Resurgent demand and limited supply combine to lift price by half this year
Uranium prices have climbed roughly 50% so far this year to a 12-year high as growing concerns over energy security spurs countries to look again at nuclear energy, an option that had been shunned since the 2011 Fukushima Daiichi meltdowns.
The spot price of uranium ore concentrate came to $72.75 on Monday, according to research firm UxC, firmly above the most recent peak of $63.75 reached in April 2022 in the wake of Russia’s invasion of Ukraine.
Markets anticipate rising demand for the nuclear fuel in the coming years, even as supply has stagnated in the industry’s decade-plus lull. A report from the World Nuclear Association forecasts nuclear capacity growing nearly 80% and demand for uranium roughly doubling by 2040.
There were a total of 431 operable reactors worldwide as of January, with 72 more under construction and 86 planned, according to the Japan Atomic Industrial Forum. Much of this growth is in China and India, which have 47 and 23 reactors in the works, respectively. Countries such as Turkey and Egypt with no reactors are embarking on nuclear power projects as well.
Discussion of building new plants or extending the lifespan of existing ones has also ramped up in advanced economies, with the U.K. and Sweden among those moving to add more capacity as the push for decarbonization accelerates. Finland in April started up its first new reactor in four decades — the largest in Europe — and the U.S. brought a newly built reactor online for the first time in 30 years this year.
Japan in May passed decarbonization legislation that explicitly cites nuclear energy as an effective way to both cut greenhouse gases and ensure a stable electricity supply, marking a change from the nuclear-shy approach that followed the Fukushima Daiichi disaster.
Uranium prices at a 12-year-high as countries give nuclear energy a second look in light of Russia’s war in Ukraine. © ReutersUranium prices have risen and fallen in tandem with shifts in global nuclear policy. During the so-called nuclear renaissance of the 2000s, uranium climbed to $136 per pound in 2007 — the highest in data going back to 1987.
But this enthusiasm quickly faded after the Fukushima Daiichi meltdowns, leaving uranium hovering around $20 to $40 for years thereafter.
Supply is also a factor in the recent surge. Uranium miners shelved development plans when prices were low, leaving them with little room to ramp up production in response to the recent upswing.
Canadian mining company Cameco halted production at a major mine at home in 2018. Though operations have since resumed, labor shortages and supply chain issues have led it to cut its output forecast for this year.
A representative at a major trading house sees prices continuing to rise gradually, noting that “suppliers have limited capacity, while the global trend of using nuclear power will continue.”
The upturn has given a boost to the earnings and share prices of uranium mining companies. Cameco’s Toronto-listed stock sits around a 16-year high, and London-listed shares of Kazatomprom — a state-owned mining company in Kazakhstan, the world’s largest uranium producer — have climbed about 40% this year.
Beyond production, the supply chain faces geopolitical risks. Kazakhstan sends uranium to Russian ports by rail for export. It has set up a new route that does not rely on Russia, but concerns persist about delays or Russia cutting off the transportation network.
A recent coup is expected to disrupt production in Niger, which accounts for 4% of global output. The African country still has close ties to France, its nuclear-reliant former colonial ruler, and much of Niger’s uranium goes to the European Union.
Uranium must be enriched before it can be used as a fuel, and Russia holds around 40% to 50% of the world’s enrichment capacity. An export ban on uranium enriched in Russia has been discussed in the U.S. and elsewhere.
The actual effect of the uranium upswing on energy prices looks likely to be limited. Fuel accounted for about 15% of the cost of generating nuclear power as of 2020, according to Japan’s Ministry of Economy, Trade and Industry, compared with 50% to 60% for liquefied natural gas and oil.
“Since the price of uranium ore concentrate before enrichment and processing makes up about 30% of the price of nuclear fuel, even if the price of concentrate surges, it won’t have that much of an impact on electricity rates,” said Masato Nabeshima of the Japan Electric Power Information Center.
