ASX uranium shares are once again becoming a hot topic.
Somewhat ironically, investing in uranium miners is controversial in Australia. I say that because Australia is believed to have the world's largest uranium resources. At least for resources that are recoverable at a reasonable cost.
Yet with no nuclear power generation of its own, and no nuclear-powered naval vessels, many Aussie investors view uranium as a dangerous energy source best relegated to the last century.
Now there are good reasons to be cautious around uranium. It can, after all, be enriched for use in nuclear missiles. And the waste remains radioactive for many centuries.
On the flipside, however, uranium produces power without any carbon emissions. And in a world intent on de-carbonising without turning off the power, some analysts are forecasting a fresh bull run for uranium.
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The case for a 2021 uranium bull market
Ben Cleary is a portfolio manager at Tribeca Investment Partners. Cleary has a decidedly bullish outlook for many hard commodities this year. And, as the Australian Financial Review reports, Cleary believes uranium could enter a bull market in 2021.
According to Cleary:
Things like uranium, which have no carbon footprint, are starting to get some recognition. Oil can double, uranium can go up five times. It's that structural demand and supply mismatch – last year, for example, there was 200 million pounds of [uranium] consumption and 100 million pounds was mined.
The difference between what was consumed and what was mined was made up from existing stockpiles. But those stockpiles will only last so long if demand remains in excess of new supply. Economics 101 dictates that any prolonged period of excess demand without a matching increase in supply will drive prices higher.
Cleary tipped 2 All Ordinaries Index (ASX: XAO) uranium miners he believes are well-placed to benefit from an increase in uranium prices: Bannerman Resources Limited (ASX: BMN) and Boss Energy Ltd (ASX: BOE).
Boss Energy and Bannerman Resources share price and company snapshots
Boss Energy (formerly Boss Resources) holds interests in the Honeymoon uranium project located in South Australia.
The Boss Energy share price fell hard today, down 9.0%. That leaves it flat for the 2021 calendar year. Over the past 12 months, though, Boss Energy shares have gained 100%.
Bannerman Resources focuses on the development of large open-pit uranium operations. The majority of its interest are in the Etango Uranium Project in Namibia, Africa.
The Bannerman Resources share price also dropped today, down 7.7%. Shares are still well into the green for the year though, up 20% since 4 January. Over the past 12 months Bannerman Resources shares have gained a whopping 200%.
