Marin Katusa: The Putinization of Resources – 4/23/14
This week, we speak with Marin Katusa, Chief Energy Strategist at Casey Research and an expert on many things including energy, resources, international real estate, and the topic of today’s interview — RUSSIA…
Marin discusses the life experiences and forces that shaped Vladimir Putin into the leader he is today. Putin’s grandfather was the personal aid and cook, not just for Lenin, but also Stalin. These stories were passed on to Putin, and upon receiving his law degree, Vladimir Putin became the head of the KGB in Eastern Germany. When the USSR fell apart, he came back to St. Petersburg.
Putin then wrote his PhD thesis on the importance of consolidating the natural resource sector within Russia to be able to build and develop a platform for the other economies and technologies to grow within Russia.
Fast forward 15 years, and Russia is now the largest producer of natural gas in the world, they are the largest producer of oil in the world, they are the largest producer of uranium resources in the world, they have the highest upgrading facilities for uranium in the world, they have about half of all the uranium resources in the world within their sphere of influence. The Putinization of natural resources has occurred.
Marin discusses the uranium sector in particular, and how Russia is intelligently vertically integrating themselves into the entire supply chain in emerging countries. Russia produces more uranium on American soil today than all American firms combined. So rather than producing just the fuel, Putin is moving into countries like Saudia Arabia, Belaruse, and Sri Lanka, and providing a life supply of the uranium fuel, he is also lending the money to build the facilities and providing Russian expertise to construct the power plants. Due to American regulation, firms like General Electric can not do the same thing.
Marin next touches on the overall uranium sector. He points out that the big key is Japan restarting its nuclear reactors, which should occur over the next 12-18 months. The next catalyst is in the United States, where Barack Obama has changed the rules to the Department of Energy. Historically the DOE has never sold more than 10% of the uranium it produces, compared to what it consumes. This is the first year that Obama has sold north of 15% into the spot market. The third thing that occurred in 2014, is that a nuclear reactor in California sold 10 million pounds of uranium into the spot market. These three points have helped to suppress the uranium price, with over 75% of all uranium transactions occurring in the spot market.
Marin expects 2014 to 2015 to be the time when uranium will really start picking up.
Marin believes that Russia is setting it up for the long term. Russia is buying more gold, signing contracts with new markets, working deals with China. Overall, Russia is positioning itself to become the fuel of future engines of the economies. Just like America did in the 60s and 70s, Russia will use that wealth to innovate.
With a background in mathematics, Marin Katusa left teaching post-secondary mathematics to pursue portfolio management within the resource sector. He is regularly interviewed on national and local television channels in North America such as the Business News Network (BNN) and many other radio and newspaper outlets for his opinions and insights regarding the resource sector. Katusa is the chief investment strategist for the energy division of Casey Research. He is the editor of the Casey Energy Report, Casey Energy Confidential and Casey Energy Dividends newsletters. A regular part of his due diligence process for Casey Research includes property tours, which has resulted in him visiting hundreds of mining and energy producing and exploration projects all around the world.