Australians can get rich by investing in controversial uranium mining companies that will be the biggest beneficiaries of nuclear submarines.
The Osborne shipyard in Adelaide will make the underwater defense equipment over the next two decades after the United States announced last month that it would share nuclear technology with Australia.
The threat from China has led to the creation of AUKUS, a trilateral security pact.
The US hadn’t shared its nuclear know-how with another country since 1958, when it entered into a Mutual Defense Agreement with the UK.
Prime Minister Scott Morrison has said the Australian government would spend 18 months deciding whether to produce the US Virginia-class submarine or the British Astute-class submarine.
The scrapping of a $90 billion deal from the French Naval Group to build 12 diesel-powered submarines means the Australian defense industry will need uranium.
Australians can get rich by investing in uranium mining companies that will be the biggest beneficiaries of nuclear submarines (pictured is a US Virginia-class attack submarine)
The threat from China has led to the creation of AUKUS, a trilateral security pact (Pictured are members of the People’s Liberation Army performing on China’s 72nd National Day in Hong Kong)
Bell Direct senior market analyst Jessica Amir said Mr Morrison’s preference for Australia to supply the nuclear material would most likely benefit a South Australian uranium mining company.
“Scott Morrison said the plans would be mapped out in the next 18 months and he wants Australia to take responsibility for nuclear stewardship – meaning he will favor Australian companies based in Adelaide,” she told Daily Mail Australia.
Australia has the world’s largest reserves of uranium and more than a third of the world’s total reserves.
But it is third in the world when it comes to mining production, behind Kazakhstan and Canada.
Only half a dozen companies or consortia in Australia are licensed to mine uranium locally, most of which are listed on the Australian stock market.
Although the federal government has ruled out starting a nuclear power industry for the time being, the uranium extracted would be needed to power the submarines.
Diversified mining giant BHP owns the Olympic Dam uranium mine, 550km north of Adelaide, which has the world’s largest uranium deposit.
ERA, also known as Energy Resources Australia, owns the Ranger and the nearby Jabiluka mines.
They are both adjacent to Kakadu National Park in the Northern Territory and sparked fierce protests in the 1990s on environmental and nuclear war sites.
Prime Minister Scott Morrison has said the Australian government would spend 18 months deciding whether to produce the US Virginia-class submarine or the British Astute-class submarine (pictured meeting US President Joe Biden in New York at the UN General Assembly on September 21)
Bell Direct senior market analyst Jessica Amir said Mr Morrison’s preference for Australia to supply the nuclear material would benefit a South Australian uranium mining company
The Australian-built submarines would be nuclear-powered, but not nuclear-armed.
Rio Tinto has an 86 percent stake in ERA, Australia’s longest-running uranium producer.
Boss Energy owns Honeywood’s idle uranium mine at Kalkaroo in South Australia.
Despite its closure in 2013, it has indigenous ownership agreements and operational permits, with the company announcing that it can produce uranium within 12 months.
The Four Mile Uranium Mine, 550 km north of Adelaide, is Australia’s fifth uranium mine, owned by a joint venture with Adelaide-based Quasar Resources and Alliance Craton, an ASX-listed subsidiary of Alliance Resources.
It is near the uranium mine at Beverley, owned by Heathgate Resources, which is not listed on the Australian Securities Exchange but is affiliated with Quasar Resources.
ERA, also known as Energy Resources Australia, owns the Ranger and the nearby Jabiluka mines. They are both adjacent to Kakadu National Park in the Northern Territory and sparked fierce protests in the 1990s, on environmental and nuclear war sites (pictured is a 1998 protest outside the Jabiluka mine)
Paladin Energy, based in Perth, operates the Langer Heinrich open uranium mine in the West African country of Namibia.
Ms Amir said investing in smaller uranium mines was more risky.
“They are speculative in nature, meaning they don’t really have the cash flows to support them like larger companies do,” she said.
“I would set up my core portfolios there and possibly consider putting a small amount of money into these companies.
“If you were to invest in a smaller company like ERA, Boss Energy or Alliance, if you checked your portfolio from day to day, you could see really big moves.
“They haven’t been operational as long as your BHPs, your Rio Tintos.”
Mr Amir said the sole company would likely benefit from a future government announcement about who would supply nuclear power to ASC, the state-owned submarine company.
“You’re not sure who’s going to win the contract,” she said.
Until 2007, the Australian Labor Party had a three-mine policy restricting uranium production, but it is no longer opposed to new mines.