to-date.
"This surge in nuclear has had no parallel, apart from the oil shock days, when nuclear wasn't even thought about," said John Borshoff, the managing director of Perth-based uranium developer Deep Yellow and a 48-year veteran of the industry.
Perth-based Boss Energy is one of several Australian uranium companies looking to take advantage, announcing this past week that mining activities had resumed at its Honeywell project 80km north of Broken Hill in South Australia.
Honeywell's previous owner, Uranium One, shuttered the then-two-year-old mine in 2013 when uranium prices plummeted following the Fukushima disaster, and Boss acquired it in 2015.
On Wednesday, workers began pumping water through the Honeywell orebody to cleanse unwanted chlorides and calcium ahead of uranium production commencing by year's end.
Boss managing director Duncan Craib called it a pivotal milestone that required many years of hard work and effort by Boss employees.
"Our timing is looking ideal," the company added, noting the decade-high uranium price.
Maple-Brown Abbott small cap portfolio fund manager Phillip Hudak predicted the up-move back in June, and says the heavy metal could easily trade for $US80 or more.
"As I wrote in that piece (in June), I believe that the nuclear industry is at an inflection point, and I believe that the price action that we've seen recently is a validation of that," Mr Hudak told AAP.
The short-term driver of the price the past few months has been a re-contracting cycle by Western utilities, which need uranium for their reactors, Mr Hudak said. Shutdowns in the wake of Fukushima resulted in a glut of uranium on the market.
"What you have seen is that effectively that inventory has been drawn down," he said.
Although the industry is very opaque, contracting levels for the first nine months of 2023 show an equivalent volume contracted than was bought in all of 2022, suggesting that the inventory surplus has indeed been exhausted, Mr Hudak said.
Beyond that short-term price driver, the fallout from Russia's invasion of Ukraine has also highlighted countries' need for energy security, Mr Hudak said.
There's also a recognition that nuclear has a role to play in the transition to clean energy, he added.
"There are expectations that renewables will be a significant driver, but there are increasing concerns about the reliability of the baseload power there, so there is potential for nuclear to have its place in the energy transition," Mr Hudak said.
In particular, he highlighted the potential of a new generation of small modular nuclear reactors, rather than the more traditional massive nuclear power plants.
The fund manager says he sees the most short-term upside in Australian companies that are trying to restart mothballed established uranium projects, such as Boss Energy and Paladin Energy, the latter of which holds a 75 per cent stake in a globally significant uranium mine in Namibia it hopes to bring back into production early next year.
"If you look in the future, there are long lead times for new production to come through," Mr Hudak said.
Mr Borshoff's Deep Yellow hopes to have its Tumas project in Namibia near Paladin's Langer Heinrich mine in operation in 2026, and its Mulga Rock project in WA's Great Victoria Desert in production by 2028.
The projects need a uranium price above $US65 to be economical and worthwhile, he said, with a decision on construction set for mid-2024.
"We're really approaching this project in a sweet spot, in terms that we've developed it without the benefit of price encouraging, but with a belief and understanding of where nuclear is going," Mr Borshoff said.
"Now the market's coming up to us, to where these projects now can be executed on, and we're waiting for a bit more upside on that uranium price."
Like Mr Hudak, Mr Borshoff is bullish on next-generation nuclear micro-reactors, and he scoffs at Energy Minister Chris Bowen's claim that a nuclear power industry would cost Australia $387 billion.
"In the rest of the world, nuclear is being taken to new levels," he said.
"It's a great industry, it's a needed industry, and the whole world is seeing this - apart from the Germans, Austrians and Australia."
