November 1, 2024 • 44 mins
There's something of a uranium cult out there: the investors and traders who believe that nuclear is the future of energy, and therefore this crucial commodity will end up being a huge winner. And over the last several years, the price has gone up substantially. But what are the economics of the uranium market? And how sensitive is it to some of these power plants that are reopening? On this episode, we speak with commodities guru Bob Brackett, head of Americas energy and transition at Bernstein Research. Bob knows everything about just about every commodity under the sun, so in addition to talking uranium, we get an update on lithium, gold, silver, oil, and more.
Previously: The Three Big Things Driving the Nuclear Energy Revival
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Episode Transcript
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Speaker 1 (00:03):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:20):
Hello and welcome to another episode of the Odd Lots Podcast.
Speaker 3 (00:23):
I'm Jill Wisenthal and I'm Tracy Alloway.
Speaker 2 (00:25):
Tracy, are we calling it a nuclear revival yet?
Speaker 1 (00:29):
No?
Speaker 2 (00:29):
I mean for real, like, is that a thing?
Speaker 3 (00:31):
You know, what's going to happen? As soon as you
start calling it that, it's gonna like peter out, Ugh, fizzle.
Speaker 2 (00:37):
Don't say that. Don't say that. Some people would say,
we saw the recent three Mile Island news, We've seen
some other things of that nature. Some people would say that,
at least in the US, there's something of a nuclear
revival going on.
Speaker 3 (00:51):
Yes, you know what I find kind of funny is
if you look at one of the price impacts of
a nuclear revival, it's uranium. Yeah, but uranium started to
go up, I think right after the pandemic, and now
it's come down a little bit from its heights, its
recent heights. So it's kind of funny, like it's sort
(01:12):
of acting like a meme stalk.
Speaker 2 (01:14):
Yeah, there's literally what I was saying. I was gonna
say that for a certain portion of the public, uranium
is like bitcoin. There's certain assets out there that have
these sort of cult like things where it's not just
that people are bullish, but they think that like in
the future, if they're smart and savvy enough to get
in now, they're going to make this huge fortune. And
(01:34):
I would put Crypto in there, and I would put
the people who play those like stub Equity of Fanny
and Freddy in that category. And then there's like the
uranium cult on social media, who thinks like, we're gonna
buy uranium and one day everyone will wake up and
realize that nuclear is the future of energy, that all
electricity will be powered by nuclear, and those of us
who are smart to get into uranium now will be
(01:57):
the new inheritors.
Speaker 4 (01:58):
Of the Earth.
Speaker 2 (01:59):
You know.
Speaker 3 (01:59):
The funniest thing I saw when this became a thing
back in twenty twenty one. So there's a uranium market subreddit,
of course there is, yeah, And someone posted on there
that they're a broker for physical uranium. So if you're
interested in buying physical uranium, you can buy it in
like one hundred thousand pound increments. So I don't even
(02:20):
know like who the target is for this, Who is
the retail trader that is buying one hundred thousand pounds
of uranium and presumably storing it somewhere.
Speaker 2 (02:29):
One day that person will have the mandate of heaven.
But the question is when will that be. Even if
there is a nuclear revival, even if all across the
rich world they like nuclear is the way to go,
what does that actually mean for the price of uranium.
I'm not really clear.
Speaker 3 (02:43):
Yeah, me neither.
Speaker 2 (02:44):
Well, I'm really excited to say because we do have
the perfect guest. We're going to be speaking to someone
who knows everything about every commodity in the world, as
far as I could tell, at least related to energy
commodities and maybe metal commodities. Two, he's someone on the
cell side, you know, Tracy, there are a few people
on the cell side, not many. Many people on the
(03:05):
cell side are worth reading. There are some people who's writing.
I consider it to be a crime that they're locked
up within cell side, because it's so good and so
interesting that it just shouldn't be the type of thing
that traders click on for five seconds. And we're going
to be speaking to one of them.
Speaker 3 (03:20):
Yes, actually, this analyst. I think their research does get
published in a book. Oh yeah, every once in a while.
I have some of those some old ones and they
stand the test of time, which is something that you
can't say for all cell side research.
Speaker 2 (03:33):
No, you absolutely can't. So we are going to be
speaking with the one and only Bob Brackett, literally the
perfect guest. I've had him on the podcast before. He
is the head of America's energy transition at Bernstein Research.
But what's your deal, Because, like I.
Speaker 3 (03:47):
Said, you do a deal.
Speaker 2 (03:48):
You know, like when I read your report on uranium,
you're going into the science of how it's mine. You're
going into the science. You have a copy and paste
of Einstein's letter to wrotell talk about how this uranium
thing could be big for bombs and electricity and so forth.
They don't really look like typical analyst reports.
Speaker 4 (04:07):
Yeah, so I think the challenges I'm a geologist living
in Manhattan. There You've got a handful of jobs, and
I think I've had two of the best. I was
working with HAS Corporation for many years. I've been at
Bernstein now more than a dozen and so the answer is,
my whole lens of this planet is a cyclical commodity investor.
And how do I think about cycles? And it's always
(04:28):
depletion based, So anything that depletes naturally, other people run
away from I tend to run towards, and uranium is
right in that wheelhouse.
Speaker 3 (04:36):
Okay, I have a really basic question what is uranium?
And also what is enriched uranium? Because when I hear that,
I always think are we adding B vitamins to it
or something? And then also what is yellow cake? And
why does it look so delicious?
Speaker 4 (04:52):
Well, we'll start with yellow cake because that's where we
start geologically. And the funny thing about uranium as a
mind commodity is most it is drilled for, and most
of it looks more like an oil and gas operation.
So the majority of uranium yellow cake U three eight
comes out of the ground through insituo leaching. Drill a well,
pump fluids down to a sandstone reservoir, and pump up
(05:15):
and treat the yellow cake. So yellow cake is U
three eight. It's a uranium oxide. It looks nice and yellow.
It is not terribly dangerous because it is mostly a
very stable form of uranium. So uranium has isotopes if
we go back and remember our nuclear chemistry, and so
most of yellow cake is U two thirty eight. I
(05:35):
send that to an enrichment facility I spin it up,
I get rid of the oxygen and replace it with
fluorine for chemical reasons, and then enrich it to power
plant grade, and then I can keep enriching it to
weapons grade. But hopefully we don't go that far.
Speaker 2 (05:52):
Hopefully the person buying one hundred thousand pounds on Reddit
isn't doing it. Earlier, you know, you mentioned depletion is
being this core lens for which you maybe view the
entire world. And I remember the one time we talked
to you before was very eye opening conversation because I
think the thing I took away from it is and
I think the way we from it disruption does not
(06:13):
exist within commodities the same way we think of in
tech and commodities. Almost they basically never disappear and they
never go absolute. Maybe with the exception of whale blubber,
which I don't think we use for lighting anymore, But
by and large, this seems to be like a core
gious of yours. I remember you wrote a great thing
on the coexistence of I think it was synthetic rubber
(06:33):
and regular rubber, but this idea like they just stay,
They'll be with us here forever.
Speaker 4 (06:37):
Yeah, we were using whale based lubricants in the space age.
Speaker 2 (06:41):
There you go, we stopped.
Speaker 4 (06:43):
Okay, yes, but yeah, So the answer is if you're
in the depletions based business, imagine COVID, where everybody on
the planet started hoarding things because they worried that it
was going away and it couldn't be replenished, and we
did it again with the most recent couple hurricanes. If
you're in the natural resource business, you wake up every
day knowing your business is going out of business and
(07:06):
think how crazy behaviors were in a hoarding sort of world.
And that's the business model. And so in one, it
creates this strong desire to go replace resource and if
incentives are bad, that's kind of crazy. But two, it's
this constant treadmill. If the industry stops, the market rebalances.
Speaker 3 (07:24):
So what does the supply of uranium look like right now?
How much is out there and how accessible is it?
Speaker 4 (07:30):
So yeah, roughly there's about two hundred million pounds of
uranium a year. And I do want to say that
we didn't really talk about what we were going to discuss,
and so I'm.
Speaker 5 (07:39):
Oh, yeah, sorry, So I'm coming in a little cold,
but perfectly happy because uranium is something that's been in
my head and it's had this a lot of client
interest in the last year, and that sort of inflected.
Speaker 4 (07:51):
Up just in the last months.
Speaker 2 (07:53):
Okay, So we were reading your clients and you sense
the book. Okay, okay.
Speaker 4 (07:58):
And so it is a small market. So it's two
hundred million pounds, and when you ever hear a million,
that sounds like a lot, but then you divide by
two thousand pounds per ton, and it's one hundred thousand kilotons.
And to put that into context, I'm going down next
month to Escondida, the world's largest copper mine. It moves
(08:19):
a million tons a year of just copper, and so
you could fit ten of the entire uranium industry within
a single copper mind. So it's a very small industry.
It's an industry that sells to one customer a lot
of commodity. Like copper goes into all parts of the economy,
uranium goes into nuclear power. But it's very small, it's
very regulated. And there's been this challenge between local ESG
(08:44):
and global ESG and the energy transition, which is to say,
I'm going to go into your remote community in South America,
and say, for the good of mankind, we need one
hundred thousand tons a year of copper so that we
can electrify the economy and reduce emissions. In the middle
of your backyard there's going to be a several thousand
foot open pit mine, and that local community says, not
(09:06):
a chance. I don't want that. That's hard enough to
do with copper right now, Think about uranium. Think about
trying to pitch a local community. This will be great
for jobs, it'll be great for investment, it'll be great
for tourism. We're gonna mine for uranium, and so as
a result, the ability to rapidly bring on uranium is
pretty challenging, which kind of suggests market tightness.
Speaker 3 (09:29):
Joe, I love that we didn't actually tell Bob that
we're going to talk about uranium. But you've already given
us so much interesting and knowledgeable stuff, so thank you
for that.
Speaker 2 (09:38):
I realized sometime this morning that we actually had never
told what we're going to be talking about. But I
also knew just from reading Bob that it wouldn't be
an issue at all, and that he would have to
be totally comfortable and keep him on his toes a
little bit Now I realize we're working in the audio
medium of podcasts, and so this is going to be
a little bit of a tricky question. But to the
(09:59):
extent that you can, can you summarize essentially like you
have a chart in your recent uranium note that I read,
give us the sort of medium term history of the
uranium price and why it went up and down over time.
Speaker 4 (10:11):
The most important thing about uranium when we think about
commodity prices in general, I'm pretty good about picking the
middle of the cycle. It's the marginal cost of commodity,
and I can find the bottom of a cycle very well.
Miners refuse to give metals away for free. So when
the ebitdah of a marginal zinc mine or nickel mind
(10:31):
goes to zero, that mind goes to care and maintenance
and stops producing and price recovers from there. It's the
top of the cycle where pricing is the hardest to
figure out. But historically what happens for other commodity sector
is it's demand destruction and or substitution. So those are
the two things you look for. So when copper price
(10:51):
flies up, then aluminum becomes substitutable. And if aluminum price
doesn't move, well, I'll just use aluminum wiring in this
transmission with uranium one that power plant. The cost of
uranium into the power plant is a rounding error once
I've spent the billions and something.
Speaker 2 (11:09):
This is really key because we talk all the time
about the cost of nuclear and construction. Uranium itself basically
never comes up.
Speaker 4 (11:16):
It's under one hundred bucks a pound, okay. And if
you think about running a coal fired power plant, you
are moving millions of tons of material into that plant
every year. With uranium, it's thousands, right, So it's a
remarkably dense, obviously source of fuel. And so once that
plant is built, there is very little evidence that that
(11:37):
plant ever shuts in on uranium price. And then you
combine that with the structure of the industry. If it's
a utility and it can pass price onto the rate base,
well then it's not taking the full brunt to that
price straight to the head. So we don't see substitution
on fly ups for uranium. We don't really see demand destruction.
And it's also one of these markets that is very
(11:59):
difficult physically short or commercially short. And so those are
the three Boogeyman's at the top of the cycle.
Speaker 3 (12:06):
They don't seem to be obvious who are the actual
players in the uranium market because I remember, again, like
going back to twenty twenty two, I think people were
talking about the price going up because there was a
new physical ETF that came out and was buying a
lot of it. And to your point, it's a relatively
small market, so presumably that kind of action could also
(12:28):
push prices.
Speaker 4 (12:29):
Yeah, so two thoughts there. So there was this investment vehicles,
there was a spot uranium physical trust that is. But
I always go back to eight nine where the price
of oil shoots to one hundred and forty bucks a barrel,
and there were investigations from Congress and was it the speculators?
Was it Wall Street that caused the price to skyrocket? So,
(12:51):
and there was never a Purp walk, And I figure
even if there was half an excuse for a Purp walk,
they would have found somebody to walk out of a
building somewhere in our neighborhood all those years years ago.
And so in my head that I don't believe that
the speculators can move for any sustained period of time
in the commodity. Sometimes they can see the trend and
get into it before it takes off. I think they
(13:12):
just saw a fairly obvious trend. I should say. The
fourth thing that can kill uranium prices, and it is
the one out there that if you're kind of long
uranium uranium stocks you have to be aware of are
nuclear disasters or nuclear accidents. And so if we look historically, yeah,
the price corrections down on uranium always came on the
(13:32):
back of Fukushima, or they came on the back of
Three Mile Island.
Speaker 2 (13:35):
So when were the big peaks in uranium prices? What
was going on in the world. I mean, even setting aside,
we know what caused them to go down, what was
going on in the world at the time, and which
years that there was a real uranium bull run.
Speaker 4 (13:48):
They just kind of drift up, and so in real
terms they never get much above where we are now.
So our price decks about one hundred bucks a pound,
so you never see thousands or two hundreds of pound,
and you just have a market that absorbs uranium regularly
at a price that doesn't care and then recorrects on
disasters where shut ins and fear of future plants causes
(14:11):
the market to go and then you'll typically fall to
twenty thirty forty pounds, which is the cash cost where
somebody says, I'm just going to leave it in the ground.
Speaker 3 (14:19):
How is it actually stored? If I'm that redditor who's
interested in buying one hundred pounds of physical or I'm sprought,
what am I actually doing with this uranium?
Speaker 4 (14:29):
So once it's enriched, there are extremely strict guidelines on
the types of organizations and the type of regulators that
watch you store it. In theory, yellow cake is stored
at mind mouths and can be stored in the supply chain,
but enriched uranium is extremely heavily regulated. So companies like Camiico,
for example, might have regulatory authority, but not Joe uranium
(14:53):
wall Street on Reddit.
Speaker 2 (14:55):
What causes demand to change in the short term, So
I imagine if the US was like, we're going to really
go nuclear crazy and we're gonna and we'll get to
all that about your prospect for nuclear but I imagine
demand would go up. But in the course of a
year twenty twenty four, where we see what's out there
and we see the utilities and what they need, and
we know there's not suddenly going to be a new
(15:15):
nuclear plant tomorrow. What does the demand picture look like?
Speaker 4 (15:19):
So two ways to create uranium demand one and we've
seen a bit of both. One is to build new
power plants and the second is to turn the old
ones back on. And so if you think about three
Mile Island being reactivated to support and Microsoft, imagine the
junior strategist that went to Microsoft's board and says, you
(15:40):
know what, aipower demand is huge. We need a cheap, ratable, dispatchable,
flat base load of power to supply it. We should
invest in nuclear power. And I imagine somebody higher above
that person said, are you an idiot? Have you ever
heard of three Mile Island? And this junior strategy said, yeah,
that's the one. We should turn that one back on.
(16:01):
And the fact that it vetted through and it's not
just Microsoft now every big tech company is associated with
nuclear investment, and they have all gone through this process
of what do they need based electricity of an unknowable
demand growth and where can they get it? And so
(16:21):
whether it's funding new SMRs, small modular reactors, or reactivating
the existing ones, it's been a remarkable inflection point.
Speaker 2 (16:29):
And then when all these headlines come and suddenly everyone
wakes up that all these tech companies are going to
want some nuclear play. What's happening on the producer side,
because I imagine they can't just turn a switch right
away and have more what's happening on the supply side
when these headlines hit.
Speaker 4 (16:43):
So on the producer side, the good news is again
it's a smallish market and it'll move relatively slowly. So
the real inflection would be around small modular reactors because
reactivating closed reactors. You know, we've got one up the Hudson,
you could reactivate theory.
Speaker 2 (17:01):
I guess I'm on the mining side.
Speaker 4 (17:02):
So on the mining side, I think the miners need
a price signal, which they have, They need regulatory approval,
and then they'll start to go out and reactivate some
of these mines. They'll start in the US and Canada.
Right the Canada already it's certainly the Athabasca region. There's
plentiful uranium resource there, and there's a range of places
(17:23):
in the US you can find uranium along the Gulf Texas.
You can go find it out in kind of four
corners out in the west. So the resources there you
don't need huge amounts of capital, and we're starting to
get a signal for a response, and then you go
further remote on the cost further remote, I should say,
not on the cost curve. Namibia's got a fantastic endowment. Russia,
(17:46):
Kazakhstan have endowments, and that's where this supply is ultimately
going to come from. From a security of supply, clearly
the US and the Canadian stuff is closer to home.
Speaker 3 (17:57):
What's the time frame for this? Like, on average, how
quickly can supply ramp up?
Speaker 4 (18:03):
Forever? In two years? So roughly we are measuring copper
mine life cycles in a decade now, right from a
maiden resource to first production. So even the easy stuff
is really measured in half a decade to a decade.
And so yeah, uranium, if it's quick, I'd be stunned.
(18:24):
If there's a big supply response in less than five years,
that seems hard to see. If five to ten you
start to get a response, and again, because the volumes
are small, we could start to balance the market them.
Speaker 3 (18:51):
So the price of uranium is obviously tied to the
prospects of nuclear energy, but nuclear doesn't exist in a vacuum.
When it comes to the energy transition, and there are
other options out there, like solar or wind. How do
you kind of evaluate the cost for nuclear versus wind
and solar.
Speaker 4 (19:12):
And there's two end members. In reality, it always sits
in between. So the primary end member that everyone talks
about in the energy space is the levelized cost of energy.
And Blizard, for example, has been studying this for decades
and putting out great work. And the idea of levelized
cost of energy is I need an electron, I need
to charge my phone. I don't need to charge it
(19:33):
all year. I just need to charge it now, and
that would be levelized cost of energy, and wind and
solar are remarkably good from that standpoint. Then there's the
other end member, which is, hey, I need to power
a remote Antarctic field station right something way off the grid,
and I need it base load twenty four to seven
(19:54):
for a year. And if I don't have baseload, if
I have intermittency, if the sun shines doesn't shine, then
I need batteries to support the rest of the time.
And so if my sun shines one percent and I
need the other ninety nine on batteries, I got to
buy a lot of batteries.
Speaker 3 (20:09):
So ELCO wouldn't take that into account, right, so.
Speaker 4 (20:12):
ELCO wouldn't be a levelized full cycle or full system
cost of energy. Adding adding letters to the acronym does,
and then nuclear starts to shine because it is just
it's built to be baseload.
Speaker 2 (20:25):
We've done episodes. We've done a lot of episodes on
renewables and some on batteries and the intermittency issues that
arise with renewables. We've done episodes on nuclear. And you know,
there are people who think it's going to be an
all Like I was at a conference last week, and
a day at that conference, I was like, I'm convinced
the future is all solar. And then I'll talk to
someone else and like, the future is all nuclear. And
(20:47):
my gut would be that the future is not going
to be all of one energy source. But how would
you go about thinking what will determine what that ultimate
mix looks like? Imagine a fully electrified economy. What is
it policy decisions, is it technological breakthroughs? What ultimately been
your view will determine the share that will be nuclear
vers solar versus maybe some wind.
Speaker 4 (21:10):
So I sort of dismiss these all or non hypotheses.
Because of the world we live in, you can barely
We don't have a single type of telephone, we don't
have a single type of carbonated beverage, we don't have
a single beer in the market, etc. So you kind
of go down and there's no obvious reason why modern
economy needs one form of electricity. So it's it's going
(21:32):
to be a big balance, and the way to solve
for intermittency, there's kind of three ways to do it,
you know, One is nuclear create energy that's baseload on
all the time. The other is batteries where I can
sort of offset the intermittency. And the third is sophisticated grids.
Right if my grid is big enough, Right, if I've
got a cross European grid and it's windy and Norway,
(21:53):
but I need my AC in Spain, the grid can
solve it. And so there's this sort of competition between
I mean, investing in the grid, which we're not doing
enough of globally, investing in cigs.
Speaker 2 (22:04):
Just to be clear, when you think about what share
of the electrified economy will be powered on nuclear, what
things will go into that determination.
Speaker 4 (22:11):
So we expect that if it grows it's going to
be less than ten percent, right, it's going to be
it's not going to be a dominant form of energy
simply because we would have to build so many reactors
so quickly and so generally. The way we get at
our long term view of what electricity demand from uranium
is is you can take an iea net zero pathway,
(22:33):
or you can take the sustainable pathway and it gets
you something like gdp ish growth from a base of
ten ish percent, and it's always going to be there.
So it's always going to be part of the mix.
What you're seeing is a customer base that really really
wants it and has deep pockets. And so if you've
got big tech throwing research and development funds, then you
(22:58):
can start and say, well, well maybe it inflects high
and maybe small modular reactors come quicker.
Speaker 2 (23:02):
And what's the higher is at fifteen?
Speaker 4 (23:04):
Yeah, it'd be that sort of tune. Right, It's never
going to be there's no obvious reason it has to
be the majority.
Speaker 3 (23:10):
So since we mentioned batteries and we're talking about uranium,
I wanted to bring up a sort of another MEMI
type thing, which is lithium. So if you look at
a chart of the lithium price. I mean, it looks
like a bubble, a bubble that burst. What's been going
on there?
Speaker 4 (23:27):
So on this l side on Wall Street, they are
perma bulls, and there's perma bears, and then I'm something
of a perma cycle. And so my general response is
this two shall pass. And so lithium prices were high
two years ago, and I would have said, and we
did say this two shall pass. They're low today, measured
in ten bucks a kilogram, sorts of levels in this
(23:50):
two shell pass, and we would say not returning to
that eighty dollars a kilogram from the whipsaw effects of
the post COVID and but really think about building back
from ten to maybe fifteen dollars a kilogram in the
near term towards twenty. It's not a terribly hard commodity
to extract, it's not terribly scarce, and we've terribly over
(24:13):
capitalized it for the next couple of years.
Speaker 2 (24:16):
I imagine that within lithium, and I'm just imagine, like
I said, I'm just imagining that there is a lot
booming demand from the electrification and the batteries and literally everything,
and that is a bullish force, and that batteries are
getting better and better and better and more efficient, and
that that is a bearish force for lithium. Tell me, Ave,
that's right. But more importantly, how do you think about
(24:36):
these two headwinds and tail.
Speaker 4 (24:38):
Yeah, so for a period of time, I always want
to be a copper bowl and I want to be
an oil bowl. The two things that undermined the combined
thesis are hybrid electric vehicles. Because hybrids they're fuel efficient, right,
and they carry very small, at fifteen kilowater batteries, whereas
a big battery electric could have a fifty or one
hundred watt kill a wat battery. Lithium into those batteries
(25:01):
is linearly proportional to the kilowatt hours. And so what
we see now globally is for the last two ish years,
battery electric vehicle sales year on your growth is plummeted
and is kind of getting toward flat year on year.
Hybrid vehicle sales have been growing fifty percent year after
(25:21):
year after year. So we're seeing a world where hybrids
are winning the growth. They're still the minority of the vehicles,
and that's bad for lithium. It's bad for copper because
copper scales as well, and it's kind of bad for oil.
And we were told for years that hybrids are complicated,
they carry two independent modes of travel. We need batteries
(25:47):
electric because they're so simple, and we're kind of coming
to a world where people are moving back ish towards
the hybrids. So at a time where a lot of
capital went into lithium mining and lithium brining, we woke
up and saw ev adoption break fifty percent in China.
So the majority of vehicles sold in China now are
electric vehicles. But the challenge is the sizes and the
(26:09):
styles are not as lithium hungry as we would have thought.
Speaker 3 (26:28):
Joe, should I just keep throwing out commodities and Bob
can talk to them. Okay, let's do gold. Speaking of
you know, there we go. But I mean, the price
action in gold has been just kind of crazy recently
and record highs, So I feel like I'm asking the
same question over and over. But what's going on there?
Speaker 4 (26:49):
So that this is one of the ones Most of
the time, this too shall pass. If it's high, it
goes down, if it's low, it goes up. If it's
in the middle, it'll stay in the middle. I'm still
in the view we have burnste here, still in the
view that gold works from here and a couple ways
to think about it, which is always kind of the
supply and demand. We've gone back and looked at every
rate cut cycle, and we've looked at every individual rate cut.
(27:10):
In a world where rates are being cut, check and
where the FED succeeds in bringing long term interest rates down,
gold has always gone up. And so our view is
if you think the FED succeeds, then gold goes up.
Where we struggle is to what level. One The speed
(27:31):
at which gold has moved this year surprised even us,
and to the level is a bit tricky. On the
supply side mining companies, gold mining companies will brag about
or grades that are a gram per ton, one per ton,
that's one part per million, And so to make money
in gold mining, you have to take a ton of rock,
(27:53):
blast it out of the earth, grind it to flour,
find the one part out of that million, and that
is worth ninety bucks today. Right a gram of gold.
I've got to make a business of finding a needle
in a haystack, and I got to do it for
forty or fifty bucks a ton, and I've got to
safely disposed of that deposit and then move on and
(28:14):
find the next one. So it's a tough business.
Speaker 2 (28:16):
Has the cost of blasting out that ton and finding
that graham come down with technology.
Speaker 4 (28:21):
Long term, Absolutely, it is stunning the ability. I mean,
the fact that you can make money pulling one parts
per million out of anything is remarkable. So the scale
at which the mining industry is efficient boggles the mine.
Come to iron ore. Iron ore is almost all iron.
I can move a ton of iron ore from the
Amazon rainforest safely to China for forty bucks a ton.
(28:47):
I can't get someone to deliver most dinners in midtown
for forty dollars, And so the efficiencies of the mining
industry boggle the mines. Now, having said that, it appears
is if geology is fighting back, right, it is getting
harder and harder. The average copper mind gets deeper and
deeper every year. We're moving to higher elevations, we're moving
(29:09):
just more difficult regions. So geology is always in this
fight against technology and innovation. The fact that most every
commodity you buy from the earth mind metals are like
ten bucks a kilogram is a testament to how well
the industry's done. But it should grind. Costs of metals
should grow faster than inflation.
Speaker 3 (29:27):
You know what else has been going up and this
is very exciting for me personally. Here's my disclaimer of
firstwes Well, no silver. For some reason. My dad every
year for my birthday sends me one silver dollar from
his collection, and because I'm getting old, I have quite
a few of them now. So silver has been going up.
(29:48):
It's not quite at a record, but you know, it's
sort of been following the path of gold. Is that
just an echo of the gold player? Is there something
more fundamental going on?
Speaker 4 (30:00):
For most of this year, there's been this funny split
between the precious metals platinum, gold, and silver. Were the
more useful the metal the less it went off, and
gold is the least useful of the metals. Right, there's
very little real utility for industry, and silver is actually
quite useful, especially if we think about the future of
(30:21):
solar energy and so on the silver front, we like silver.
And finally silver's beating gold this year, so silver's kind
of broken out a bit.
Speaker 3 (30:29):
Oh, I didn't realize that.
Speaker 4 (30:30):
Yeah, just in the last few weeks. And what's interesting
is if you went through the list of the forty
largest mines that produce silver, one or two of them
are silver mines. The rest are lead zinc mines, or
gold mines or copper minds.
Speaker 2 (30:46):
So I was gonna say, and I've brought this up
on the podcast before, but this reminded me a couple
of years ago. I was taking an uber into work,
you know, and I used to put it. The uber
drivers would see that I was going to Bloomberg, like
Bloomberg and like, what do you think about bitcoin? Or
Dogeklin And then there was this guy who said, oh,
you work for Bloomberg. I'm really bullish on silver because
(31:07):
there's less copper mining going on in the world, and
silver is a byproduct of copper, and there's a lot
of solar demand, and so there's going to be the
supplied demand mismatch. Was he onto something.
Speaker 4 (31:17):
It might have been me driving, Yeah, that's pretty well aligned.
He was reading the Bracket novel. Yes, And so the
answer is yes, if silver were to double overnight, there
is no mine that would say, well, now we should
go chase silver. So the largest silver mine in the
world was. I think it still could be kghm and Poland,
and it's a giant copper mind with a lot of
silver byproduct and a lot of the big gold mines
(31:39):
in Mexico. Silver is a byproduct, which means they love
to see that revenue stream go up from silver, but
it isn't the primary driver of capital decisions, investment decisions,
or supply response, and so it would take a big
price signal from silver to convince much of the world's
supply to do much more than they're doing already. But
(32:00):
we will mop it up with solar panels over time,
plus the other industrial uses.
Speaker 3 (32:06):
Joe, when are we going to interview your uber driver?
Speaker 2 (32:09):
Our producer Call is supposedly working on that, so yeah, yeah,
we're in touch with him. I think he's going to
come at some point. We're going to make that episode happen.
Speaker 3 (32:18):
That'll be fun. So I hesitate to ask this question
because you know, politics are everywhere and inescapable at the moment,
But we do have a presidential election coming up, and
we have two candidates who seem to be, you know,
in different positions when it comes to the energy transition.
What are you watching out for there?
Speaker 4 (32:39):
There's three events that have kept a lot of institutional
energy and oil investors on the sidelines over the last
several months. And the idea is, broadly speaking, if I
go to Las Vegas and go to any game of
the casino, on average, I'm going to lose, right, So
I shouldn't go. If I throw money at the stockmore blindly,
(33:00):
over time, it's going to compound high single digits, and
so I can kind of throw money in and so
therefore to make money, it's like, well, I think markets
go up, and let me find some ideas. And in
oil markets right now, you have to get three independent
variables or decisions or outcomes right in order to figure
it out. And if you're as good at figuring out geopolitics,
(33:22):
that you get one out of two and then one
out of two and there's a one in eight chance
you're going to get it all right. So those are
so one has been this constant, this de escalatory escalation
between Iran and Israel. Right what is the geopolitical premium
in the oil price? And we woke up Monday with
oil down five percent because the latest Israeli response was
(33:43):
extremely measured and disciplined and not the attacking of nuclear
or the attacking of oil infrastructure that the people had
worried about, and we've been seeing that all fall, this
sort of measured escalation, and so you had to get
that right. And then you have to get the election
right in terms of oil price, and then you have
to get the OPEC Thanksgiving meeting right in terms of
(34:06):
oil price. And then you wake up in January and
you have to decide what is China oil demand going
to do next year? This year has been stunningly poor
for Chinese oil demand growth, So you got to get
like fourth geopolitical things right. That's tough. Flipping coins on
him would be tough, and so most investors are simply waiting.
(34:26):
The way I'd frame it, at least in terms of
the election is, if it is a Trump presidency, you
can sort of believe he will do things like he
did last time, and then you have to separate it
into micro things he'll do around oil and the macro
things he'll do, like tariffs. Right, so somebody will have
a view on what his tariff policy is. But if
I just look at the oil sector, we know under
(34:47):
the Trump administration, sanctions on Iran were much more severe
than they are today, and so you could take a
million or two barrels off the market from Iran. And
he's no huge fan of Iran, so you could imagine
that decision wouldn't be that difficult for him. That would
strengthen oil price. Under Harris administration, you sort of assume,
(35:08):
for lack of clarity, more business as usual continuity with
Biden and so no radical reaction to Iranian sanctions. And
so I've been arguing for most of this year. I think,
starting in January, that Trump would be good for oil
price in that regard, and I've had a majority of
(35:29):
investors push back and worry about drill, baby drill. Where
he would be bad for oil price. Well, time will tell,
but ultimately it's much easier to put sanctions in place
on Venezuela or Iran than it is to convince an
oil and gas industry that's pretty mature, pretty grown up,
pretty disciplined to drill, baby drill.
Speaker 2 (35:47):
I think I just have one last question. But since
I like hearing you talk geology and science, I like
the price stuff, but most you know, there are other
people in the world who could talk price stuff. Can
you talk about lithium brining and what that means and
how that'll work.
Speaker 4 (36:00):
So broadly speaking, two places define lithium mines and brines,
and up until now the brines have been Let me
go to the most remote places on the planet. I'm
going to go to high altitudes and to these ancient
lake beds, these salars, these salty, dried up lake beds,
and the Atacama has this lithium triangle that spreads between Bolivia,
(36:22):
Argentina and Chile, the world's hugest endowsment. You go up
into the highlands of Tibet and you can find similar
so in Tibet, for example, Chinese companies are drilling wells
right again, which is kind of funny where we've come
full circle from my oil and gas roots. You drill
for uranium, you drill for oil, you drill for gas,
you drill for lithium brines. You pump this very salty
(36:43):
brine to the surface, and historically you let it evaporate.
You did the same thing the French have done on
their coasts for years, and you create seldom are the
beautiful sea salts. But you don't want the sodium chloride,
you don't want the table salt. You want the lithium,
and so we've been doing that for a very long time.
It's economic even doing it in these remote areas, and
(37:04):
then slowly and now quickly over time there is a
technology disruption. And so one of the reasons I have
to cover all of these various commodities is the shale
industry destroyed the oil patch. And the reason that shale
was such a disruptive technology was threefold. First, it's small
little units of capex ten million dollars a well, not
(37:24):
a billion dollar platform. Second, you get a quick response.
I get oil two quarters later, not five years later.
And third, we drilled one hundred thousand shale wells and
we got smarter and smarter and smarter. So Wright's law
that natural learning curve mattered. So why am I talking
about this in dlee? Well lithium is now being commercialized
(37:45):
with a new technology it's been around well dl E
direct lithium extraction, where instead of laying that briny liquid
out in the sun and letting mother nature evaporate it,
I'll do it in a tank. And so if you're
about a year ago, is when X Mobile announced their
plans to go to old oil field areas They're going
up into Arkansas and they are drilling wells to pump
(38:08):
out brinds from the Smackover formation, and they're going to
put it in a facility that doesn't look any different
than an Amazon fulfillment center, and they're going to extract
that lithium and by twenty thirty they want to have
a million cars worth of lithium. An equanor next door
in Arkansas wants to do the same thing. That technology works.
We saw Rio Tinto in my coverage spend paying almost
(38:31):
one hundred percent premium on a company that is leading
the industry in terms of direct lithium extraction. So there's
a disruptive technology that comes into the bottom of the
cost of on lithium. So that's the future of lithium
is will the industry get more lithium from old oil
fields or will they get it from the slars of
(38:53):
the high altitude andies.
Speaker 3 (38:54):
Joe and I learned the hard way that commodities can
in fact evaporate when they're in container because I had
a small glass jar of crude oil and I left
it in the office when I moved to Abu Dhabi
because I figured I couldn't take a jar of oil
on a plane and it's slowly evaporated in the office,
for which I apologized, Joe.
Speaker 2 (39:16):
That's okay. I don't as far as I know, I
didn't get sick. Wait, I have one tiny, tiny question,
and I just want to end it. Back on uranium.
What is the role of nuclear weapons decommissioning in the
uranium supply?
Speaker 4 (39:26):
That's an excellent question, and so as a geologist, I
can go by mine by mine and add up all
of the uranium supply. There are three other places that
you can get uranium from. I can go to old
uranium tailings and enrich those. That's never going to be
the bottom of the cost curve. They wouldn't be sitting there.
The other is government stockpiles can release uranium. And the
(39:49):
third is I can accelerate the conversion literally almost literally
swords to plowshares and start moving decommissioning warheads and using
that as a supply. What I would say is the
government is not in the business of making money, So
I don't really worry that there's some government bureaucrat that says, oh,
uraniums at one hundred and town bucks, let's put some
(40:11):
of our volumes into the market. It will almost be
like gold. Right, as gold price goes up, governments actually
buy more. It's almost the reverse of what you'd expect.
And so if uranium price goes up, it's highly unlikely
that governments are like, let's make a quick buck. Instead,
they will see that as a strategic stockpile.
Speaker 2 (40:31):
Bob Brackett, I can't think of any other guest where
we would go from the highlands and Tibet to a
random place in Arkansas. It's nuclear weapons decommissioning and it's
effect on the uranium price, but there's no doubt we
could do it to you. Thank you so much for
coming back on online.
Speaker 4 (40:46):
Absolutely my pleasure. Thanks Joe, thanks gas seeing.
Speaker 2 (41:00):
I love talking to Bob. They're so fun.
Speaker 3 (41:02):
Yeah, he's one of those rare guests where you can
just sort of throw out anything and literally answer expertly.
Speaker 2 (41:08):
Ohmercaief is kind of like that, And he's another one where, yeah,
you just have there was just no doubt that if
you throw something out, he's going to have some extremely
granular knowledge of what he's talking about.
Speaker 4 (41:19):
Yeah.
Speaker 3 (41:19):
Brad Setzer as well is one that sticks in my mind. No,
that was fascinating I do wonder. First of all, I
feel like there's this weird, like overarching theme when it
comes to these commodities where people get really like emotionally
attached to a lot of them. You know, I don't
think anyone treats like US treasuries in the same way
(41:40):
they treat like the same uranium or gold or something
like that. So that's kind of interesting why that happens.
And then secondly, I was thinking about the prospects for
nuclear energy, and it does. I take Bob's point about
how you're actually measuring the cost and that things like
Elco aren't going to take into a out the stability
(42:01):
of nuclear power, but I do wonder as the cost
curve comes down for stuff like solar, if you know,
maybe some of the appetite for nuclear kind of ebbs.
Speaker 2 (42:12):
Yeah, we'll have to see. I mean, to my mind,
there's still just so much incredible uncertainty about what the
energy mix looks like in five years, ten years, twenty
years and beyond. You know, Bob said something that was
like this major light bulb moment for me in that conversation.
I've always thought commodity people are a little bit screw loose.
(42:33):
Many of them, not Bob, but you know, like especially
that people get really culty about commodities and stuff like that.
And then he said, all commodity people are aware that
their business is disappearing. And it's like, you know what,
if I were in a business like that where every
day I woke up.
Speaker 3 (42:47):
And knew it, you'd be a little weird too.
Speaker 2 (42:49):
Yeah, It's like, Okay, I get it. I forgive you. You're
in a business where every day like there's less and
less of it in the world and people are trying
to substitute away from it. I get it, all right.
Speaker 3 (42:59):
Shall we leave it there?
Speaker 2 (43:00):
Let's leave it there.
Speaker 3 (43:01):
This has been another episode of the Odd Loots podcast.
I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2 (43:07):
And I'm Joe Wisenthal. You can follow me at the Stalwart.
Follow our producers Carmen Rodriguez at Kerman Arman, Dashel Bennett
at Dashbot and Kilbrooks at Kilbrooks. Thank you to our
producer Moses Ondem. From our odd Lots content, go to
bloomberg dot com slash odd Lots, where transcripts, a blog
and a newsletter and you can chat about all of
these topics twenty four to seven with fellow listeners in
(43:28):
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Speaker 3 (43:30):
Loots and if you enjoy odd Lots. If you like
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Bob Brackett, then please leave us a positive review on
your favorite podcast platform. And remember, if you are a
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(43:51):
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Thanks for listening in
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:20):
Hello and welcome to another episode of the Odd Lots Podcast.
Speaker 3 (00:23):
I'm Jill Wisenthal and I'm Tracy Alloway.
Speaker 2 (00:25):
Tracy, are we calling it a nuclear revival yet?
Speaker 1 (00:29):
No?
Speaker 2 (00:29):
I mean for real, like, is that a thing?
Speaker 3 (00:31):
You know, what's going to happen? As soon as you
start calling it that, it's gonna like peter out, Ugh, fizzle.
Speaker 2 (00:37):
Don't say that. Don't say that. Some people would say,
we saw the recent three Mile Island news, We've seen
some other things of that nature. Some people would say that,
at least in the US, there's something of a nuclear
revival going on.
Speaker 3 (00:51):
Yes, you know what I find kind of funny is
if you look at one of the price impacts of
a nuclear revival, it's uranium. Yeah, but uranium started to
go up, I think right after the pandemic, and now
it's come down a little bit from its heights, its
recent heights. So it's kind of funny, like it's sort
(01:12):
of acting like a meme stalk.
Speaker 2 (01:14):
Yeah, there's literally what I was saying. I was gonna
say that for a certain portion of the public, uranium
is like bitcoin. There's certain assets out there that have
these sort of cult like things where it's not just
that people are bullish, but they think that like in
the future, if they're smart and savvy enough to get
in now, they're going to make this huge fortune. And
(01:34):
I would put Crypto in there, and I would put
the people who play those like stub Equity of Fanny
and Freddy in that category. And then there's like the
uranium cult on social media, who thinks like, we're gonna
buy uranium and one day everyone will wake up and
realize that nuclear is the future of energy, that all
electricity will be powered by nuclear, and those of us
who are smart to get into uranium now will be
(01:57):
the new inheritors.
Speaker 4 (01:58):
Of the Earth.
Speaker 2 (01:59):
You know.
Speaker 3 (01:59):
The funniest thing I saw when this became a thing
back in twenty twenty one. So there's a uranium market subreddit,
of course there is, yeah, And someone posted on there
that they're a broker for physical uranium. So if you're
interested in buying physical uranium, you can buy it in
like one hundred thousand pound increments. So I don't even
(02:20):
know like who the target is for this, Who is
the retail trader that is buying one hundred thousand pounds
of uranium and presumably storing it somewhere.
Speaker 2 (02:29):
One day that person will have the mandate of heaven.
But the question is when will that be. Even if
there is a nuclear revival, even if all across the
rich world they like nuclear is the way to go,
what does that actually mean for the price of uranium.
I'm not really clear.
Speaker 3 (02:43):
Yeah, me neither.
Speaker 2 (02:44):
Well, I'm really excited to say because we do have
the perfect guest. We're going to be speaking to someone
who knows everything about every commodity in the world, as
far as I could tell, at least related to energy
commodities and maybe metal commodities. Two, he's someone on the
cell side, you know, Tracy, there are a few people
on the cell side, not many. Many people on the
(03:05):
cell side are worth reading. There are some people who's writing.
I consider it to be a crime that they're locked
up within cell side, because it's so good and so
interesting that it just shouldn't be the type of thing
that traders click on for five seconds. And we're going
to be speaking to one of them.
Speaker 3 (03:20):
Yes, actually, this analyst. I think their research does get
published in a book. Oh yeah, every once in a while.
I have some of those some old ones and they
stand the test of time, which is something that you
can't say for all cell side research.
Speaker 2 (03:33):
No, you absolutely can't. So we are going to be
speaking with the one and only Bob Brackett, literally the
perfect guest. I've had him on the podcast before. He
is the head of America's energy transition at Bernstein Research.
But what's your deal, Because, like I.
Speaker 3 (03:47):
Said, you do a deal.
Speaker 2 (03:48):
You know, like when I read your report on uranium,
you're going into the science of how it's mine. You're
going into the science. You have a copy and paste
of Einstein's letter to wrotell talk about how this uranium
thing could be big for bombs and electricity and so forth.
They don't really look like typical analyst reports.
Speaker 4 (04:07):
Yeah, so I think the challenges I'm a geologist living
in Manhattan. There You've got a handful of jobs, and
I think I've had two of the best. I was
working with HAS Corporation for many years. I've been at
Bernstein now more than a dozen and so the answer is,
my whole lens of this planet is a cyclical commodity investor.
And how do I think about cycles? And it's always
(04:28):
depletion based, So anything that depletes naturally, other people run
away from I tend to run towards, and uranium is
right in that wheelhouse.
Speaker 3 (04:36):
Okay, I have a really basic question what is uranium?
And also what is enriched uranium? Because when I hear that,
I always think are we adding B vitamins to it
or something? And then also what is yellow cake? And
why does it look so delicious?
Speaker 4 (04:52):
Well, we'll start with yellow cake because that's where we
start geologically. And the funny thing about uranium as a
mind commodity is most it is drilled for, and most
of it looks more like an oil and gas operation.
So the majority of uranium yellow cake U three eight
comes out of the ground through insituo leaching. Drill a well,
pump fluids down to a sandstone reservoir, and pump up
(05:15):
and treat the yellow cake. So yellow cake is U
three eight. It's a uranium oxide. It looks nice and yellow.
It is not terribly dangerous because it is mostly a
very stable form of uranium. So uranium has isotopes if
we go back and remember our nuclear chemistry, and so
most of yellow cake is U two thirty eight. I
(05:35):
send that to an enrichment facility I spin it up,
I get rid of the oxygen and replace it with
fluorine for chemical reasons, and then enrich it to power
plant grade, and then I can keep enriching it to
weapons grade. But hopefully we don't go that far.
Speaker 2 (05:52):
Hopefully the person buying one hundred thousand pounds on Reddit
isn't doing it. Earlier, you know, you mentioned depletion is
being this core lens for which you maybe view the
entire world. And I remember the one time we talked
to you before was very eye opening conversation because I
think the thing I took away from it is and
I think the way we from it disruption does not
(06:13):
exist within commodities the same way we think of in
tech and commodities. Almost they basically never disappear and they
never go absolute. Maybe with the exception of whale blubber,
which I don't think we use for lighting anymore, But
by and large, this seems to be like a core
gious of yours. I remember you wrote a great thing
on the coexistence of I think it was synthetic rubber
(06:33):
and regular rubber, but this idea like they just stay,
They'll be with us here forever.
Speaker 4 (06:37):
Yeah, we were using whale based lubricants in the space age.
Speaker 2 (06:41):
There you go, we stopped.
Speaker 4 (06:43):
Okay, yes, but yeah, So the answer is if you're
in the depletions based business, imagine COVID, where everybody on
the planet started hoarding things because they worried that it
was going away and it couldn't be replenished, and we
did it again with the most recent couple hurricanes. If
you're in the natural resource business, you wake up every
day knowing your business is going out of business and
(07:06):
think how crazy behaviors were in a hoarding sort of world.
And that's the business model. And so in one, it
creates this strong desire to go replace resource and if
incentives are bad, that's kind of crazy. But two, it's
this constant treadmill. If the industry stops, the market rebalances.
Speaker 3 (07:24):
So what does the supply of uranium look like right now?
How much is out there and how accessible is it?
Speaker 4 (07:30):
So yeah, roughly there's about two hundred million pounds of
uranium a year. And I do want to say that
we didn't really talk about what we were going to discuss,
and so I'm.
Speaker 5 (07:39):
Oh, yeah, sorry, So I'm coming in a little cold,
but perfectly happy because uranium is something that's been in
my head and it's had this a lot of client
interest in the last year, and that sort of inflected.
Speaker 4 (07:51):
Up just in the last months.
Speaker 2 (07:53):
Okay, So we were reading your clients and you sense
the book. Okay, okay.
Speaker 4 (07:58):
And so it is a small market. So it's two
hundred million pounds, and when you ever hear a million,
that sounds like a lot, but then you divide by
two thousand pounds per ton, and it's one hundred thousand kilotons.
And to put that into context, I'm going down next
month to Escondida, the world's largest copper mine. It moves
(08:19):
a million tons a year of just copper, and so
you could fit ten of the entire uranium industry within
a single copper mind. So it's a very small industry.
It's an industry that sells to one customer a lot
of commodity. Like copper goes into all parts of the economy,
uranium goes into nuclear power. But it's very small, it's
very regulated. And there's been this challenge between local ESG
(08:44):
and global ESG and the energy transition, which is to say,
I'm going to go into your remote community in South America,
and say, for the good of mankind, we need one
hundred thousand tons a year of copper so that we
can electrify the economy and reduce emissions. In the middle
of your backyard there's going to be a several thousand
foot open pit mine, and that local community says, not
(09:06):
a chance. I don't want that. That's hard enough to
do with copper right now, Think about uranium. Think about
trying to pitch a local community. This will be great
for jobs, it'll be great for investment, it'll be great
for tourism. We're gonna mine for uranium, and so as
a result, the ability to rapidly bring on uranium is
pretty challenging, which kind of suggests market tightness.
Speaker 3 (09:29):
Joe, I love that we didn't actually tell Bob that
we're going to talk about uranium. But you've already given
us so much interesting and knowledgeable stuff, so thank you
for that.
Speaker 2 (09:38):
I realized sometime this morning that we actually had never
told what we're going to be talking about. But I
also knew just from reading Bob that it wouldn't be
an issue at all, and that he would have to
be totally comfortable and keep him on his toes a
little bit Now I realize we're working in the audio
medium of podcasts, and so this is going to be
a little bit of a tricky question. But to the
(09:59):
extent that you can, can you summarize essentially like you
have a chart in your recent uranium note that I read,
give us the sort of medium term history of the
uranium price and why it went up and down over time.
Speaker 4 (10:11):
The most important thing about uranium when we think about
commodity prices in general, I'm pretty good about picking the
middle of the cycle. It's the marginal cost of commodity,
and I can find the bottom of a cycle very well.
Miners refuse to give metals away for free. So when
the ebitdah of a marginal zinc mine or nickel mind
(10:31):
goes to zero, that mind goes to care and maintenance
and stops producing and price recovers from there. It's the
top of the cycle where pricing is the hardest to
figure out. But historically what happens for other commodity sector
is it's demand destruction and or substitution. So those are
the two things you look for. So when copper price
(10:51):
flies up, then aluminum becomes substitutable. And if aluminum price
doesn't move, well, I'll just use aluminum wiring in this
transmission with uranium one that power plant. The cost of
uranium into the power plant is a rounding error once
I've spent the billions and something.
Speaker 2 (11:09):
This is really key because we talk all the time
about the cost of nuclear and construction. Uranium itself basically
never comes up.
Speaker 4 (11:16):
It's under one hundred bucks a pound, okay. And if
you think about running a coal fired power plant, you
are moving millions of tons of material into that plant
every year. With uranium, it's thousands, right, So it's a
remarkably dense, obviously source of fuel. And so once that
plant is built, there is very little evidence that that
(11:37):
plant ever shuts in on uranium price. And then you
combine that with the structure of the industry. If it's
a utility and it can pass price onto the rate base,
well then it's not taking the full brunt to that
price straight to the head. So we don't see substitution
on fly ups for uranium. We don't really see demand destruction.
And it's also one of these markets that is very
(11:59):
difficult physically short or commercially short. And so those are
the three Boogeyman's at the top of the cycle.
Speaker 3 (12:06):
They don't seem to be obvious who are the actual
players in the uranium market because I remember, again, like
going back to twenty twenty two, I think people were
talking about the price going up because there was a
new physical ETF that came out and was buying a
lot of it. And to your point, it's a relatively
small market, so presumably that kind of action could also
(12:28):
push prices.
Speaker 4 (12:29):
Yeah, so two thoughts there. So there was this investment vehicles,
there was a spot uranium physical trust that is. But
I always go back to eight nine where the price
of oil shoots to one hundred and forty bucks a barrel,
and there were investigations from Congress and was it the speculators?
Was it Wall Street that caused the price to skyrocket? So,
(12:51):
and there was never a Purp walk, And I figure
even if there was half an excuse for a Purp walk,
they would have found somebody to walk out of a
building somewhere in our neighborhood all those years years ago.
And so in my head that I don't believe that
the speculators can move for any sustained period of time
in the commodity. Sometimes they can see the trend and
get into it before it takes off. I think they
(13:12):
just saw a fairly obvious trend. I should say. The
fourth thing that can kill uranium prices, and it is
the one out there that if you're kind of long
uranium uranium stocks you have to be aware of are
nuclear disasters or nuclear accidents. And so if we look historically, yeah,
the price corrections down on uranium always came on the
(13:32):
back of Fukushima, or they came on the back of
Three Mile Island.
Speaker 2 (13:35):
So when were the big peaks in uranium prices? What
was going on in the world. I mean, even setting aside,
we know what caused them to go down, what was
going on in the world at the time, and which
years that there was a real uranium bull run.
Speaker 4 (13:48):
They just kind of drift up, and so in real
terms they never get much above where we are now.
So our price decks about one hundred bucks a pound,
so you never see thousands or two hundreds of pound,
and you just have a market that absorbs uranium regularly
at a price that doesn't care and then recorrects on
disasters where shut ins and fear of future plants causes
(14:11):
the market to go and then you'll typically fall to
twenty thirty forty pounds, which is the cash cost where
somebody says, I'm just going to leave it in the ground.
Speaker 3 (14:19):
How is it actually stored? If I'm that redditor who's
interested in buying one hundred pounds of physical or I'm sprought,
what am I actually doing with this uranium?
Speaker 4 (14:29):
So once it's enriched, there are extremely strict guidelines on
the types of organizations and the type of regulators that
watch you store it. In theory, yellow cake is stored
at mind mouths and can be stored in the supply chain,
but enriched uranium is extremely heavily regulated. So companies like Camiico,
for example, might have regulatory authority, but not Joe uranium
(14:53):
wall Street on Reddit.
Speaker 2 (14:55):
What causes demand to change in the short term, So
I imagine if the US was like, we're going to really
go nuclear crazy and we're gonna and we'll get to
all that about your prospect for nuclear but I imagine
demand would go up. But in the course of a
year twenty twenty four, where we see what's out there
and we see the utilities and what they need, and
we know there's not suddenly going to be a new
(15:15):
nuclear plant tomorrow. What does the demand picture look like?
Speaker 4 (15:19):
So two ways to create uranium demand one and we've
seen a bit of both. One is to build new
power plants and the second is to turn the old
ones back on. And so if you think about three
Mile Island being reactivated to support and Microsoft, imagine the
junior strategist that went to Microsoft's board and says, you
(15:40):
know what, aipower demand is huge. We need a cheap, ratable, dispatchable,
flat base load of power to supply it. We should
invest in nuclear power. And I imagine somebody higher above
that person said, are you an idiot? Have you ever
heard of three Mile Island? And this junior strategy said, yeah,
that's the one. We should turn that one back on.
(16:01):
And the fact that it vetted through and it's not
just Microsoft now every big tech company is associated with
nuclear investment, and they have all gone through this process
of what do they need based electricity of an unknowable
demand growth and where can they get it? And so
(16:21):
whether it's funding new SMRs, small modular reactors, or reactivating
the existing ones, it's been a remarkable inflection point.
Speaker 2 (16:29):
And then when all these headlines come and suddenly everyone
wakes up that all these tech companies are going to
want some nuclear play. What's happening on the producer side,
because I imagine they can't just turn a switch right
away and have more what's happening on the supply side
when these headlines hit.
Speaker 4 (16:43):
So on the producer side, the good news is again
it's a smallish market and it'll move relatively slowly. So
the real inflection would be around small modular reactors because
reactivating closed reactors. You know, we've got one up the Hudson,
you could reactivate theory.
Speaker 2 (17:01):
I guess I'm on the mining side.
Speaker 4 (17:02):
So on the mining side, I think the miners need
a price signal, which they have, They need regulatory approval,
and then they'll start to go out and reactivate some
of these mines. They'll start in the US and Canada.
Right the Canada already it's certainly the Athabasca region. There's
plentiful uranium resource there, and there's a range of places
(17:23):
in the US you can find uranium along the Gulf Texas.
You can go find it out in kind of four
corners out in the west. So the resources there you
don't need huge amounts of capital, and we're starting to
get a signal for a response, and then you go
further remote on the cost further remote, I should say,
not on the cost curve. Namibia's got a fantastic endowment. Russia,
(17:46):
Kazakhstan have endowments, and that's where this supply is ultimately
going to come from. From a security of supply, clearly
the US and the Canadian stuff is closer to home.
Speaker 3 (17:57):
What's the time frame for this? Like, on average, how
quickly can supply ramp up?
Speaker 4 (18:03):
Forever? In two years? So roughly we are measuring copper
mine life cycles in a decade now, right from a
maiden resource to first production. So even the easy stuff
is really measured in half a decade to a decade.
And so yeah, uranium, if it's quick, I'd be stunned.
(18:24):
If there's a big supply response in less than five years,
that seems hard to see. If five to ten you
start to get a response, and again, because the volumes
are small, we could start to balance the market them.
Speaker 3 (18:51):
So the price of uranium is obviously tied to the
prospects of nuclear energy, but nuclear doesn't exist in a vacuum.
When it comes to the energy transition, and there are
other options out there, like solar or wind. How do
you kind of evaluate the cost for nuclear versus wind
and solar.
Speaker 4 (19:12):
And there's two end members. In reality, it always sits
in between. So the primary end member that everyone talks
about in the energy space is the levelized cost of energy.
And Blizard, for example, has been studying this for decades
and putting out great work. And the idea of levelized
cost of energy is I need an electron, I need
to charge my phone. I don't need to charge it
(19:33):
all year. I just need to charge it now, and
that would be levelized cost of energy, and wind and
solar are remarkably good from that standpoint. Then there's the
other end member, which is, hey, I need to power
a remote Antarctic field station right something way off the grid,
and I need it base load twenty four to seven
(19:54):
for a year. And if I don't have baseload, if
I have intermittency, if the sun shines doesn't shine, then
I need batteries to support the rest of the time.
And so if my sun shines one percent and I
need the other ninety nine on batteries, I got to
buy a lot of batteries.
Speaker 3 (20:09):
So ELCO wouldn't take that into account, right, so.
Speaker 4 (20:12):
ELCO wouldn't be a levelized full cycle or full system
cost of energy. Adding adding letters to the acronym does,
and then nuclear starts to shine because it is just
it's built to be baseload.
Speaker 2 (20:25):
We've done episodes. We've done a lot of episodes on
renewables and some on batteries and the intermittency issues that
arise with renewables. We've done episodes on nuclear. And you know,
there are people who think it's going to be an
all Like I was at a conference last week, and
a day at that conference, I was like, I'm convinced
the future is all solar. And then I'll talk to
someone else and like, the future is all nuclear. And
(20:47):
my gut would be that the future is not going
to be all of one energy source. But how would
you go about thinking what will determine what that ultimate
mix looks like? Imagine a fully electrified economy. What is
it policy decisions, is it technological breakthroughs? What ultimately been
your view will determine the share that will be nuclear
vers solar versus maybe some wind.
Speaker 4 (21:10):
So I sort of dismiss these all or non hypotheses.
Because of the world we live in, you can barely
We don't have a single type of telephone, we don't
have a single type of carbonated beverage, we don't have
a single beer in the market, etc. So you kind
of go down and there's no obvious reason why modern
economy needs one form of electricity. So it's it's going
(21:32):
to be a big balance, and the way to solve
for intermittency, there's kind of three ways to do it,
you know, One is nuclear create energy that's baseload on
all the time. The other is batteries where I can
sort of offset the intermittency. And the third is sophisticated grids.
Right if my grid is big enough, Right, if I've
got a cross European grid and it's windy and Norway,
(21:53):
but I need my AC in Spain, the grid can
solve it. And so there's this sort of competition between
I mean, investing in the grid, which we're not doing
enough of globally, investing in cigs.
Speaker 2 (22:04):
Just to be clear, when you think about what share
of the electrified economy will be powered on nuclear, what
things will go into that determination.
Speaker 4 (22:11):
So we expect that if it grows it's going to
be less than ten percent, right, it's going to be
it's not going to be a dominant form of energy
simply because we would have to build so many reactors
so quickly and so generally. The way we get at
our long term view of what electricity demand from uranium
is is you can take an iea net zero pathway,
(22:33):
or you can take the sustainable pathway and it gets
you something like gdp ish growth from a base of
ten ish percent, and it's always going to be there.
So it's always going to be part of the mix.
What you're seeing is a customer base that really really
wants it and has deep pockets. And so if you've
got big tech throwing research and development funds, then you
(22:58):
can start and say, well, well maybe it inflects high
and maybe small modular reactors come quicker.
Speaker 2 (23:02):
And what's the higher is at fifteen?
Speaker 4 (23:04):
Yeah, it'd be that sort of tune. Right, It's never
going to be there's no obvious reason it has to
be the majority.
Speaker 3 (23:10):
So since we mentioned batteries and we're talking about uranium,
I wanted to bring up a sort of another MEMI
type thing, which is lithium. So if you look at
a chart of the lithium price. I mean, it looks
like a bubble, a bubble that burst. What's been going
on there?
Speaker 4 (23:27):
So on this l side on Wall Street, they are
perma bulls, and there's perma bears, and then I'm something
of a perma cycle. And so my general response is
this two shall pass. And so lithium prices were high
two years ago, and I would have said, and we
did say this two shall pass. They're low today, measured
in ten bucks a kilogram, sorts of levels in this
(23:50):
two shell pass, and we would say not returning to
that eighty dollars a kilogram from the whipsaw effects of
the post COVID and but really think about building back
from ten to maybe fifteen dollars a kilogram in the
near term towards twenty. It's not a terribly hard commodity
to extract, it's not terribly scarce, and we've terribly over
(24:13):
capitalized it for the next couple of years.
Speaker 2 (24:16):
I imagine that within lithium, and I'm just imagine, like
I said, I'm just imagining that there is a lot
booming demand from the electrification and the batteries and literally everything,
and that is a bullish force, and that batteries are
getting better and better and better and more efficient, and
that that is a bearish force for lithium. Tell me, Ave,
that's right. But more importantly, how do you think about
(24:36):
these two headwinds and tail.
Speaker 4 (24:38):
Yeah, so for a period of time, I always want
to be a copper bowl and I want to be
an oil bowl. The two things that undermined the combined
thesis are hybrid electric vehicles. Because hybrids they're fuel efficient, right,
and they carry very small, at fifteen kilowater batteries, whereas
a big battery electric could have a fifty or one
hundred watt kill a wat battery. Lithium into those batteries
(25:01):
is linearly proportional to the kilowatt hours. And so what
we see now globally is for the last two ish years,
battery electric vehicle sales year on your growth is plummeted
and is kind of getting toward flat year on year.
Hybrid vehicle sales have been growing fifty percent year after
(25:21):
year after year. So we're seeing a world where hybrids
are winning the growth. They're still the minority of the vehicles,
and that's bad for lithium. It's bad for copper because
copper scales as well, and it's kind of bad for oil.
And we were told for years that hybrids are complicated,
they carry two independent modes of travel. We need batteries
(25:47):
electric because they're so simple, and we're kind of coming
to a world where people are moving back ish towards
the hybrids. So at a time where a lot of
capital went into lithium mining and lithium brining, we woke
up and saw ev adoption break fifty percent in China.
So the majority of vehicles sold in China now are
electric vehicles. But the challenge is the sizes and the
(26:09):
styles are not as lithium hungry as we would have thought.
Speaker 3 (26:28):
Joe, should I just keep throwing out commodities and Bob
can talk to them. Okay, let's do gold. Speaking of
you know, there we go. But I mean, the price
action in gold has been just kind of crazy recently
and record highs, So I feel like I'm asking the
same question over and over. But what's going on there?
Speaker 4 (26:49):
So that this is one of the ones Most of
the time, this too shall pass. If it's high, it
goes down, if it's low, it goes up. If it's
in the middle, it'll stay in the middle. I'm still
in the view we have burnste here, still in the
view that gold works from here and a couple ways
to think about it, which is always kind of the
supply and demand. We've gone back and looked at every
rate cut cycle, and we've looked at every individual rate cut.
(27:10):
In a world where rates are being cut, check and
where the FED succeeds in bringing long term interest rates down,
gold has always gone up. And so our view is
if you think the FED succeeds, then gold goes up.
Where we struggle is to what level. One The speed
(27:31):
at which gold has moved this year surprised even us,
and to the level is a bit tricky. On the
supply side mining companies, gold mining companies will brag about
or grades that are a gram per ton, one per ton,
that's one part per million, And so to make money
in gold mining, you have to take a ton of rock,
(27:53):
blast it out of the earth, grind it to flour,
find the one part out of that million, and that
is worth ninety bucks today. Right a gram of gold.
I've got to make a business of finding a needle
in a haystack, and I got to do it for
forty or fifty bucks a ton, and I've got to
safely disposed of that deposit and then move on and
(28:14):
find the next one. So it's a tough business.
Speaker 2 (28:16):
Has the cost of blasting out that ton and finding
that graham come down with technology.
Speaker 4 (28:21):
Long term, Absolutely, it is stunning the ability. I mean,
the fact that you can make money pulling one parts
per million out of anything is remarkable. So the scale
at which the mining industry is efficient boggles the mine.
Come to iron ore. Iron ore is almost all iron.
I can move a ton of iron ore from the
Amazon rainforest safely to China for forty bucks a ton.
(28:47):
I can't get someone to deliver most dinners in midtown
for forty dollars, And so the efficiencies of the mining
industry boggle the mines. Now, having said that, it appears
is if geology is fighting back, right, it is getting
harder and harder. The average copper mind gets deeper and
deeper every year. We're moving to higher elevations, we're moving
(29:09):
just more difficult regions. So geology is always in this
fight against technology and innovation. The fact that most every
commodity you buy from the earth mind metals are like
ten bucks a kilogram is a testament to how well
the industry's done. But it should grind. Costs of metals
should grow faster than inflation.
Speaker 3 (29:27):
You know what else has been going up and this
is very exciting for me personally. Here's my disclaimer of
firstwes Well, no silver. For some reason. My dad every
year for my birthday sends me one silver dollar from
his collection, and because I'm getting old, I have quite
a few of them now. So silver has been going up.
(29:48):
It's not quite at a record, but you know, it's
sort of been following the path of gold. Is that
just an echo of the gold player? Is there something
more fundamental going on?
Speaker 4 (30:00):
For most of this year, there's been this funny split
between the precious metals platinum, gold, and silver. Were the
more useful the metal the less it went off, and
gold is the least useful of the metals. Right, there's
very little real utility for industry, and silver is actually
quite useful, especially if we think about the future of
(30:21):
solar energy and so on the silver front, we like silver.
And finally silver's beating gold this year, so silver's kind
of broken out a bit.
Speaker 3 (30:29):
Oh, I didn't realize that.
Speaker 4 (30:30):
Yeah, just in the last few weeks. And what's interesting
is if you went through the list of the forty
largest mines that produce silver, one or two of them
are silver mines. The rest are lead zinc mines, or
gold mines or copper minds.
Speaker 2 (30:46):
So I was gonna say, and I've brought this up
on the podcast before, but this reminded me a couple
of years ago. I was taking an uber into work,
you know, and I used to put it. The uber
drivers would see that I was going to Bloomberg, like
Bloomberg and like, what do you think about bitcoin? Or
Dogeklin And then there was this guy who said, oh,
you work for Bloomberg. I'm really bullish on silver because
(31:07):
there's less copper mining going on in the world, and
silver is a byproduct of copper, and there's a lot
of solar demand, and so there's going to be the
supplied demand mismatch. Was he onto something.
Speaker 4 (31:17):
It might have been me driving, Yeah, that's pretty well aligned.
He was reading the Bracket novel. Yes, And so the
answer is yes, if silver were to double overnight, there
is no mine that would say, well, now we should
go chase silver. So the largest silver mine in the
world was. I think it still could be kghm and Poland,
and it's a giant copper mind with a lot of
silver byproduct and a lot of the big gold mines
(31:39):
in Mexico. Silver is a byproduct, which means they love
to see that revenue stream go up from silver, but
it isn't the primary driver of capital decisions, investment decisions,
or supply response, and so it would take a big
price signal from silver to convince much of the world's
supply to do much more than they're doing already. But
(32:00):
we will mop it up with solar panels over time,
plus the other industrial uses.
Speaker 3 (32:06):
Joe, when are we going to interview your uber driver?
Speaker 2 (32:09):
Our producer Call is supposedly working on that, so yeah, yeah,
we're in touch with him. I think he's going to
come at some point. We're going to make that episode happen.
Speaker 3 (32:18):
That'll be fun. So I hesitate to ask this question
because you know, politics are everywhere and inescapable at the moment,
But we do have a presidential election coming up, and
we have two candidates who seem to be, you know,
in different positions when it comes to the energy transition.
What are you watching out for there?
Speaker 4 (32:39):
There's three events that have kept a lot of institutional
energy and oil investors on the sidelines over the last
several months. And the idea is, broadly speaking, if I
go to Las Vegas and go to any game of
the casino, on average, I'm going to lose, right, So
I shouldn't go. If I throw money at the stockmore blindly,
(33:00):
over time, it's going to compound high single digits, and
so I can kind of throw money in and so
therefore to make money, it's like, well, I think markets
go up, and let me find some ideas. And in
oil markets right now, you have to get three independent
variables or decisions or outcomes right in order to figure
it out. And if you're as good at figuring out geopolitics,
(33:22):
that you get one out of two and then one
out of two and there's a one in eight chance
you're going to get it all right. So those are
so one has been this constant, this de escalatory escalation
between Iran and Israel. Right what is the geopolitical premium
in the oil price? And we woke up Monday with
oil down five percent because the latest Israeli response was
(33:43):
extremely measured and disciplined and not the attacking of nuclear
or the attacking of oil infrastructure that the people had
worried about, and we've been seeing that all fall, this
sort of measured escalation, and so you had to get
that right. And then you have to get the election
right in terms of oil price, and then you have
to get the OPEC Thanksgiving meeting right in terms of
(34:06):
oil price. And then you wake up in January and
you have to decide what is China oil demand going
to do next year? This year has been stunningly poor
for Chinese oil demand growth, So you got to get
like fourth geopolitical things right. That's tough. Flipping coins on
him would be tough, and so most investors are simply waiting.
(34:26):
The way I'd frame it, at least in terms of
the election is, if it is a Trump presidency, you
can sort of believe he will do things like he
did last time, and then you have to separate it
into micro things he'll do around oil and the macro
things he'll do, like tariffs. Right, so somebody will have
a view on what his tariff policy is. But if
I just look at the oil sector, we know under
(34:47):
the Trump administration, sanctions on Iran were much more severe
than they are today, and so you could take a
million or two barrels off the market from Iran. And
he's no huge fan of Iran, so you could imagine
that decision wouldn't be that difficult for him. That would
strengthen oil price. Under Harris administration, you sort of assume,
(35:08):
for lack of clarity, more business as usual continuity with
Biden and so no radical reaction to Iranian sanctions. And
so I've been arguing for most of this year. I think,
starting in January, that Trump would be good for oil
price in that regard, and I've had a majority of
(35:29):
investors push back and worry about drill, baby drill. Where
he would be bad for oil price. Well, time will tell,
but ultimately it's much easier to put sanctions in place
on Venezuela or Iran than it is to convince an
oil and gas industry that's pretty mature, pretty grown up,
pretty disciplined to drill, baby drill.
Speaker 2 (35:47):
I think I just have one last question. But since
I like hearing you talk geology and science, I like
the price stuff, but most you know, there are other
people in the world who could talk price stuff. Can
you talk about lithium brining and what that means and
how that'll work.
Speaker 4 (36:00):
So broadly speaking, two places define lithium mines and brines,
and up until now the brines have been Let me
go to the most remote places on the planet. I'm
going to go to high altitudes and to these ancient
lake beds, these salars, these salty, dried up lake beds,
and the Atacama has this lithium triangle that spreads between Bolivia,
(36:22):
Argentina and Chile, the world's hugest endowsment. You go up
into the highlands of Tibet and you can find similar
so in Tibet, for example, Chinese companies are drilling wells
right again, which is kind of funny where we've come
full circle from my oil and gas roots. You drill
for uranium, you drill for oil, you drill for gas,
you drill for lithium brines. You pump this very salty
(36:43):
brine to the surface, and historically you let it evaporate.
You did the same thing the French have done on
their coasts for years, and you create seldom are the
beautiful sea salts. But you don't want the sodium chloride,
you don't want the table salt. You want the lithium,
and so we've been doing that for a very long time.
It's economic even doing it in these remote areas, and
(37:04):
then slowly and now quickly over time there is a
technology disruption. And so one of the reasons I have
to cover all of these various commodities is the shale
industry destroyed the oil patch. And the reason that shale
was such a disruptive technology was threefold. First, it's small
little units of capex ten million dollars a well, not
(37:24):
a billion dollar platform. Second, you get a quick response.
I get oil two quarters later, not five years later.
And third, we drilled one hundred thousand shale wells and
we got smarter and smarter and smarter. So Wright's law
that natural learning curve mattered. So why am I talking
about this in dlee? Well lithium is now being commercialized
(37:45):
with a new technology it's been around well dl E
direct lithium extraction, where instead of laying that briny liquid
out in the sun and letting mother nature evaporate it,
I'll do it in a tank. And so if you're
about a year ago, is when X Mobile announced their
plans to go to old oil field areas They're going
up into Arkansas and they are drilling wells to pump
(38:08):
out brinds from the Smackover formation, and they're going to
put it in a facility that doesn't look any different
than an Amazon fulfillment center, and they're going to extract
that lithium and by twenty thirty they want to have
a million cars worth of lithium. An equanor next door
in Arkansas wants to do the same thing. That technology works.
We saw Rio Tinto in my coverage spend paying almost
(38:31):
one hundred percent premium on a company that is leading
the industry in terms of direct lithium extraction. So there's
a disruptive technology that comes into the bottom of the
cost of on lithium. So that's the future of lithium
is will the industry get more lithium from old oil
fields or will they get it from the slars of
(38:53):
the high altitude andies.
Speaker 3 (38:54):
Joe and I learned the hard way that commodities can
in fact evaporate when they're in container because I had
a small glass jar of crude oil and I left
it in the office when I moved to Abu Dhabi
because I figured I couldn't take a jar of oil
on a plane and it's slowly evaporated in the office,
for which I apologized, Joe.
Speaker 2 (39:16):
That's okay. I don't as far as I know, I
didn't get sick. Wait, I have one tiny, tiny question,
and I just want to end it. Back on uranium.
What is the role of nuclear weapons decommissioning in the
uranium supply?
Speaker 4 (39:26):
That's an excellent question, and so as a geologist, I
can go by mine by mine and add up all
of the uranium supply. There are three other places that
you can get uranium from. I can go to old
uranium tailings and enrich those. That's never going to be
the bottom of the cost curve. They wouldn't be sitting there.
The other is government stockpiles can release uranium. And the
(39:49):
third is I can accelerate the conversion literally almost literally
swords to plowshares and start moving decommissioning warheads and using
that as a supply. What I would say is the
government is not in the business of making money, So
I don't really worry that there's some government bureaucrat that says, oh,
uraniums at one hundred and town bucks, let's put some
(40:11):
of our volumes into the market. It will almost be
like gold. Right, as gold price goes up, governments actually
buy more. It's almost the reverse of what you'd expect.
And so if uranium price goes up, it's highly unlikely
that governments are like, let's make a quick buck. Instead,
they will see that as a strategic stockpile.
Speaker 2 (40:31):
Bob Brackett, I can't think of any other guest where
we would go from the highlands and Tibet to a
random place in Arkansas. It's nuclear weapons decommissioning and it's
effect on the uranium price, but there's no doubt we
could do it to you. Thank you so much for
coming back on online.
Speaker 4 (40:46):
Absolutely my pleasure. Thanks Joe, thanks gas seeing.
Speaker 2 (41:00):
I love talking to Bob. They're so fun.
Speaker 3 (41:02):
Yeah, he's one of those rare guests where you can
just sort of throw out anything and literally answer expertly.
Speaker 2 (41:08):
Ohmercaief is kind of like that, And he's another one where, yeah,
you just have there was just no doubt that if
you throw something out, he's going to have some extremely
granular knowledge of what he's talking about.
Speaker 4 (41:19):
Yeah.
Speaker 3 (41:19):
Brad Setzer as well is one that sticks in my mind. No,
that was fascinating I do wonder. First of all, I
feel like there's this weird, like overarching theme when it
comes to these commodities where people get really like emotionally
attached to a lot of them. You know, I don't
think anyone treats like US treasuries in the same way
(41:40):
they treat like the same uranium or gold or something
like that. So that's kind of interesting why that happens.
And then secondly, I was thinking about the prospects for
nuclear energy, and it does. I take Bob's point about
how you're actually measuring the cost and that things like
Elco aren't going to take into a out the stability
(42:01):
of nuclear power, but I do wonder as the cost
curve comes down for stuff like solar, if you know,
maybe some of the appetite for nuclear kind of ebbs.
Speaker 2 (42:12):
Yeah, we'll have to see. I mean, to my mind,
there's still just so much incredible uncertainty about what the
energy mix looks like in five years, ten years, twenty
years and beyond. You know, Bob said something that was
like this major light bulb moment for me in that conversation.
I've always thought commodity people are a little bit screw loose.
(42:33):
Many of them, not Bob, but you know, like especially
that people get really culty about commodities and stuff like that.
And then he said, all commodity people are aware that
their business is disappearing. And it's like, you know what,
if I were in a business like that where every
day I woke up.
Speaker 3 (42:47):
And knew it, you'd be a little weird too.
Speaker 2 (42:49):
Yeah, It's like, Okay, I get it. I forgive you. You're
in a business where every day like there's less and
less of it in the world and people are trying
to substitute away from it. I get it, all right.
Speaker 3 (42:59):
Shall we leave it there?
Speaker 2 (43:00):
Let's leave it there.
Speaker 3 (43:01):
This has been another episode of the Odd Loots podcast.
I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2 (43:07):
And I'm Joe Wisenthal. You can follow me at the Stalwart.
Follow our producers Carmen Rodriguez at Kerman Arman, Dashel Bennett
at Dashbot and Kilbrooks at Kilbrooks. Thank you to our
producer Moses Ondem. From our odd Lots content, go to
bloomberg dot com slash odd Lots, where transcripts, a blog
and a newsletter and you can chat about all of
these topics twenty four to seven with fellow listeners in
(43:28):
our discord discord dot gg slash, od.
Speaker 3 (43:30):
Loots and if you enjoy odd Lots. If you like
it when we take a tour of interesting commodities with
Bob Brackett, then please leave us a positive review on
your favorite podcast platform. And remember, if you are a
Bloomberg subscriber, in addition to getting our new daily newsletter,
you can also listen to all of our episodes absolutely
(43:51):
ad free. All you need to do is find the
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Thanks for listening in
Hosts And Creators
Joe Weisenthal
Tracy Alloway
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