- ASX: BMN
- Shares Outstanding: 1.06B
- Share price: A$0.04 (30.06.2020)
- Market Cap: A$39M
A Conversation with Brandon Munro, CEO of Bannerman Resources (ASX: BMN).
We have interviewed Munro throughout this uranium bear cycle; his insights have been incredibly useful for investors.
Uranium Market Commentator & Bannerman Resources (ASX:BMN) CEO, Brandon Munro gives us an exclusive run through on the World Nuclear Association (WNA) Nuclear Fuel Report – Extended Summary.
This is the first document of its kind by the WNA. The summary lays out the nuclear fuel cycle and macro thesis for the need for nuclear (and why uranium investors should feel comfortable), in easy to understand format and language. And most appealing is the plethora of charts, tables and diagrams to make the numbers easy to access and extrapolate. Good work WNA.
As ever, Munro masterfully breaks it down so that we can appreciate the moving parts and why the Extended Summary has been put together like it has. Munro was also co-Chair of the Demand Side Sub Group and contributor to the Fuel Report and Summary. Good work, Brandon Munro.
- WNA Report: What is it and What’s its Purpose?
- WNA Expanded Summary: A Long-Time-Coming Tool For Investors
- Giving Nuclear Energy a Voice: Conservative Promotion Based on Past Experience
- Recent Events’ Impact on the Nuclear Space: Time for the WNA to Step Up?
- One Tool for Many Users: Who is The Target Audience?
- Can This Report Hold an Impartial and Balanced View on the Space?
- Hope For Harmony: Lack of Investment Needed for Nuclear to Shine
CLICK HERE to watch the full interview.
Matthew Gordon: Brandon, how are you doing?
Brandon Munro: I’m very well. How about you, Matt?
Matthew Gordon: Well, I’m a bit excited. I’ve seen this report this morning from the WNA and I suspected that you would know a thing or two because you’re one of the co-chairs of the Demand Committee. So, this is the WNA putting out an expanded summary of their report from last September. So, it’s for a point in time, up until that time. There are no new data points in there from September to now, but it looks pretty exciting to me because it seems to be quite a nice summary of you know, what’s going on in the supply-demand side of things in this market.
Brandon Munro: Yes, it’s just hot off the press. We’ve been working on it behind the scenes for some time, but now it’s just been made public. And for people who haven’t followed the WNA’s Nuclear Fuel Report, it’s put out every two years and it looks in detail at the whole nuclear fuel supply chain. So, there’s a demand subgroup which I co-chair, and that determines what the demand for nuclear fuel will be, in this case from 2019 out to 2040. And then it looks at the different aspects of the nuclear fuel supply. So, there’s Uranium supply, conversion, enrichment, fabrication, and it finishes off with a little bit of discussion about how they all come together with supply and demand graphs, which I think are some of the most interesting aspects of this report for investors in this sector. So that’s the document that comes out in September and it’s available first of all, to WNA members and otherwise it’s available for purchase at a price that I think is very reflective of its value, but it’s not particularly accessible to, for instance, retail investors. It is something like £800. So, it’s quite an impost on a retail investor trying to get behind the information there.
Matthew Gordon: Okay. But you’ve now decided to put out this expanded summary, which covers most of the, I mean, not all of the juice has been given up on this, on the main report, but you’ve highlighted and gone through the micro-ecosystem that nuclear and Uranium inhabits. And I actually think you guys have done a good job. I mean, for someone who is coming new to this, whether they may just be interested parties or investors, it’s a really concise summary of that ecosystem. So, I think, well done for that. I mean, I got asked the question, so, it’s nine months later, so, 1 – why does it take so long? And then 2 – what were you hoping to achieve with this document?
Brandon Munro: Yes. So, look, first of all, the credit needs to go to WNA Secretary. They are the people who have done all of the heavy lifting. As you know, I’ve played a role in the report itself, as a member of some of the committees and co-chairing the demand committee. And I also played a review role and a little bit of touch ups on this summary. But the hard graft has been done by WNA in August. Olga Skorlyakova in particular, so all credit to her and the team there.
So, it is staggered, I’d say. I wouldn’t necessarily concede a delay because it has been intended to be that way. What WNA were trying to achieve is that the main report, in all of its detail and glory, is available to members and those who are prepared to pay for it. And obviously there is media and others who receive complimentary copies. And then this comes out with a staggered approach so that the information is available for free without diminishing the value proposition for the main report. As I say, for members and those who are paying for it.
In terms of what it’s achieving – well, it’s the first time that WNA has done this. So, we’re feeling our way a little bit. Some of the things that are motivated initially with the concept when myself and Olga and some others were throwing around ideas as to how we can add value to the main report, was for the investor community, which is one of the audiences that the Nuclear Fuel Report is designed for, what it enables is people to get behind the key graphs. So, the key graphs have made it into the public domain through WNA presentations, and you would have seen some on Twitter and some companies that picked up the key graphs in their own promotional materials. So, the Bannerman corporate update, for example: Uranium 2020, that’s on our website. That includes one of the graphs. And it’s very useful for us, but it’s harder for people, or it has been very hard for people to get behind what’s the methodology? What are the three scenarios and what’s behind them? How exactly has WNA gone about constructing the supply side, constructing the demand side? What’s the thinking behind why some projects are in one category and other projects are in another category? And for the people who really want to get technical, there’s quite a lot of discussion about load factor methodology, and exactly how WNA builds up their demand projections. So, it’s most of what you would need to be able to construct a model. Now, if you buy the full report, then you can of course check the WNA numbers at a granular level against your own model. But for somebody who’s looking in detail at the space, this is now a fully accessible and free version that they can go back to.
And whilst it is nine months late, or staggered, as I’m prepared to say, look, we’re talking about a horizon that goes all the way out to 2040 so I don’t think its lost value because of that. You know, people aren’t accessing this information and using this information to understand where nuclear is at in 12 months’ time. This is the industry’s view for 3 different scenarios as to where nuclear can be at all the way out to 2040. And that hasn’t lost any relevance through the passage of that time.
Matthew Gordon: I hear what you’re saying there. And I like the fact that it’s the WNA for the first time making more information accessible. That’s great. And I like, I particularly like sharing the methodology by which they have created these different scenarios for nuclear electricity generation. So, all that is good and to be commended. You know, my notes about the WNA, they are, this must be quite a move for them because they are quite conservative in terms of approach to the market. If I look at the way that the renewable sector comes and bashes them regularly, and there’s no kind of repost from nuclear; they are a kind of a quiet voice and perhaps I’d like to see them turn the volume up somewhat, if I’m honest. But how is that affecting their ability to promote nuclear? I mean, do you think that this document is the first of many, or a renewed, or invigorated approach to getting the story out there? Is that also the point of this document?
Brandon Munro: No, it’s not designed to be a point of the document. The WNA, they are very graceful and poised in the way that they approach things. And you’re not the only person who’d like to see the volume turn up a little bit. And bearing in mind that the nuclear sector is one of the most unfairly attacked sectors of any industry in the world. And the people who have been in this industry for a while, they’re just punch drunk to it, to be quite frank. So, increasingly, I think you will see advocates from both inside and outside of the nuclear industry, having a bit more to say about where renewables cannot provide the entire solution, and where it needs to sit side by side with nuclear. But we are not anti-renewables. That’s a point that needs to come across. And that’s a lot of the reason why WNA doesn’t want to be perceived as being an us and them type thing. It’s an us together situation. For the planet to deal with climate change challenges and all of the implications that come with that we need to have every available energy source, particularly the carbon-free energy sources like nuclear and the low carbon energy sources like renewables, they need to be working hand in hand in the appropriate circumstances and in the appropriate places. And the opposition that I’ve got to a lot of the renewables’ lobbying, is the ill-conceived and dishonest advocacy around renewables being able and capable of providing a hundred percent solution in all situations. It just isn’t true and it’s totally unfeasible. But WNA, as you pointed out, they are a lot more gentle about how they go about things. And so, they’re more careful about making those statements in that way.
Back to your question, this is not designed to be a lobbying document. It’s not designed to be an advocacy document. It’s designed to be a document that puts the facts out on the table as best as the industry can produce those estimates and those facts. So that’s why when you read through, you made the comment that you found the explanations quite helpful; that’s what we’ve tried to do with this document. And WNA does put out some excellent publications for those looking for a brochure that they can give to their neighbour who is a bit concerned or confused about nuclear. There’s an excellent one called The Sleeping Giant that you can download from their website. There is a bunch of other material there. And someone looking for a policy document or an advocacy document should go to some of those. This is about information. This is about economics. And that’s the value of the full report. And to a slightly lesser extent, that’s the value of this expanded summary in a more accessible form.
Matthew Gordon: Okay. So, I think we’re agreeing with each other. It’s a great explanation of where Uranium and nuclear kind of sits today, using the data from September. So obviously it’s nine months later, quite a few events have happened since then, which have affected the market. Does the WNA feel that it should update its data, given these quite extreme and extraordinary events, and what it could mean, certainly on the supply side? Because as an investor, I’m looking for guidance from someone. I kind of like that there is a kind of sober approach, a conservative approach from the WNA to this, because I hear lots of commentary from, they could be funds, interested parties, commentators, company CEOs, and they need to tell a certain story because their model is different, right? They either need shareholders to believe what they’re saying, or they need to raise capital, and they need to believe, or people to believe, that this market is going somewhere soon. The WNA numbers, along with some of the trade people are, I think, a little bit more realistic. So, I like this, but don’t you think in light of what’s happened recently that WNA should be leading from the front: talking about some of these events, what it’s going to do to the numbers? This nuclear report comes out every 2-years, don’t you think it’s time for it to, you know, step up and say, well, look, everyone, don’t worry. Things haven’t changed that much, or they have? But at least give some kind of guidance.
Brandon Munro: Yes. Look, you’ve got to ask yourself, what is the WNA role here? This is one of the functions of the organisation. They’re not a full-time information provider or consultancy like a Platz or one of the other S&P, or one of the other specialists in the industry. And the moment WNA starts updating this information for a particular event, well, where do they stop? You know, where do you draw the line as to something that’s so significant? So, I’m not advocating within an inside WNA at all for updating. I think people just have to be patient for the next edition to come out. However, having said that, one of the advantages of now putting out this expanded summary with a great degree of additional detail versus what’s in the public domain, is somebody can get behind these numbers and formulate in their own minds their own adjustment for some of these more dramatic events.
So, my expectation personally is that the COVID-related supply disruption will take about 20Mlbs out of supply for this year, and as per our discussion last week. I think that could well go up if we see certain disruptions extended beyond their initial estimates. So, you can look at the key graphs on supply and you can quite easily understand what 20Mlbs less for this year is likely to do to that. And you can get behind the methodology. So, whilst it’s not quite handing over a model so that you can just plug in the new numbers yourself, it’s pretty obvious looking at that, what that supply disruption is going to do. And I think that’s the value of this tool for not only investors, but all of the other stakeholders and members of the audience that this is trying to reach.
Matthew Gordon: I buy that. I think it does make it accessible from that point of view. And you can do some very simple maths there. Because there’s different types of investors going to be watching this, from those who are not yet invested but are slightly curious about this noise that Uranium market is creating. But they won’t quite know how to go about it. I think the charts in here are, well, it’s great. It is generous to share that with the public for the first time. Great. There’s going to people who want to be told what to do. There’s going to be people who use it and sort of reach around and do their own numbers. And some of these newsletter writers can produce some interesting content around that based on some real numbers. And then there’s going to be sort of other market commentators who, as usual, have their own view on where this is going and their timeframe. So, yes, I think it is a very interesting document. I did want to speak to you about what you set out to try and achieve with it and whether, well, here’s the question – do you think you’ve achieved everything that you wanted to achieve when you started writing this?
Brandon Munro: Well, I don’t think we can answer that until we’ve had some feedback. A large part of what WNA was trying to do with putting the expanded summary out was to provide information to people. And if the feedback starts coming back that it’s very helpful and it’s useful, well, then we can get a lot closer to saying, yes, we’ve ticked those boxes and we’re happy with the extra effort involved, which of course is quite substantial. So, let’s wait and see. I’m happy with the end product. And I hope that it ticks those boxes. But a large part of it is getting eyeballs onto this document, getting it explained in addition to the text, and getting people to go through it and start a conversation around it.
Matthew Gordon: But that’s what I’m trying to get at here. Who did you design this to go to? We have talked about a bunch of different audiences, like I’m focused on investors, right. But there’s obviously a wider audience that perhaps that are there help or influence, or you know, update with this. All those different audiences will have different needs. So, you know, when you write these things, you’ve got to have in mind who is reading it and what you think they want from it. And then, you know, getting feedback. Because there are 2 ways to come at it: you can talk to them and say, what do you need from it? And write it to suit that. Or you can say, actually our remit is just this. We are just providing raw data for you in a slightly different way. And all of you will get something from it, but not any one individual will get everything they need from it. So, you know, getting feedback is kind of, it’s a little bit horse before the cart, isn’t it?
Brandon Munro: So, it’s a good point, because this is not a document that was written or prepared primarily for investors, and that on the one hand, is very helpful because it makes it impartial and it makes it balanced. And it makes it a document that offers you something different to what you might get from a bank or someone else who is advocating on the investment side in the sector. It is written more for members to understand what’s happening in the industry and do their own planning according to trends and form their own view. It’s written for policymakers, both within countries that already have nuclear power and countries that are considering nuclear power. It’s written for journalists to help straighten out a lot of the facts and hopefully address some of the mistruths about nuclear power. It’s written for academics, it’s written for students, and it’s written for the nuclear power supply chain. So if you’re a company who makes widgets and you’re hoping to sell X number of these widgets to a company that makes pipes, that’s hoping to build nuclear power plants, well, this is probably the best document out there for someone like that to understand what their market is likely to look for.
So, it cuts both ways. It has not honed in on what an investor wants to understand from this and what an investor requires, but equally you’re not getting the varnish that you do on many reports that are written for investors. And your point about balance and being impartial; I think there’s a point for people to understand here: this is a very balanced document because it has been written by committees who are predominantly composed of utilities on the one hand, who have got an interest in ensuring that this doesn’t overstate some of the dynamics for Uranium. And on the other hand, there’s a number of people from the supply and the development side who have got an interest in making sure that the document doesn’t understate the case for Uranium. And the same can be said for conversion and enrichment and fabrication. So that tension, which I know well after chairing one of those committees, that tension has ensured that we’ve come out with a really balanced outcome and something that can be relied on as a very good starting point for investors. And more sophisticated investors will then go and try and apply their own judgment having full understanding and knowledge of what the methodology is behind these numbers.
Matthew Gordon: You kind of answered my next question, which was a to be, given that the clue is in the title; it is the World Nuclear Association, you know, everyone talks to their own playbook. Do you think that you genuinely achieved an impartial and imbalanced view of the world, of nuclear, as people should see it? You know, I say this in the context of, I don’t think you are combative enough compared to everyone else, and compared to gas, compared to, you know, other forms of renewable you know, even coal, quite frankly. These people have lobbyists and they are talking a very aggressive game and fighting their corner. We’ve seen that played out with some of the conversations that we’ve had with utilities who are multi-energy source utilities. Nuclear seems slightly humbled by its past, or slightly nervous about its past in having these conversations where because of events like, well, not necessarily Fukushima, but certainly Chernobyl, or Three Mile Island, et cetera, you have to apologise slightly before you start a conversation. Is that the way it feels?
Brandon Munro: That is very Canadian. Sorry. I just couldn’t resist it. They’re our closest cousins on humour, the Canadians to the Australians.
And you’re right. So, to answer your question – yes. I do think it has come out in a very balanced and impartial way. But remember, we’re dealing with the future here. It will necessarily be wrong. That’s the only thing it can be. We’re hoping it’ll only be a tiny bit wrong because by and large we’ve made solid assumptions, and more importantly, people can understand those assumptions. And with any economic forecast, as long as the assumptions are stated correctly it’s up to the reader ultimately to interpret those assumptions, see if they agree with them or not and make adjustments. So, it’s a forecast. It is delving into the future based on a set of circumstances. But each of those three sets of circumstances, which we’ve grouped into the scenarios: the reference, the lower and the upper scenarios, they are based on realities, forward-looking realities. The reference case is based on the current reality not improving and not getting worse. And the current reality, as we all know for the reasons that you just talked about, particularly since Fukushima, has been tough on the ground, tough with slow policy changes, still a fair bit of taboo at a political level. Communities are just starting to come around. But to be fair, nuclear just isn’t getting the chance to show even a small fraction of what it’s capable of doing for the world and achieving in the climate change challenge. So that’s the reference case. The lowercase means that those demands get harder and the reality is a more difficult reality. And then the uppercase assumes that the world and the nuclear industry makes improvements at that. Improvements in a policy, improvements in economics, and achieves at least some of the things, positively, that the industry is trying to achieve. But it is grounded in reality. It is not a wishful document. It is not an aspirational document. It’s not a, but only if we could achieve this, or with all the will that we could do this. So I contrast it very, very heavily with many of the documents and policy rhetoric that I see in some of our competitive forms of industry.
There are other both industry and non-industry groups who are putting out much higher scenarios for nuclear demand growth, you know, including the likes of IPCC, IAEA, WNCE. And in fact, the nuclear industry has a harmony project which is not based on moving from where we are with the current reality, that is based on the industry changing, or having an influence on the reality in a positive way to enable it to make a bigger contribution to climate goals. So, I do think it’s impartial and I do think it is grounded in reality, but we are talking about the future so it’s necessarily never going to get everything right.
Matthew Gordon: Okay. I agree with that. It is grounded in reality. The data points are excellent. And the way that, again, come back to the charts, people should look at this document, look at the charts. You know, it allows you to very quickly see the state of the nation, as it were. There was a flicker, there was a moment in this document where I thought there might be some selling. There might be some upside that, you know, some sort of ray of sunshine. And maybe it’s a discussion for another day, but you talked about harmony. Okay. So harmony is a, it’s kind of hope. It’s a moment of hope, and you go, well, can nuclear provide 25% of global energy needs at some point in the distance, right? And then the hope was crushed because they said, well, we’re going to need to treble our current production, infrastructure and so forth. In the same breath they then talked about the lack of investment in Uranium mining since 2016, actually 2014, to today. The lack of investment in any of the required infrastructure to get the Uranium sector, let alone the nuclear sector, moving again, which is obviously the supply side of the document. And I encourage people to look at that because that’s fascinating; the drop off in investment and the access to capital to do that, as we know it in today’s market. And then it goes very quickly onto the billions and billions of dollars which are going to be needed to be raised, and the infrastructure built in a market, which is again, struggling, I think, in the Western world and the places that we talked about. You know, USA and Europe investing in new plants or upgrading plants, et cetera, compared to what’s going on in China, or even the middle East, quite frankly. So, I just thought there was a moment there where the WNA might try and propose a way forward, bring other associations in, energy associations in, governments in, and try and get some sort of collective movement. But that I know is a big task. It would be a big effort required and maybe it’s not within the WNAs remit. But I think it would be really interesting to talk about between you and me, what we think it would take to deliver harmony, as described by the WNA.
Brandon Munro: Yes. And there’s a lot in that. There really is a lot in that, and there’s a lot that’s being done. This isn’t the document for explaining fully what needs to be done with harmony. And I think I’m glad that you asked me and we discussed the audience before you asked this question, because whilst you said that we are crushing hopes with the way that that’s been written, it is also a little reality check for policymakers that if you want to deal with climate crisis, these are some of the things that we need to be dealing with. We need to be, as policymakers and as global citizens, we need to be addressing some of these things that make nuclear more capable.
We know that the technology is there to be able to provide 25% of the world’s electricity. We know that industry can respond. It just needs the same build rate of nuclear power plants that we had in the 1980s. That can definitely be done. It is policy enablers predominantly; it is levelling the playing field. It is ensuring that there is, for example, some of the design specifications there, you don’t have nuclear power plants needing to have one design for the US, another designs for California, another design for Canada and another design for France, et cetera, et cetera. Those sorts of things can be addressed relatively easily in the context of the challenge that the world is trying to respond to. So, let’s pick that up in a separate conversation. It is a good one.
And the other thing that you said that I’d just like to pick you up on is you said, ‘the little ray of sunshine with harmony.’ I reckon you need; I know that you’ve only had this for a very short period of time, this document, but go back and have a look at those graphs. If you are a Uranium investor and you’re looking for sunshine in this document, you’ve got enough there to get sunburned Australian-style, really. Like you look at the concept of unspecified supply and how much Uranium is going to need to come on, particularly from 2025 onwards, by 2030, by 2040, there is a lot to be excited about as an Uranium investor, set out in an impartial, balanced way from deep within the industry itself with a whole bunch of utilities sitting across the table who’ve got no interest in paying more than they need to for Uranium. There’s plenty of sunshine here. I think maybe what you’re referring to with the harmony is that it’s gone beyond sunshine and it’s, you know, you are looking for the sky to open in a very heavenly way. And if we can achieve harmony as an industry, well, that’s exactly what will happen, I guess.
Matthew Gordon; We shall see. We shall see. You know, congratulations to everyone involved in the report. I had to rush through it this morning to be able to get you on the line to be able to get this out today. I suspect this will be our weekly catch up because it is a good meaty subject. I’d love to come back to the harmony component. I think I’ve learned a few things in there, just in terms of, you know, the order of play, quite frankly. And honestly, the charts are fantastic. And to be sharing that with the public for the first time, I hope it’s the first of many. And as you say, I’ll be sure to give you my feedback once I’ve read it again. Because like I say, I would love to see WNA kind of doing more than it is doing now. Isn’t that the name of the game?
Brandon Munro: Yes, look. I think you have got to be a bit fair. They are doing a lot and they’re doing some great work at a policy level.
Matthew Gordon: I know, but you’ve got to ask for more, if you don’t ask for more, you won’t get. So, they can choose not to, we’ve got to be demanding as investors.
Brandon Munro: We always want more.
Matthew Gordon: Exactly. As investors we always want more. You should know that by now, Brandon.
Brandon Munro: Okay. More to come. I will look forward to that.
Matthew Gordon: I will look forward to that. Thanks for making time to run through this. We will catch up with you next week. Maybe on Harmony, maybe on something else. Hopefully there is more news and more feedback on social media. And once everyone’s had time to digest this over the weekend.
Brandon Munro: Yes. Terrific. And look, it’s been wonderful to come on, and I think, you know that I’m in no way a spokesman for WNA. That’s not my role here. I’m an industry participant who is privileged to have been quite involved in the process and just passionate about what I’m doing. So hopefully I haven’t overstepped the mark there or crossed any lines. But it was great to talk and great to talk about something that’s been quite a big part of what I’ve been doing for the last couple of years.
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