Air pollution in China is a prime reason why China has no choice but to ramp up Nuclear power in a major way. Leaders won't necessarily come out and say it, but they will be doing it. Growth in coal consumption will slow faster than expected and Nuclear power will grow faster than expected. China will talk about renewables like wind, hydro-thermal and solar, but China is running out of logical places to build massive dams, and wind and solar are not baseload power sources. China literally has no other choice if it wants to keep its 1.4 billion people happy. Happy by supplying enough electricity for all to use at an affordable price, without blackouts, and happy by substantially decreasing the levels of air pollution.
This horrible air pollution problem is not entirely from burning coal, it's also coming from the fairly recent addition of tens of millions of cars and trucks. China will not limit car sales, it will move rapidly towards electric cars. Therefore, millions of new electric cars will require even more baseload power from coal, natural gas, or Nuclear. No matter what Chinese leaders do, it will take years to reduce the level of air pollution in cities like Beijing, meaning that the spotlight will be focused on ways to fix the problem. Did I mention that more Nuclear power is the only viable solution?
Energy Fuels, Inc. is the largest uranium company in the U.S. Pro forma for the planned acquisition of Strathmore Minerals, the company will have 127 million pounds of uranium resources across several western States. Already producing 1.2 million pounds, about 25%-30% of ALL U.S. uranium this year, Energy Fuels also has permitted mines on standby and development stage projects that could bring production up to 3-4 million pounds once the long-term uranium price rebounds above $70.
Energy Fuels is 100% owner of the ONLY conventional uranium mill in the U.S., the White Mesa mill. This mill can process up to 8 million pounds of uranium per year, giving the company 3-4 million pounds of excess toll milling capacity. Therefore, within 2-3 years, Energy Fuels could be mining and milling its own 3-4 million pounds of uranium, plus toll milling an additional 3-4 million pounds, for a total of 6-8 million pounds per year. Again, a uranium price north of $70 per pound would likely be required, but $70 is well within the range of expert estimates for 2016 and beyond. Estimates from key producers, industry consultants and equity analysts range from $65-$90 per pound.
If Energy Fuels reaches throughput of 6-8 million pounds at White Mesa, that would make it 2x-3x the size of any other U.S.-focused uranium company such as Uranium Energy Corp, Uranerz or UR-Energy. With the current long-term uranium price at $57 per pound, Energy Fuels is flying under the radar, trading very cheap to peers. However, fast forward 12-18 months, assuming the long-term uranium price has improved, Energy Fuels would be a prime takeout candidate for a company like Uranium One, (ARMZ), Rio Tinto, Areva and of course, Cameco.
The last time that uranium stocks languished at depressed levels, they subsequently and suddenly staged a tremendous rally. This rally was cut short by the tragic (earthquake/tsunami) events in Japan in March, 2011. Still, at the time, Energy Fuels stock price spiked from 16 cents, (sound familiar??) to 80 cents, a FIVE-Bagger! This explosive move, shared by many other uranium junior stocks as well, was driven by a mere 22% increase in the long-term uranium price.
The following article is what got me going in the above opening paragraphs.
[Mining.com] Air pollution from burning coal can significantly shorten the lives of people exposed to the particulates, according to a study of China's air quality by an MIT economist. The study predicts that some 500 million Chinese living "north of the Huai River are set to lose an aggregate 2.5 billion years of life expectancy (5 years per person) due to the extensive use of coal to power boilers for heating throughout the region."
For people living south of the Huai, where government policies are less accommodating of coal-powered heating, the life expectancy outlook is much more positive.
The Chinese government has recently pledged to tackle air pollution but the task is daunting: The US's 45 micrograms of particulates per cubic metre during the 1990s pales in comparison to China's more than 400 micrograms during the same period. The situation has become worse in many Chinese cities, including Beijing. Pollution levels in January of this year reached as high as 700 micrograms per cubic metre.
Disclosure: I am long EFRFF.PK.