David Talbot on Uranium and the Russia Factor

David Talbot on Uranium and the Russia Factor

Flag of Russia. Source: Wikimedia Commons.

The uranium price has slowly but surely started to rebound, with global catalysts such as reactor restarts in Japan, deals with India and new construction in China being some of the main forces investors expect will bring it back up.

However, with attention focused on those key drivers, one country making major moves in the space hasn't been getting as much attention as it probably should. That country is Russia.

David Talbot of Dundee Capital Markets believes that Russia's influence will likely become more and more important as it continues to build aggressively worldwide. In fact, he believes Russia is an underappreciated factor that will likely prove to be just as important to the uranium market as new builds in China and India.

It's not hard to see why he thinks that. Rosatom, the country's state-owned nuclear energy company, currently has 29 reactors in various stages of planning and construction in over a dozen countries. That's the largest number of reactors being built internationally, and in total the country's participation in the uranium industry accounts for about 30 percent of new construction.

"The Russians are building one-third of all the power plants globally, and they are coming into these developed nations," Talbot told Resource Investing News by phone. "They are not only teaching them how to set up regulations, but they are financing them, building them — they are going to provide them [with] uranium, [then] take the uranium away at the end of the day. So the Russians are becoming the one-stop shop, and they are doing it aggressively."

In a recent installment of his newsletter, Talbot also said, "[w]e have said that we believe Russia is going to dominate the nuclear industry, but we aren't sure the market pays as much attention to it as it does Japan, China and India. The other three are significant, but Russia's impact will likely extend beyond its borders and make it easier for the rest of the world to meet their energy requirements and access nuclear power — from financing to setting up a regulatory regime, to uranium procurement and reactor construction."

Given that France's Areva (EPA:AREVA) hasn't sold a nuclear reactor since 2007, it brings into question just what has made Rosatom so successful. Interestingly, it seems that having the Russian government as a supporter has definitely played a part. Not only did President Vladimir Putin ink nuclear energy cooperation agreements with Argentine President Cristina Kirchner when he toured South America in July 2014, but he also took care of deals with India.

Whatever has led to Russia's success, it seems likely to continue, at least according to Talbot. It will be interesting to see whether the company's build-own-operate scheme ultimately benefits the uranium price as well.

 

Securities Disclosure: I, Kristen Moran, hold no direct investment interest in any company mentioned in this article.

Related reading:

'Slight Rebound' for Uranium Price in First Week of May

Good News from Japan Moves Uranium Stocks

David Talbot on Uranium and the Russia Factor from Uranium Investing News

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