Uranium prices will keep rising, Neal Froneman predicts

Uranium rose to trade at its highest levels since 2014 on Thursday, as mining house Sibanye-Stillwater emphasised its commitment to capitalising on the commodity’s run, with CEO Neal Froneman predicting the metal’s continued rise. 

Sibanye-Stillwater is gearing up for a future beyond the platinum group metals (PGMs) boom, pinning its hopes on advancing green metals into its portfolio as a way to create shareholder value and demonstrate to investors its commitment to cleaner energy sources. 

The group is also putting a strategy in place to develop its uranium assets in anticipation of nuclear power playing a major role in global energy due to it emitting no carbon.

“Uranium has been identified and has always been a green metal. As the world become more sensitive to CO_² emissions, nuclear energy has emerged as an alternative, zero carbon-based generation option, to complement renewable energy,” Froneman said at an investor presentation on Thursday. 

Uranium is now trading at about $40.05 a pound, a level it had failed to breach for the past seven years.

Froneman said the price is likely to go higher, increasing by more than 50% as demand for the metal rises.  

“There’s growing commitment to nuclear energy, specifically in the Asia Pacific region with 125GW of new energy projects being planned,” he said. “We expect the uranium market to move into deficit within about five years and we expect long-term forecasts to exceed $60 per pound.”

Froneman has, for years, been bullish about the potential of uranium. 

In 2005, he merged the uranium-rich assets of Afrikander Lease with Toronto-based Southern Cross Resources to form internationally listed Uranium One. Shareholders enjoyed good times up to mid-2007, when the uranium price peaked at more than $140 a pound. But it began to fall sharply thereafter, and in 2008 Froneman shocked the market when he suddenly stepped down as CEO.

Now, seemingly redeemed, Froneman hopes to capitalise on growing demand with their assets of 27-million pounds of uranium at its Beatrix West unit, another 52-million pounds at Kook, as well as processing capability. 

All this is part of a strategy to plug the holes expected to be left by dwindling gold production in future. 

The group has no immediate plans to expand its gold operations which were spun out of Gold Fields in 2013. 

“At the moment, it’s very difficult to find value in the gold sector. I don’t see the gold price doubling or tripling. I see battery metals doing that. We’ve got a very good gold base and still believe in gold for the long term.”

Besides owning gold mines, Sibanye also owns a wealth of PGMs, which it got when it bought Lonmin, Stillwater in the US, and several of Anglo Platinum’s mines.

The group recently reported record profits, thanks to strong production and sky-high PGM prices — normalised earnings for the first half were R24.4bn and a dividend of R8.5bn was declared.

By the end of trade on Thursday, shares in Sibanye were 2.66% weaker at R51.25, having fallen almost 19% this year. 

With Lisa Steyn

gavazam@businesslive.co.za