Adam Rozencwajg outlines the uranium supply and demand situation and discusses how his firm is approaching this investment opportunity.
It’s no secret that the uranium market has faced headwinds over the last decade or so.
But calls for a turnaround have been increasing for some time now as supply tightens and the demand story grows stronger, leaving market participants more hopeful than ever.
Speaking to the Investing News Network, Adam Rozencwajg, managing partner at Goehring & Rozencwajg, shared his thoughts on the industry and what he expects moving forward.
Looking at supply, Rozencwajg noted that major players Cameco (TSX:CCO,NYSE:CCJ) and Kazatomprom (LSE:KAP) have had to curtail their output during this cycle and continue to do so; meanwhile, persistently low prices have kept smaller companies out of the market altogether.
Uranium demand has been hurt since the 2011 Fukushima nuclear disaster, but is looking increasingly promising as green energy becomes more attractive and with the advent of buyers like the Sprott Physical Uranium Trust (TSX:U.UN), which officially launched this past summer.
“When you put all those things together, what you end up with is a market that I think has been neglected for a long time — it’s a market that has basically bottomed and tightened starting two years ago,” said Rozencwajg. “We’ve been running a massive deficit of primary uranium for the last two years, and I think that now it’s going to start to work its way into higher prices.”
When asked whether it’s best invest in uranium producers or to consider explorers and developers, Rozencwajg emphasized that each person is different. However, Goehring & Rozencwajg is currently sticking with larger companies and vehicles that can get passive price exposure like the Sprott trust.
“In this stage, in this bottoming process, (we) try to stay with names that have some downside protection, and then we’ll look to add a little bit more as time goes on,” he explained.
Watch the interview above for more from Rozencwajg on the uranium space.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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