Uranium miners have been battered for years by low prices, but market forces and policy changes could push companies to consolidate.
Hundreds of uranium companies around the globe shut down in the face of low prices over the past decade, and there is widespread agreement that the number needs to be even lower.
“Of the producers, there are maybe 10 that anybody should pay attention to and maybe four that can ramp up economically and quickly produce at scale,” Jeffrey Klenda, CEO of Ur-Energy said, using 2 million pounds of annual production as a benchmark for U.S. producers. “We all know what the other has and what we should all be worth.”
A need for consolidation may seem counterintuitive at a time when there is chance for the uranium space to regain its glow. The global pivot away from nuclear power is slowing or even reversing, sector executives say. Environmental, Social and Governance (ESG) mandates by institutional investors and the vision for a carbon-free grid require baseload power from sources other than coal and natural gas. Nuclear power advocates say the industry could meet that need at a lower cost than building renewable generating and energy storage capacity, and utilities are burning through the cheap uranium they stockpiled over years of low prices. All of that sits atop a structural production deficit of more than 20 million pounds annually.
But the challenges have left many uranium companies with high debt, geographically isolated assets and unproven resources. That means some companies will struggle to compete with players who can increase production without making acquisitions.
Curtis Moore, VP marketing and corporate development for Energy Fuels, pointed to drivers in the U.S. that could further boost demand. First, the creation of a strategic uranium reserve has been endorsed by a federal working group, has seen bipartisan support and was proposed in the Trump administration’s 2021 budget. Additionally, President Trump issued an executive order that could open the door to possible tariffs, import quotas or other actions against foreign uranium. And the Commerce Department has announced a tentative agreement to tighten the cap on imports of Russian uranium.
Uranium prices have climbed to around $30 per pound today versus $23 earlier this year, but “it’s just not at a level yet to sustain most production around the world,” Moore said.
Getting there, another industry executive said, would probably take $40 uranium. Several North American uranium companies could pursue consolidation or sell equity to fund ramp-ups in production, especially at that price point. In the U.S., Energy Fuels claims to have the largest resource and greatest licensed production capacity and Moore recently told Mergermarketit could sell some fully permitted non-core assets. Klenda said Ur-Energy, which erased its debt this month, can quickly ramp up production and raise capital if the need to scale arose. NexGen Energy adopted a shareholder rights plan to protect it from unwanted takeovers this year. Skyharbour Resources would “ultimately” like to sell, according to comments by Jordan Trimble, its CEO, in a published report.