Uranium prices reach highest in 12 years amid rising fuel demand
The spike in uranium prices shows the revival of nuclear power as a critical carbon-free power source to tackle climate change, which was undermined by Japan’s Fukushima nuclear disaster in 2011.
Uranium prices have recorded their highest level in 12 years, highlighting global competition for nuclear power as demands for fuel supply rise.
For the commodity dubbed “yellowcake," prices increased around 12% to $65.50 per pound over the past month, which broke last year's record to reach numbers not seen since 2011, according to data from UxC, a pricing data service.
The rise in demand shows the desire by nations such as the US and South Korea to increase energy independence by extending the lifetime of the existing nuclear reactors and building new plants following the rise in gas prices amid Russia’s special operation in Ukraine.
The jump in uranium prices shows the revival of nuclear power as a critical carbon-free source of power to tackle climate change, which was undermined by Japan’s Fukushima nuclear disaster in 2011.
Grant Isaac, chief financial officer at Cameco, the world’s second-largest uranium producer, said: “You have a focus on energy security colliding with a focus on clean energy," adding: "The days of buying $40 uranium are over — and probably also for $50 or $60. We’re going to need new supplies".
Niger, which generates about 4% of the world’s uranium, has caused immense pressure on the market following the coup with Cameco announcing this month lower full-year predictions for production as a result of challenges at its Cigar Lake mine and Key Lake mill in Canada.
Meanwhile, France’s majority state-owned nuclear company Orano stated last week that shortages also caused its operations in Niger to bring maintenance. The disruption in Niger's uranium production could compel utilities in these regions to increasingly rely on alternative sources such as Kazakhstan, Canada, and Australia.
Blame it on geopolitics
Prices were recorded at $73-per-pound level before the Fukushima disaster, which oversupplied the market a decade after Germany and Japan began decommissioning their nuclear fleets.
Per Jander, director at commodity trading merchant, WMC Energy, explained that the “steady increase” in price was mainly caused by energy utilities and not investors.
“There’s a crunch for the next couple of years,” he said, noting: “Not only are we going back to pre-Fukushima levels, we are exceeding it,” as he referred to the global pace of nuclear developments led by China.
Last week, the World Nuclear Association, the international trade body, significantly revised its projections, foreseeing a substantial increase in the role of nuclear power in global electricity production and uranium consumption.
According to the Association's forecasts, more than 140 reactors may come online, surpassing previous expectations. Additionally, by 2040, we could witness the development of 35-gigawatt hours of small modular reactors, necessitating the establishment of new mines to meet the surging demand, which is set to double to 130,000 tonnes annually.
Nick Lawson, the CEO of Ocean Wall, a brokerage firm, commented, "For some time now, there has been an ongoing supply-demand imbalance, and recent geopolitical developments have only exacerbated the situation." He anticipates that the spot price of uranium could surge to $200 per pound by 2025.