1 00:00:04,019 --> 00:00:06,960 Sean Aylmer: Welcome to the FEAR & GREED Business Interview. I'm Sean Aylmer. 2 00:00:07,110 --> 00:00:10,049 Sean Aylmer: Nuclear energy is a hot topic at the moment. The 3 00:00:10,050 --> 00:00:14,339 Sean Aylmer: federal opposition is reportedly set to include small modular nuclear 4 00:00:14,340 --> 00:00:17,608 Sean Aylmer: reactors in its energy policy before the next budget. Putting 5 00:00:17,609 --> 00:00:22,500 Sean Aylmer: aside the domestic politics, globally, nuclear power generation is on 6 00:00:22,650 --> 00:00:26,820 Sean Aylmer: up. The International Energy Agency predicts nuclear power generation will 7 00:00:26,820 --> 00:00:29,460 Sean Aylmer: hit an all- time high next year, and with that 8 00:00:29,460 --> 00:00:33,330 Sean Aylmer: comes renewed demand for uranium and Australian companies are well- 9 00:00:33,330 --> 00:00:35,969 Sean Aylmer: placed to meet that demand. Remember, this is general information 10 00:00:35,969 --> 00:00:38,879 Sean Aylmer: only and you should always seek professional advice before making 11 00:00:38,880 --> 00:00:42,750 Sean Aylmer: any investment decisions. Tribeca Investment Partners runs one of the 12 00:00:42,750 --> 00:00:46,740 Sean Aylmer: only wholesale funds dedicated to this nuclear energy and uranium 13 00:00:46,740 --> 00:00:50,580 Sean Aylmer: globally. Guy Keller is the Portfolio Manager for the Tribeca 14 00:00:50,639 --> 00:00:54,450 Sean Aylmer: Nuclear Energy Opportunities Strategy. Guy, welcome to FEAR & GREED. 15 00:00:54,810 --> 00:00:56,190 Guy Keller : Thanks very much for having me, Sean. 16 00:00:56,850 --> 00:00:59,940 Sean Aylmer: So Guy, I don't know much about uranium. Given the 17 00:00:59,940 --> 00:01:01,980 Sean Aylmer: fact that we want renewables and we want to get 18 00:01:01,980 --> 00:01:05,670 Sean Aylmer: rid of carbon fossil fuels, it seems to be on 19 00:01:05,670 --> 00:01:07,199 Sean Aylmer: the up at the moment, but maybe you can just 20 00:01:07,200 --> 00:01:11,369 Sean Aylmer: talk us through what's happened to uranium prices in recent 21 00:01:11,369 --> 00:01:15,030 Sean Aylmer: years and why they've fallen and now rising. 22 00:01:15,840 --> 00:01:18,840 Guy Keller : Sure. Yeah, I mean, so obviously we were in a 23 00:01:18,959 --> 00:01:23,399 Guy Keller : beginnings of sort of a cycle throughout the early 2000s 24 00:01:23,789 --> 00:01:27,480 Guy Keller : that was derailed by the global financial crisis, picked itself 25 00:01:27,480 --> 00:01:29,819 Guy Keller : up off the floor again and was looking like a 26 00:01:29,819 --> 00:01:35,220 Guy Keller : healthy sector until we had the Fukushima tsunami that caused 27 00:01:35,700 --> 00:01:39,209 Guy Keller : an accident in one of Japan's nuclear reactors. We've had 28 00:01:39,209 --> 00:01:42,809 Guy Keller : more than a decade now of nuclear being not a 29 00:01:42,809 --> 00:01:46,919 Guy Keller : popular choice. In fact, the West were retiring reactors early. 30 00:01:46,920 --> 00:01:50,760 Guy Keller : Germany, very publicly was moving completely away from nuclear, and 31 00:01:50,760 --> 00:01:53,880 Guy Keller : of course Japan shut theirs down. I think what's changed 32 00:01:53,880 --> 00:01:58,170 Guy Keller : though is you've seen a push towards decarbonization and that 33 00:01:58,170 --> 00:02:02,610 Guy Keller : has shone the spotlight on moving away from coal and 34 00:02:02,610 --> 00:02:07,260 Guy Keller : gas as electricity towards things like wind and solar. But 35 00:02:07,260 --> 00:02:09,930 Guy Keller : then we've sort of realized that we actually need to 36 00:02:09,930 --> 00:02:13,049 Guy Keller : replace base load electricity, which is electricity that runs 24 37 00:02:13,050 --> 00:02:15,750 Guy Keller : hours, 7 days a week and doesn't need the sun 38 00:02:15,750 --> 00:02:17,730 Guy Keller : to shine or the wind to blow. And so of 39 00:02:17,730 --> 00:02:21,960 Guy Keller : course, the countries that had nuclear decided they should probably 40 00:02:21,960 --> 00:02:24,419 Guy Keller : keep it on because it solves a lot of the 41 00:02:24,450 --> 00:02:28,440 Guy Keller : carbon problems. I think nuclear electricity generation is about 10% 42 00:02:28,440 --> 00:02:31,800 Guy Keller : of the world's electricity, but actually solves about 40 to 43 00:02:31,800 --> 00:02:36,269 Guy Keller : 45% of the decarbonization of the electricity grid. So it's an 44 00:02:36,270 --> 00:02:40,859 Guy Keller : amazingly efficient form of electricity in the fight to decarbonization. 45 00:02:41,579 --> 00:02:46,019 Guy Keller : When you fast- forward through towards the war in Ukraine, 46 00:02:46,410 --> 00:02:50,910 Guy Keller : that caused many governments to look for energy security and 47 00:02:50,910 --> 00:02:54,000 Guy Keller : it was yet another factor. And these are governments making 48 00:02:54,000 --> 00:02:57,809 Guy Keller : these decisions, not commercial decisions. They're governments saying, " We want 49 00:02:57,809 --> 00:02:59,969 Guy Keller : nuclear power to stay on, and in fact we want 50 00:02:59,969 --> 00:03:00,870 Guy Keller : to look at building more." 51 00:03:01,800 --> 00:03:05,760 Sean Aylmer: So I would imagine that most people would support nuclear 52 00:03:05,760 --> 00:03:11,219 Sean Aylmer: energy except for safety concerns. So the big question is 53 00:03:11,219 --> 00:03:12,538 Sean Aylmer: how safe is nuclear? 54 00:03:13,830 --> 00:03:15,899 Guy Keller : Well, I mean, the fact of the matter is there's 55 00:03:15,900 --> 00:03:18,630 Guy Keller : a bunch of countries that have nuclear and they have 56 00:03:18,630 --> 00:03:25,108 Guy Keller : had nuclear since the 1950s and 1960s. There's 420 reactors operating 57 00:03:25,110 --> 00:03:29,070 Guy Keller : globally, and there's 20 or so idled. Most of those in 58 00:03:29,070 --> 00:03:32,159 Guy Keller : Japan. We're in the middle of the biggest reactor build 59 00:03:32,160 --> 00:03:35,939 Guy Keller : program we've seen in decades with 62 reactors being built, 60 00:03:36,570 --> 00:03:38,880 Guy Keller : the majority of them being China of course, but there's 61 00:03:38,880 --> 00:03:42,780 Guy Keller : 13 other countries that are also building nuclear. And you 62 00:03:42,780 --> 00:03:46,349 Guy Keller : just need to look at COP28 for example, when for 63 00:03:46,349 --> 00:03:50,639 Guy Keller : the first time ever nuclear was front and center of 64 00:03:50,639 --> 00:03:54,840 Guy Keller : that. So whilst our government might've been in the tents 65 00:03:54,840 --> 00:03:57,420 Guy Keller : in the back car park talking solar panels, there was 66 00:03:57,450 --> 00:04:03,059 Guy Keller : 22 nations that agreed that they needed to triple nuclear 67 00:04:03,059 --> 00:04:07,320 Guy Keller : capacity by 2050 in order to meet decarbonization goals. Now, 68 00:04:07,320 --> 00:04:09,660 Guy Keller : they're probably not going to get there, but I think 69 00:04:09,809 --> 00:04:13,170 Guy Keller : the fact that there's such good momentum towards nuclear that 70 00:04:13,170 --> 00:04:15,660 Guy Keller : governments are getting much more comfortable with it would suggest 71 00:04:16,110 --> 00:04:19,979 Guy Keller : what I already know, that the current generation of nuclear 72 00:04:19,980 --> 00:04:21,420 Guy Keller : reactors are in fact very safe. 73 00:04:22,050 --> 00:04:25,139 Sean Aylmer: So the small modular nuclear reactors, you're going to have 74 00:04:25,139 --> 00:04:26,879 Sean Aylmer: to give me a lesson in these. I kind of 75 00:04:26,880 --> 00:04:30,899 Sean Aylmer: get the idea of the big nuclear reactor. The small 76 00:04:30,900 --> 00:04:33,150 Sean Aylmer: modular ones, just how do they work? 77 00:04:34,320 --> 00:04:37,738 Guy Keller : Well, so there's two stages of small modular reactor. The 78 00:04:37,740 --> 00:04:42,719 Guy Keller : first is a smaller version of existing technology, so that's 79 00:04:42,719 --> 00:04:47,039 Guy Keller : a light water or pressurized water reactors, just not on 80 00:04:47,039 --> 00:04:49,919 Guy Keller : a gigawatt scale, but on a 300 megawatt scale. So 81 00:04:49,920 --> 00:04:55,200 Guy Keller : Westinghouse has got the AP 300 coming out, for example, and it's basically their 82 00:04:55,200 --> 00:04:59,339 Guy Keller : Westinghouse 1000, but a third of the size bigger. The 83 00:04:59,339 --> 00:05:03,000 Guy Keller : reason that that is becoming more popular is because the 84 00:05:03,000 --> 00:05:05,879 Guy Keller : whole idea is because they're smaller, there's not as much 85 00:05:05,879 --> 00:05:08,070 Guy Keller : heavy forging, you can make things in the factory, you 86 00:05:08,070 --> 00:05:09,600 Guy Keller : can make more of them, you can roll them out 87 00:05:09,600 --> 00:05:13,710 Guy Keller : more efficiently. So that's existing technology. The second stage is 88 00:05:13,800 --> 00:05:17,189 Guy Keller : what I generally call is advanced reactors, and that's looking 89 00:05:17,190 --> 00:05:19,830 Guy Keller : at your high- temperature gas- cooled reactor, your molten salt 90 00:05:19,830 --> 00:05:23,520 Guy Keller : reactor, your fast breeder reactors. So whilst that technology has 91 00:05:23,520 --> 00:05:27,599 Guy Keller : been around and has tried and tested in labs and 92 00:05:27,600 --> 00:05:31,920 Guy Keller : various places, it's not commercially in operation with the exception 93 00:05:31,920 --> 00:05:34,529 Guy Keller : of a high- temperature gas- cooled reactor that in fact 94 00:05:34,529 --> 00:05:37,438 Guy Keller : is actually connected to the Chinese grid this year or 95 00:05:37,440 --> 00:05:40,919 Guy Keller : last year. So there's the smaller version of what we 96 00:05:40,920 --> 00:05:45,180 Guy Keller : know, easier to regulate. And once governments solve, who's going 97 00:05:45,180 --> 00:05:48,060 Guy Keller : to (inaudible) funding cost of first of a kind, 98 00:05:48,330 --> 00:05:51,389 Guy Keller : I think they'll roll out very, very quickly because when 99 00:05:51,389 --> 00:05:53,370 Guy Keller : you look at those sort of size, guess what? They're 100 00:05:53,370 --> 00:05:57,569 Guy Keller : about the perfect size to replace coal on coal- fired sites. 101 00:05:58,350 --> 00:06:01,049 Sean Aylmer: Okay, so where does Australia fit into this and obviously 102 00:06:01,049 --> 00:06:03,630 Sean Aylmer: our uranium reserves, where do we fit in? 103 00:06:04,110 --> 00:06:07,500 Guy Keller : Well, Australia has got one of the biggest uranium reserves 104 00:06:07,500 --> 00:06:09,808 Guy Keller : in the world, and the majority of that sits in 105 00:06:09,809 --> 00:06:13,589 Guy Keller : BHP's Olympic Dam deposit. However, there are plenty of other 106 00:06:13,710 --> 00:06:17,428 Guy Keller : uranium showings in different parts of Australia. The problem is 107 00:06:17,430 --> 00:06:20,279 Guy Keller : at the moment is that South Australia and Northern Territory 108 00:06:20,279 --> 00:06:23,279 Guy Keller : are largely open for business. Northern Territory doesn't have an 109 00:06:23,279 --> 00:06:27,238 Guy Keller : operating mine, but South Australia has obviously Olympic Dam, the 110 00:06:27,240 --> 00:06:30,540 Guy Keller : Beverley four mile mine, and by the end of this 111 00:06:30,540 --> 00:06:33,419 Guy Keller : month, Boss will be producing out of its Honeymoon deposit 112 00:06:33,420 --> 00:06:36,119 Guy Keller : in South Australia as well. But when you look at 113 00:06:36,180 --> 00:06:40,680 Guy Keller : Western Australia, for example, it's a sitting government policy to 114 00:06:40,830 --> 00:06:43,380 Guy Keller : not allow uranium mining. It's not illegal, it's just the 115 00:06:43,380 --> 00:06:46,500 Guy Keller : government policy. And that's the same with Queensland. Again, a 116 00:06:46,500 --> 00:06:50,699 Guy Keller : sitting government policy. New South Wales, there's still some legislation 117 00:06:51,270 --> 00:06:54,960 Guy Keller : and Victoria, we haven't found much uranium, but you're not allowed 118 00:06:54,960 --> 00:06:56,040 Guy Keller : to do anything down there anyway. 119 00:06:56,520 --> 00:06:58,350 Sean Aylmer: Stay with me, Guy. We'll be back in a minute. 120 00:07:04,589 --> 00:07:07,559 Sean Aylmer: I'm speaking to Guy Keller, Portfolio Manager for the Tribeca 121 00:07:07,559 --> 00:07:12,510 Sean Aylmer: Nuclear Energy Opportunity Strategy. Okay. So I mean, I don't 122 00:07:12,510 --> 00:07:15,390 Sean Aylmer: want to say it's inevitable, but if you look at 123 00:07:15,510 --> 00:07:18,300 Sean Aylmer: the way the world's going, even Japan, you said they've 124 00:07:18,300 --> 00:07:21,210 Sean Aylmer: mothballed a bunch of reactors, but they're actually talking about 125 00:07:21,480 --> 00:07:25,050 Sean Aylmer: firing them up again simply to meet their emissions targets. 126 00:07:26,070 --> 00:07:29,160 Sean Aylmer: So maybe not inevitable, but certainly the trend is that 127 00:07:29,219 --> 00:07:32,700 Sean Aylmer: way. As an investor, how do I think about it 128 00:07:32,970 --> 00:07:37,001 Sean Aylmer: in that Guy, that's your role, you talk about (inaudible) 129 00:07:37,001 --> 00:07:41,730 Sean Aylmer: wholesale investors, you can invest in nuclear/ uranium? How 130 00:07:41,730 --> 00:07:44,309 Sean Aylmer: do investors think about it? What are the stocks we're 131 00:07:44,309 --> 00:07:46,769 Sean Aylmer: talking about or what are the assets we're talking about? 132 00:07:47,459 --> 00:07:50,970 Guy Keller : Well, so it's still a really, really small market. When 133 00:07:50,970 --> 00:07:54,480 Guy Keller : I started looking at this back in 2017, I think 134 00:07:54,480 --> 00:07:58,889 Guy Keller : there was about 26 odd stocks globally listed, stocks doing 135 00:07:58,889 --> 00:08:01,770 Guy Keller : something in uranium. There was almost zero in advanced nuclear 136 00:08:02,099 --> 00:08:04,499 Guy Keller : and the middle of the fuel cycles quasi- government so 137 00:08:04,500 --> 00:08:08,250 Guy Keller : there's not real investment opportunity there. We're now 2024, there's 138 00:08:08,250 --> 00:08:11,610 Guy Keller : maybe 60 odd stocks, but last cycle there was up 139 00:08:11,610 --> 00:08:14,970 Guy Keller : to 500 list opportunities that had uranium in their name. 140 00:08:14,970 --> 00:08:17,790 Guy Keller : Now of course, a lot of them were gold or 141 00:08:18,090 --> 00:08:20,001 Guy Keller : something else that decided to pick up a uranium (inaudible) 142 00:08:20,001 --> 00:08:22,709 Guy Keller : . In fact, I've just come back from PDAC in 143 00:08:22,709 --> 00:08:26,010 Guy Keller : Toronto, Canada, and we're already seeing the beginning of that. 144 00:08:26,670 --> 00:08:29,489 Guy Keller : People picking up because lithium's not working or uranium's not 145 00:08:29,490 --> 00:08:33,870 Guy Keller : working. The ASX has got a very wide choice of 146 00:08:33,960 --> 00:08:37,499 Guy Keller : uranium stocks with projects in various locations, not many with 147 00:08:37,500 --> 00:08:39,870 Guy Keller : projects in Australia, but you can get Africa, you can 148 00:08:39,870 --> 00:08:42,750 Guy Keller : get Canada, you can get United States, but the market 149 00:08:42,750 --> 00:08:45,720 Guy Keller : caps of those companies aren't very big. So to get 150 00:08:45,720 --> 00:08:47,850 Guy Keller : the bigger market caps you need to be in Canada 151 00:08:47,850 --> 00:08:49,770 Guy Keller : and USA where you can invest in the likes of 152 00:08:49,770 --> 00:08:52,349 Guy Keller : Cameco, which is the biggest listed producer or second biggest 153 00:08:52,349 --> 00:08:55,679 Guy Keller : listed producer. But a lot of questions I was getting 154 00:08:55,679 --> 00:08:59,430 Guy Keller : was, especially as I said, coming back from PDAC was, " 155 00:08:59,910 --> 00:09:02,460 Guy Keller : Is uranium going to do what Lithium has just done?" 156 00:09:03,059 --> 00:09:07,200 Guy Keller : We saw obviously a very big run higher in lithium, 157 00:09:07,620 --> 00:09:11,940 Guy Keller : and then prices collapsing back to almost 2020 levels. The 158 00:09:11,940 --> 00:09:15,599 Guy Keller : difference here is that there's a primary mine supply deficit 159 00:09:15,599 --> 00:09:17,759 Guy Keller : in uranium that's been around for more than a decade. 160 00:09:18,660 --> 00:09:22,740 Guy Keller : It was getting fulfilled by inventory drawdown and some secondary 161 00:09:22,740 --> 00:09:26,849 Guy Keller : programs that are no longer in existence, and something around 162 00:09:26,849 --> 00:09:28,740 Guy Keller : in Richmond, which is a bit too complex to get 163 00:09:28,740 --> 00:09:32,488 Guy Keller : into where basically they had spare capacity, so they were 164 00:09:32,490 --> 00:09:36,540 Guy Keller : pushing uranium equivalent back into the market. That's now reversed 165 00:09:36,540 --> 00:09:39,870 Guy Keller : with Russia, of course, they're now sucking uranium out of 166 00:09:39,870 --> 00:09:43,228 Guy Keller : the market because they're trying to run harder. So we 167 00:09:43,230 --> 00:09:46,380 Guy Keller : started this move with a primary mine supply deficit from 168 00:09:46,380 --> 00:09:49,499 Guy Keller : yesterday that we can't fulfill. We've got a primary mine 169 00:09:49,500 --> 00:09:52,260 Guy Keller : supply deficit today, even with prices up around 90 or $ 170 00:09:52,260 --> 00:09:56,520 Guy Keller : 100 as we've seen earlier this year. There's no wall 171 00:09:56,520 --> 00:09:59,640 Guy Keller : of supply that's going to come to market here to 172 00:09:59,850 --> 00:10:02,098 Guy Keller : try to solve this at the moment. And as I 173 00:10:02,099 --> 00:10:04,588 Guy Keller : mentioned earlier, we're in the middle of the biggest reactor 174 00:10:04,590 --> 00:10:08,820 Guy Keller : build program in decades. So we've got future demand that 175 00:10:08,820 --> 00:10:11,760 Guy Keller : we can't solve for at the moment either. So it's 176 00:10:11,760 --> 00:10:17,250 Guy Keller : an extraordinarily tight market where supply has been completely neglected, 177 00:10:17,400 --> 00:10:21,480 Guy Keller : both in exploration and project development, and now that prices 178 00:10:21,480 --> 00:10:24,540 Guy Keller : are getting to a level where they're interesting, a lot 179 00:10:24,540 --> 00:10:28,799 Guy Keller : of these developers are now trying to get permits in 180 00:10:28,799 --> 00:10:31,828 Guy Keller : place, trying to get project finance in place. When was the 181 00:10:31,830 --> 00:10:34,890 Guy Keller : last time a bank debt project financed a uranium project? 182 00:10:34,890 --> 00:10:37,590 Guy Keller : More than a decade ago. There's a lot of things 183 00:10:37,590 --> 00:10:41,280 Guy Keller : that need to go right, and price here is not 184 00:10:41,280 --> 00:10:42,630 Guy Keller : going to solve it necessarily. 185 00:10:43,230 --> 00:10:46,559 Sean Aylmer: So Guy, just quickly in terms of government policy then, 186 00:10:47,039 --> 00:10:49,590 Sean Aylmer: it sounds like we need more than just the market 187 00:10:49,590 --> 00:10:54,060 Sean Aylmer: to solve it. How important is government policy? Obviously, the 188 00:10:54,570 --> 00:10:58,139 Sean Aylmer: federal government in Australia has been opposed to uranium mining 189 00:10:58,139 --> 00:11:01,529 Sean Aylmer: for a long time. The opposition is making noises otherwise, 190 00:11:01,770 --> 00:11:06,780 Sean Aylmer: but do we need a better government paradigm for the 191 00:11:06,780 --> 00:11:08,010 Sean Aylmer: development of the industry? 192 00:11:09,330 --> 00:11:13,078 Guy Keller : Look, from a federal level, we certainly need to remove 193 00:11:13,080 --> 00:11:16,049 Guy Keller : the ban on nuclear power so that we can have 194 00:11:16,050 --> 00:11:19,380 Guy Keller : some grown- up conversations on energy policy and how that 195 00:11:19,380 --> 00:11:23,129 Guy Keller : should look. And certainly on a state level, having a 196 00:11:23,129 --> 00:11:27,030 Guy Keller : policy because of the sitting party. I mean, I doubt 197 00:11:27,030 --> 00:11:29,880 Guy Keller : very much the people of Western Australia or Queensland know 198 00:11:29,880 --> 00:11:32,639 Guy Keller : or care that their government has got a ban on 199 00:11:32,639 --> 00:11:37,410 Guy Keller : mining uranium. And as I said, it's needed. Why wouldn't 200 00:11:37,469 --> 00:11:42,269 Guy Keller : Australia with such abundant resources of uranium mine those resources 201 00:11:42,360 --> 00:11:46,980 Guy Keller : to be powering the 450 reactors plus the 60 being 202 00:11:46,980 --> 00:11:50,429 Guy Keller : built to enable the future generation to have a carbon- 203 00:11:50,429 --> 00:11:56,910 Guy Keller : free base load electricity lifestyle? We've got the resources. The 204 00:11:56,910 --> 00:12:00,509 Guy Keller : world needs them. We are silly not to be participating 205 00:12:00,510 --> 00:12:00,840 Guy Keller : in this. 206 00:12:01,230 --> 00:12:03,030 Sean Aylmer: Guy, thank you for talking to FEAR & GREED. 207 00:12:03,600 --> 00:12:05,220 Guy Keller : Thanks very much for having me. It's been a pleasure. 208 00:12:05,910 --> 00:12:09,030 Sean Aylmer: That was Guy Keller, Portfolio Manager for the Tribeca Nuclear 209 00:12:09,030 --> 00:12:12,719 Sean Aylmer: Energy Opportunity Strategy. This is the FEAR & GREED Business Interview. 210 00:12:12,719 --> 00:12:15,269 Sean Aylmer: Remember, this is general information only and you should seek 211 00:12:15,270 --> 00:12:18,958 Sean Aylmer: professional advice before making any investment decision. Join us every 212 00:12:18,958 --> 00:12:21,360 Sean Aylmer: morning for the full episode of FEAR & GREED, Australia's best 213 00:12:21,360 --> 00:12:24,060 Sean Aylmer: business podcast. I'm Sean Aylmer. Enjoy your day.