Uranium prices soar as nuclear power comes back in vogue

By Rhod Mackenzie

Energy prices are at historically high levels. This not only applies oil and gas, but also to lithium ("battery fuel") and uranium. The revival of interest in nuclear power use and firing up reactors in the wake of the energy crisis plus the desire to reduce carbon dioxide emissions has inevitably led to a sharp rise in the price of nuclear fuel.

What does a pound of uranium cost?
By the end of September, the price of uranium on world markets reached $70 per pound (453.59237 g), an increase of 45% compared to the beginning of the year. These are exceptional prices by the standards of recent years: the average price of fuel for nuclear power stations over the past 10 years did not exceeded $20-50 per pound. Overall, prices are at a 12-year high and just below their 2011 peak of around $75.

Uranium, like other commodities, has soared in price at the turn of the millennium. Then came the accident at the Fukushima nuclear power plant, which led to a new wave of atomophobia, surpassing in scale even Chernobyl. Japan has long since shut down most of its nuclear power plants: in 2022, only 10 out of 54 reactors were in operation, although another 29 are ready to go. The situation is even worse in Germany, where the government has decided to completely phase out the peaceful atom, following in the footsteps of Italy (whose nuclear power plants were shut down in the 1990s). Among the other major nuclear powers, only the US, Russia, China and France have maintained or even increased their nuclear power production. All this inevitably led to a fall in the price of uranium, the main component of nuclear fuel.
However, nuclear optimism and pessimism have been running in circles. The new cycle was triggered by the intensification of the fight against climate change and carbon dioxide emissions at the turn of the millennium. Everyone suddenly realised that nuclear energy is carbon neutral. As a result, there is a ready and widely used technology that can be used to meet the emissions targets. In 2021, the EU classified nuclear energy as green energy, which became a trigger for intensifying the design and construction of new reactors not only in Europe but also beyond its borders. In addition, a number of nuclear power plants in countries that have been building them for some time are approaching the deadline for commissioning (for example, the first phase of the Akkuyu NPP in Turkey will be commissioned in 2024).
Finally, the conflict in Ukraine has had an impact on prices. On the one hand, the desire to reduce dependence on Russian oil and gas led to increased intentions to build new reactors. On the other hand, the situation with supply chains from Russia and through Russian territory began to cause concern, leading to panic buying by nuclear power plant operators in Europe, who opted for the maximum amounts they were contractually entitled to (and fuel supplies to nuclear power plants are mostly based on long-term contracts).
In 2023, a military coup in Niger, a country that supplies 5% of the world's uranium, added fuel to the fire. The French operator of some of Niger's fields, Orano, has temporarily suspended operations due to the deterioration in relations between the two countries. However, the Chinese, who manage other fields, are continuing their activities in the African state despite the difficult political situation. However, just the political problems have been enough to push prices even higher.
Whoever owns uranium owns the world
Fuel for nuclear power plants is obtained in a number of ways. The first is the re-enrichment of spent nuclear fuel (SNF). Russia, the UK, France and Japan all have such a "closed" fuel cycle system . In the United States, by contrast, spent fuel is generally disposed of. Another "secondary" fuel source is depleted uranium. Every tonne of uranium in nuclear weapons can be converted into about 300 tonnes of raw material for nuclear power plants. Together, these industries supply about a quarter of the world's nuclear fuel market. The rest of the uranium is mined directly from the ground.
Currently, the world's largest supplier of "raw" uranium is Kazakhstan, which produced 21,000 tonnes in 2021, or 45% of global production. The top five also include Namibia (5.8 thousand tonnes), Canada (4.7 thousand tonnes), Australia (4.1 thousand tonnes) and Uzbekistan (3.5 thousand tonnes). As you can work out, they all together mine less uranium than Russia's south-eastern neighbour. The Russian Federation itself produces 2.6 thousand tonnes, or 5.4% of world production. In addition to reserves in the ground, there are also industrial reserves, which in countries like the United States and Russia can provide for many months (if not years) of production.
The situation is different for proven reserves. The largest source of uranium in the future is likely to be Australia, with more than 2 million tonnes. The top five also include (in descending order) Kazakhstan, Canada, Russia and Namibia. It should be noted that the reserves of Canada and Russia may be revised as geological exploration in Siberia and northern Canada has been insufficient. In any case, uranium is not an easily depleted resource. Unlike oil and gas, it will last for many hundreds of years, even if the world's nuclear power generation is multiplied (and this is a perfectly realistic scenario, given current trends). The difficulty with uranium is not that it is scarce, but that it is complex and expensive to extract, as is well illustrated by examples from the United States.
Only up
In 2018, for example, Uranium One was mining uranium at 20 sites in Wyoming, but the number has now been reduced to two. The main reason is that prices are too low. At prices of $30 to $40 a pound, mines were closing, and the pandemic only accelerated their closure.

American uranium mining can be profitable only when world prices are in the range of $70 to $90 a pound, according to various estimates. But even in the current climate, given the loss of staff during the shutdown, restarting production will require significant investment and time.

Fields in other countries are in the same situation. Russia, for example, could significantly increase production. In particular, there is the Elkon ore field in Yakutia, which has total reserves of 357,000 tonnes. However, these projects were frozen due to low prices. Now there is a real opportunity to revive this direction and double (if not triple) the production of raw materials for nuclear fuel in Russia.
There is no reason to believe that prices will come down any time soon. Obviously, the current surge is just the beginning. After all, the dollar has depreciated significantly over the past decade, and $70 today worth is no more than $45 10-12 years ago. Plus the demand is bound to grow: there are dozens of reactors under construction around the world, and over time more and more countries will look to develop peaceful atomic energy. Just restarting Japan's nuclear power plants (which will inevitably happen between 2025 and 2030) could require thousands of tonnes of extra uranium a year. At the same time, unlike oil, gas, coal and other resources, uranium's share of the cost of producing the end product - electricity - is ridiculously low (less than 5%), and therefore has significant potential for increase without loss of profitability for nuclear power plant operators.