Editor's Note: Today we're bringing you the Outsider Club's Gerardo Del Real's exclusive interview with the President and CEO of Uranium Energy Corp (NYSE: UEC), Amir Adnani.
Mr. Adnani is among the most active and well-connected players in the uranium space, and you'd be hard pressed to find a better person to explain why the uranium sector is heating up.
To your wealth,
Nick HodgePublisher, Outsider Club
Gerardo Del Real: This is Gerardo Del Real with the Outsider Club.
Joining me today is the President & CEO of Uranium Energy Corp (NYSE: UEC), Amir Adnani.
Amir, thank you for joining me.
The timing for this interview couldn't be better. You and I spoke several months ago and we both knew 2018 was going to be a pivotal year for uranium and uranium stocks.
It's still early, but judging by the volume and share price performance of the better uranium juniors the past week or so, it's clear that the recent chatter out of Russia has reminded investors and speculators just how quickly uranium stocks can move under more favorable market conditions.
I reached out because you are among the most active and well-connected players in the uranium space and I'm hoping that you can provide a mini-course on the current state of the uranium market, what we need to see price wise for a sustained rally, and why UEC is positioned to step up to the plate and help hedge against a potential ban of uranium to the U.S. by Russia.
It seems all roads lead to Moscow these days with the news cycle! Can you explain the proposed Russian retaliation action towards the U.S. and why the simple mention of a draft bill has such a big impact on uranium?
Amir Adnani: Gerardo, it's great to speak with you again and thanks for taking the time to discuss these very complex and timely situations relating to the uranium market.
Things are really heating up between the White House and the Kremlin regarding the sanctions imposed on Russia by the U.S., the conflict in Syria, and Russia's proposed counter sanctions against the U.S. and its allies. The situation remains very fluid and has been changing day to day.
The recently proposed Russian law submitted to the State Duma would ban nuclear cooperation, including uranium supply, not only with the U.S., but also in "other foreign states" who support U.S. sanctions against Russia and "those who support Washington's position on Syria." If the draft law is approved by the Kremlin, the U.S. utility industry may be in for a major supply shock as a result of their overdependence on uranium coming from countries under the Russian sphere of influence.
Gerardo Del Real: How dependent is the U.S. on uranium from countries under the Russian sphere of influence? Is it a meaningful share of imported uranium supplies?
Amir Adnani: It is a pretty big deal, Gerardo, which is why UEC stock has moved higher in the past week. The U.S. generates about 20% of its electricity and 60% of its carbon-free energy from nuclear power. To fuel this generation, the U.S. imports about 40% of its uranium requirements from Russia, Kazakhstan, and Uzbekistan. The extreme dependence on foreign uranium from countries with elevated geopolitical risks is clearly a serious national security threat and has prompted concern from the industry as well as our federal government and Capitol Hill.
Uranium is a strategic mineral for the U.S. as well as a source of economic development and jobs. At its peak, the uranium industry employed more than 20,000 Americans; now the number is less than 500 and continues to decline. Since 2012, investment in uranium exploration is down more than 90%. In 2018, U.S. uranium production is expected to fall to approximately 700,000 pounds, the lowest production since 1949. At this level, domestic production will account for less than 2% of the uranium required to power U.S. reactors.
Gerardo Del Real: Amir, I'm perplexed that politicians and policy makers are not responding more forcefully to fix this overdependence. UEC has a unique advantage to have former U.S. Energy Secretary Spencer Abraham as chairman. What do you and Spence make of what the administration wants to see or do?
Amir Adnani: We're very fortunate to have Spencer Abraham as chairman, he has considerable insight and provides significant guidance in our Washington strategy. Scott Melbye, our executive vice president, also provides deep experience in D.C. policy development. He has served as president of the Uranium Producers of America and has given testimonies on the state of the U.S. uranium industry to the House Oversight Committee. Also, as a Texas-based company in Corpus Christi, myself and our South Texas team are very familiar with the current energy secretary, Rick Perry, who we first met during his 14 years as governor of the state of Texas.
Secretary Perry is a huge supporter of the U.S. nuclear power and uranium industries and was recently quoted saying "The Trump administration thinks nuclear energy is very important. It's important domestically, it's important internationally."
So, you can see that under the current administration there has been increasing support for the domestic U.S. uranium industry. We have seen bipartisan support from Capitol Hill to promote the importance of a safe and viable domestic production industry. One of the more recent measures came when Secretary Perry halted damaging transfers of the government's excess uranium to fund clean-up activity at legacy enrichment facilities.