Anfield energy takeover, ILA strikes, Iran-Israel war and how this affects uranium
Anfield energy takeover, ILA strikes, Iran-Israel war and how this affects uranium
Will $UEC get involved in the Anfield takeover? Was the mafia involved in the ILA strikes. And is the Iran-Israel war just performative? How does this all affect uranium? Here are my thoughts on this.
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has kindly allowed me to post their recent paid article about the Anfield energy takeover (nothing to do with Liverpool Football Club), ILA strikes, Iran v Israel and how this affects uranium moving forward.Uranium Investor has allowed this post to be free for Contrarian Capitalists so I would like to extend my thanks to Uranium Investor and also hope that you enjoy reading this article!
I have not altered any of the text and have only made the subheadings BOLD.
Everything that you read below the dividing line are the thoughts of
Recently, three major events happened which I think will affect the uranium market atleast somewhat.
1)ANFIELD ENERGY A -0.77%↓ EC IS BEING TAKEN OVER BY ISO ENERGY ISO 1.53%↑ FOR $127 million. Will UEC -0.15%↓ do a counter offer? And why I think this is the case.
2)The ILA is striking which can have a huge impact on the economy depending on a few factors. What does it mean in the long run? What is the Taft-Hartley Act and will it be used?
3)How much will the Iran-Israel war escalate? How does this impact the uranium market?
ANFIELD ENERGY
Anfield Energy was taken over by ISO Energy recently, I believe that due to how aggressive Amir Adnani (CEO of $UEC) wants to expand the company I believe this will be a target for him. Recently, he bought Rio Tinto’s uranium assets in the USA and previously he bought other uranium assets too such as Uranium One’s US assets and The Palangana Project. Furthermore, he is also extremely aggressive in his contracting strategy claiming he won’t have any contracts for selling uranium if there are any ceilings.
Outside of UEC potentially buying Anfield or even ISO for a premium I believe that it also shows uranium companies being more confident in the future for uranium. Companies that are actually involved in uranium know more than others about what the future demand for uranium looks like. The fact that they are betting on higher uranium prices is a very good sign.
Lastly, I expect there to be more acquisitions in the future as companies seek to monopolise certain areas in order to keep costs low. The only way mining companies can be worthwhile in the long run is to be bought out or to get so large they can take advantage of economies of scale to be a low cost producer so they can survive when the market turns which is why I believe uranium companies will be more aggressive inntheir acquisitions once they get the money.
ILA STRIKES
The ILA recently started striking which I believe could have a huge impact on the economy. In the words of the ILA President “cars won’t come in, food won’t come in, clothing won’t come in.” In another quote “…second week, guys who sell cars can’t sell cars because the cars ain’t coming in off the ships, they get laid off. Third week, malls start closing down, they can’t get the goods from China, they can’t sell clothes, they can’t do this. Everything in the United States comes on a ship, they go out of business. Construction workers gwt laid off because the materials arwn’t coming in. The steel is not coming in. The lumber’s not coming in. They lose their jobs.”
In other words in just a couple weeks the economy will become much much worse. JP Morgan predicts the strikes will cost the economy $4.5 billion each day. If the strikes were to last an entire year that is 5%-10% of the economy. In other words it could be very bad for the economy.
Of course, strikes don’t tend to last that lomg although it has happened before in extreme circumstances. So how long will the strikes last? To figure that out we need to consider the possibility of Biden using the Taft-Hartley act to stop the unions from striking for 90 days as part of a cooldown period.
Firstly, if Biden were to do this the workers will just not work very hard while still getting paid. In other words, taking advantage of this law might actually backfire and prolong the strikes. Of course there is also the possibility that Biden just stops the workers from being able to strike completely or allows the workers to strike without any sort of restrictions and anything in between.
We know that most likely the strikes will not end by Friday because that is what people are gambling on happening in the prediction market, polymarket. There is only an 11% chance the strikes will end by Friday according to the prediction markets.
So how do we figure out whether Biden will invoke Taft-Hartley Act or not? There are basically two models we can use.
1)Assuming Biden is driven by left wing ideology. In this case we can assume he will not invoke Taft-Hartley since left wingers see the world through a division of class between the business owners and the workers. They tend to side with the workers striking during strikes and tend to have a very pro union stance such as being against right to work laws. Based on this we can assume he won’t invoke Taft Hartley.
2)We can look at Biden’s incentives from a rational choice theory perspective. Democrats need the support of voters and so they may do what the median voter wants. Based on comments sections on youtube of various media organisations it seems people are overwhelmingly against the strikes (although the extent varies from suppprting a Taft-Hartley to banning strikes altogether). However, I don’t believe this is the rational move to do to win an election. In my opinion, the rational move to win an election is to focus on voters who are willing to change their votes (swing voters), the ILA are swing voters which means it is rational for Biden and Trump to support them despite most being against them. (I saw this model when reading Marko Papics tweets on twitter and from reading his book geopolitical alpha.)
Based on the weight of the evidence, I believe that whichever model you look at what most likely happens is that Taft-Hartley is not used.
So how else can we tell how long the strikes will last? There are roughly 7 factors in my opinion that influence this.
1)Negotiation progress.
2)Public support and pressure.
3)Legal factors.
4)Financial impact on workers and companies hiring them.
5)Historical context.
6)Union strategy.
7)Government intervention.
We already previously discussed how 2, 3, and 7 are irrelevant. So let’s look at the other factors at play.
NEGOTIATION PROGRESS-The main disagreement amongst thr workers and the bosses are over automation. The differences between how much the employers are willing to pay the workers and how much the workers are willing to work for definitely seems negotiable. The difference is between 10%-15% currently. The main point of contention seems to be around automation. ILA want promises to never automate at all I personally don’t see how a business will agree to anything this extreme. I believe wih such a big difference between what the workers want and what the bosses want this factor suggests the strikes could last for alonger rather than for a shorter time frame.
FINANCIAL IMPACT ON WORKERS AND COMPANIES HIRING THEM- The typical longshoremen salary is well into 6 figures. At the same time the companies hiring them are also have way more than enough to wait this out. In other words, nobody needs to fold in the negotiations suggesting the strikes could last for a longer rather than shorter timeframe.
HISTORICAL CONTEXT- There isn’t much of a historical context regarding ILA strikes recently. the last time the ports shutdown was over 50 years ago suggesting labour/management relations aren’t too bad and this is something that can be negotiated suggesting the strikes won’t be too long.
UNION STRATEGY-There is basically three possibilities of what the union’s strategy is.
1)Based on the weight of all of the factors combined I believe it is best from the workers perspective for them to play hardball and thos could be the case.
2)There is of course the possibility that they decide to play softball although I don’t believe that is what they will do because that is not the optimal strategy.
3)What if the strikes are not anything to do with workers rights at all? What if the strikes are all part of some mob trying to flex their muscle over the government and their employers? This makes the duration of the strikes unpredictable.
Their is a longstanding history of corruption in unions although it is not as common as it used to be just like corruption in general. However, there is evidence to suggest that the head of the ILA does have criminal ties.
1)Why does he keep threatening the people of the USA? His most optimal strategy would be to try to make the public on his side by not mentioning the affects on the wider economy, by downplaying it or by saying he doesn’t take joy in seeing unrelated third parties lose their jobs but he wants to strike only for better pay and he’s sorry for any damage to others instead of talking about how he’s happy to see others lose their jobs.
2)Is it just me or does he talk and just generally act like a mobster?
3)The ILA does have historical ties towards the mafia. Maybe they still do? The McClellan Committee which investigated organised crimes and labour unions in the 1950’s brought to light various links between union officials and the mafia. In 2005, the Justice Department accused Daggett of being an “associate” of the Genovese crime family- one of the “Five Families” of the US Mafia. He was later charged with racketeering (although he was acquitted.) During the course of the trial, one of Daggett’s co-defendants – Lawrence Ricci, an alleged major mob figure – disappeared. His body was found weeks later decomposing in the trunk of a car outside a New Jersey diner. Ricci’s death remained unsolved, though speculation circulated that he was killed after refusing to plead guilty to avoid news reports of the trial. All of this suggests the strikes may not have anything to do with the workers wanting more pay and no automation but to do with crime activities instead.
4)Why does the mafia have links to labour unions? And why does this suggest the ILA may do so? Industries that are ceitical to the economy such as construction, transportation and shipping allow the mafia to practically control the economy. They also wanted political connections which unions had. Furthermore, they wanted to manipulate strikes to gain political leverage.
All of these points suggest the strikes may not have anything to do with pay or automation but instead mob control in ways we do not know much about meaning these negotiations are unpredictable. Of course they may also not be controlled by the mob meaning the strikes likely last long.
LONG TERM IMPLICATIONS
In the long run, I think what to take from these strikes is that we can’t trust that we can get things safely from abroad due to shipping being a strategic chokepoint. I think as a result we could see a lot of companies who don’t export a lot and don’t import a lot but sell to the USA and have foreign competitors who import into the USA benefit from this trend. I think companies like UEC -0.15%↓ will particularly benefit from this trend as the USA is particularly dependent on foreign countries for an energy source which is very important.
IMPACT ON URANIUM
I think if we see unemployment go up, if we see GDP collapse from these strikes I reckon the government will step in with huge fiscal spending to stop the short term being as bad. All of this fiscal spending will be hugely inflationary. This increase in inflation will encourage utilities to increase their uranium stockpiles and encourage speculators to speculate in the uranium market. It wouldn’t directly affect the uranium market much because of stockpiles that already exist being affected. It will mainly affect things which rely on just in time stock control instead of just in case.
IRAN-ISRAEL WAR
Recently, Iran declared war on Israel. This happened after Israel decided to launch a ground invasion in parts of Southern Lebanon. Iran bombed Israel then Israel said they will bomb Iran and Iran said they will respond if Israel does so. In other words, things can escalate. But will it really? I don’t think it will. The entire thing seems so performative. Why are they giving each other time to prepare? Why did Iran’s strikes basically not affect anything? This is why I don’t see things escalating here. But let’s say if it does. Here’s how it can play out.
Iran stops oil going through the Strait of Hormuz. Oil jumps to something crazy and so does uranium.
Here is what is more likely.
Israel “might” bomb Iranian oil production reduce oil supply slightly. I don’t see why or how this will really affect uranium.
Biden sanctions Iranian oil supply. This will decreases supply somehwat and increases oil prices substantially. I don’t see how this will really affect uranium unless oil jumps by a lot.
In ‘22 we had a shift in sentiment which was pro nuclear energy only because oil prices went absolutely way above the historical average. I don’t see how we get that if oil jumps maybe $5 or $10.
Overall, I think the ILA strikes is the main thing to watch, followed by the acquisiton and then the Iran news. I think overall, this news is quite good for the uranium sector.
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