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The importance of uranium prices and structural shocks: Some implications for Greenland

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  • Arnaut, Javier L.

Abstract

Over the past decade, Greenland has lifted and restored its ban on uranium mining amid the uncertainty of global uranium prices. This article investigates the dynamic interrelations between uranium commodity prices and the impacts of structural shocks, sketching key economic implications for Greenland. Using a structural vector autoregressive model, this work analyses the changing relations between uranium prices, coal prices as well as real and financial variables from 1980 to 2019. The main findings are that the dynamics of uranium spot prices are diversely affected by shocks in combined real GDP, total electricity production from nuclear power, the interest rate, the real effective exchange rate, and the price of coal. The estimates also show that the pricing dynamics are important for future production and capital investment decisions. The analysis illustrates that despite the prevailing depressed uranium market, Greenland can still capitalize on future market developments. The country can anticipate benefiting from a short-run world supply disruption, a positive combination of macroeconomic shocks, and the long-term expansion of nuclear energy programs.

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  • Arnaut, Javier L., 2022. "The importance of uranium prices and structural shocks: Some implications for Greenland," Energy Policy, Elsevier, vol. 161(C).
    • Handle: RePEc:eee:enepol:v:161:y:2022:i:c:s0301421521006236
    DOI: 10.1016/j.enpol.2021.112757
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    Cited by:

    1. Shi, Tao & Li, Chongyang & Zhang, Wei & Zhang, Yi, 2023. "Forecasting on metal resource spot settlement price: New evidence from the machine learning model," Resources Policy, Elsevier, vol. 81(C).

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    More about this item

    Keywords

    Uranium; Energy commodity prices; Greenland; Structural vector autoregression;
    All these keywords.

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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