The mining industry is one of a few industries that not only supports energy production, but also benefits from it. On the fossil fuel side, coal and oil sands are mined and converted to Btu’s. Similarly, for the green energy sector, the industry mines and refines uranium, which is a base load fuel for power generation, like coal and natural gas. The mining industry also supplies the many different metals that are used for solar arrays, windmills, batteries, hydrogen fuel cells, etc. And, most important, it mines and refines the copper that transfers those electrons from the power generator to the end user.
The metal mining side of the business is currently hedging around a massive transition to renewable power for both power generation and transportation, which would mean a shift away from coal and petroleum products. While the International Energy Agency supports that notion, it also documents how fossil fuel use continues to grow, especially in the developing world.
The fickle nature of consumers is also complicating the situation. For example, during late October, the Danish offshore wind corporation Orsted, announced that it was abandoning its Ocean Wind One and Ocean Wind Two offshore wind projects off the coast of New Jersey, USA. While Orsted cited supply chain issues, project opponents, who mounted an aggressive 2-year campaign, celebrated success in defeating the project.
On a CNBC segment titled EV Meltdown that also aired during October, a Deutsche Bank auto technology analyst described what he sees as a meltdown in electric vehicle (EV) expectations. EV adoption rates worldwide are slower than expected, which has caused automotive manufacturers to rethink massive buildout plans. Factors such as affordability and the lack of charging infrastructure are weighing heavily on the minds of consumers. The analyst believes the transition will take place, but at a much slower pace than originally anticipated. This is troublesome for mining companies that are planning the future mines that will supply the raw materials to support this market, but it may also give companies the breathing room needed to permit new mines.
The shining star in the energy discussion right now is uranium. With demand increasing worldwide, spot prices for the fuel have increased to $73/ton, the highest level since 2008. Consumers are depleting the spot market as they build inventories in response to rising geopolitical risks, brought on by Russia’s invasion of Ukraine and a coup in Niger. France, the USA, and Germany are all investing in extending the lifespan of nuclear power plants, which are emissions free.
Cameco’s Q3 2023 earnings release at the end of October illustrates the positive momentum the nuclear energy industry is experiencing. “The world’s desire for clean, secure and low-cost energy is creating a foundation of support for nuclear energy from across the public and political spectrum,” said Tim Gitzel, president and CEO, Cameco, which is one of the largest uranium providers, based in Canada. As this edition was going to press, Cameco received regulatory approval for its acquisition of Westinghouse Electric Co., which manufactures small modular reactors.