Uranium mining

Disclaimer: I have been buying stocks in uranium producers for more than a decade. I accelerated my purchasing in 2011 when stock prices fell after Fukushima. I’ve added to my holdings each time there was a big drop in stock prices.

I am a contrarian who likes to buy high quality assets when they’re on sale.

Now a confession. Though my investments in Uraniumland™ are a small portion of my overall
portfolio, they are underwater and would make me look dumb if I ran an investment fund for other people.

Now a rant. I’m pretty certain that I am not dumb. Uranium is an amazing element. Its compounds and alloys have characteristics that give it fundamental advantages over most competitive or substitute materials that are in the same lines of work.

I was saddened by the headline column in the Sept. 29 issue of Fuel Cycle Week (FCW) describing a significant, employment-reducing reorganization of uranium industry marketing organizations.

Layoffs and retrenchment are always painful. As an investor, though, I was angry to find more evidence of companies that are confused about the difference between making sales to known customers and market creation strategy development.

The trouble with Uraniumland is that it is too insular. To this outsider, uranium producers avoid devising and implementing ways to attract non-consumers, which I’m defining here as anyone who is not currently buying your product. You must help them know that they both need and want what you can provide.

Over 100 Years of Uranium Glass

Here’s one example. When was the last time anyone made a large sale of uranium to the glass industry? Have uranium producers spent any time thinking about how they can take advantage of the unique chemical property of uranium that makes it glow in shades ranging from cream through yellow to lime green when illuminated by a blacklight?

Have they ever thought about the large base of interested non-consumers who are fascinated by the slowly shrinking inventory of glassware manufactured for more than 100 years, between 1830 and 1940?

That market abruptly disappeared because governments thought there was a tightly limited supply. Political leaders in the US, UK, France and Russia decided they needed to corner the uranium market in order to achieve a short term goal.

After being the only legal buyers for almost two decades, governments realized there was far more material than they could ever consider hoarding.

By the time the U.S. government abruptly stopped buying, Hermann Muller and his friends had successfully invented and spread atomic fear by claiming even tiny doses of radiation were harmful.

In response, “safety” regulators imposed tight controls over uranium as a useful material for adding unique colors and a responsive glow to glassware and ceramic products.

Even without a complete prohibition, those rules made it too difficult for anyone in the glass industry to consider reviving their formerly popular lines of uranium glass products or to consider new products like luminous glass bricks for decorative interior or exterior design.

The abrupt disappearance of the uranium glass market wasn’t caused by glass makers getting nervous about the negatively promoted health effects. After all, they routinely take precautions against ingesting the hazardous materials that are inescapable ingredients of their livelihood.

Silica dust is a known hazard, but so are lead and arsenic, two elements that remain in common use in specialty glass making.

Glassmakers knew from a century of experience that uranium glass products were safe and well accepted in the market. But they couldn’t or wouldn’t fight city hall by themselves.

There are provisions in U.S. regulations (10 CFR 40.22 and 40.23) that allow shipping and handling uranium under a general license. Unfortunately, the restrictions on quantity and the documentation requirements are too onerous to allow economic production for anything other than specialty applications.

It’s worth noting that the potential market is huge. Glass is one of the world’s largest material commodities by weight; some of the old recipes for uranium glass contained as much as 25% uranium oxide.

Creating a new uranium glass market would include efforts to promote the fact that low doses of radiation are not harmful. They would also include lobbying efforts to ensure that regulators use modern scientific knowledge to implement less onerous restrictions on commerce in materials like natural uranium or depleted uranium.

When I mentioned the idea of uranium glass to a friend who is a career radiobiologist, she reacted with excitement. Her scientific research over the past 30 years tells her that people would be more healthy with a little more radiation in their environment.

A vibrant uranium glass market would create a new sector of demand and introduce a completely new customer base. Customer diversification is a conventional, but important long term success strategy.

Uranium glass marketing would also result in growing public awareness of the utility and safety of the element. It could help them develop comfort levels approaching those earned by other potentially hazardous commercial items like gasoline, propane and natural gas.

Where’s the Uranium Association?

There once was an organization named the Uranium Institute (UI), which grew out of a somewhat infamous organization known colloquially as the Uranium Cartel or the Uranium Club. It focused on the interests of the uranium mining industry.

UI is now part of the World Nuclear Association. WNA’s membership has a wider span of interests. Although it isn’t exclusively focused on increasing the demand for uranium, it just re-launched the Harmony program, a call to action to governments to do more to ensure that nuclear energy makes the full contribution that society requires to meet its future clean energy needs.

The target for nuclear energy is to provide 25% of electricity in 2050, requiring roughly 1,000 GWe of new nuclear capacity to be constructed.

Instead of focusing on technology, WNA believes it is “vital that the global industry identifies and focuses on demolishing the real barriers to growth.”

While I’m not advocating the creation of an organization that engages in nefarious activities like establishing prices or allocating sales to suppliers, uranium is a commodity product like dairy, avocados, grapes, oil, coal or gas that deserves to have a trade association that can focus on lobbying and joint marketing efforts to build overall demand to match supply.

Though virtually all uranium sold is currently used by the “nuclear industry,” the interests of uranium producers only occasionally intersect with those of the rest of the industry.

It makes no sense for uranium producers to depend on the nuclear industry and expect that the nuclear industry shares its legitimate desire to regain enough pricing power to enable pro table and expanding sales.

In fact, it seems conventionally obvious that utility companies and their fuel purchasing arms would prefer for the uranium mining industry to continue as a tightly linked dependent with no other customers competing for the material.

If there was a Uranium Association, it could help stimulate creation of the uranium glass industry described above. It could also stand beside the currently lonely Nuclear Energy Institute and the American Association for Clean Coal Electricity.

Those organizations support the Department of Energy’s proposed rule that would require regional transmission organizations and independent system operators (RTO/ISO) to establish tariffs to provide full cost recovery and a fair profit for operating nuclear plants and certain coal plants that have large coal stockpiles.

A coalition of 11 organizations collectively calling themselves Energy Industries Associations filed a motion opposing the proposal.

Those groups, representing oil, natural gas, wind, solar and biomass, want the public to believe that today’s electricity markets are fair.

They claim there are no government hands pushing certain power sources to the detriment of others.

Environmental Progress says that the rule could be a big win for nuclear energy. The uranium industry could help by explaining the importance of maintaining the current nuclear fleet and its clean, reliable, affordable power supply.

It could explain why the vital uranium industry needs to keep its current customer base so that it has the human capital resources to expand.

That could be necessary to support the potentially large number of advanced reactors that might arise out of one or more of the 50 or so designs actively being developed.

Taking clues from competitors, the Uranium Association could describe its decades worth of proven reserves while also helping the public understand that there is virtually no limit on the amount of material remaining to be discovered.

A Uranium Association could respond with hard facts when the natural gas industry brags about its potential to supply almost 100 years worth of fuel that only produces half as much CO2 as coal does.

Eat Your Own Dog Food

Many sectors of the nuclear fuel cycle industry buy large quantities of electrical power. Some installations are located in remote areas without reliable connection to an affordable grid power supply.

It would make conventional marketing sense for companies whose profitability depends on customers purchasing uranium fuels and related services to use their own products.

This choice would help its direct, power plant-operating customers build interest and sales.

Fuel cycle companies could express their desire to purchase bundled power that is produced in environmentally friendly nuclear plants, just as companies can signal their high moral standards by arranging to purchase bundled wind or solar electricity from the power grid.

Some might even consider making public announcements that they want to be customers for independent power producers that use small modular reactors to supply a local power grid in remote mining towns.

Supplier companies and the leaders of those companies should show the value, ease of use and safety of their product in personal, demonstrable ways.

Customers are less likely to remain uncomfortable if they recognize that the people in the know support their words with actions.

Nothing tells the public that they are right to be concerned about safety than fuel producers who show by their actions they are reluctant to be too close to a power plant using that fuel.

Final Thoughts and Recommended Reading

“It is no wonder that corporate leaders throughout the world see market creation as a central strategic challenge to their organizations in the upcoming decade.

“They understand that in an overcrowded and demand-starved economy, profitable growth is not sustainable without creating, and re-creating, markets. That is what allows small companies to become big and what allows big companies to regenerate themselves.”

That is the concluding paragraph from a seminal article in the Harvard Business Review titled “Creating New Market Space.” It was published in the Jan-Feb 1999 issue. It provides case studies and advice that is highly relevant to today’s uranium fuel supply industry.

Market creation is a term of art that can result in useful search results for more ideas.

The most important message is that success comes from action and creative thinking. Repeated rounds of cost cutting and retrenchment under the assumption that suppliers are passive acceptors of whatever “the market” decides will only continue a downward spiral.

The uranium fuel cycle industry produces useful material and value-added enhancements to that material. Companies in that line of business should not allow them to shrink because they accepted false limitations and overt negative propaganda from competitors.

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Note: The above was first published in the October 6, 2017 edition of Fuel Cycle Week. It has been revised and republished here with permission.