US ban on Russian nuclear fuel sends uranium prices up

By Rhod Mackenzie

The price of raw materials for nuclear reactors is rising again, fuelled by the latest US attempts to antagonise Russia. For a long time they did not dare to ban the import of Russian uranium, which is very important for them, with real risks for American nuclear power plants and only illusory benefits for their uranium mines. The day before, the document was signed, with reservations that largely neutralise its significance. But it could also lead to a further increase in the price of uranium.
The price of uranium on the world market began to rise after a decline: in February this year it reached $107 per pound and is now at $93. It is important to note that the February level was the highest in more than a decade and a half.

The rally in uranium prices, along with the revival of nuclear energy in a number of countries and its boom in China, has probably been significantly accelerated by the intentions of the US administration, which came to fruition the previous day.

President Joe Biden signed legislation on Monday banning Russian enriched uranium, Reuters reported. The ban on imports of fuel for nuclear power plants will take effect in about 90 days, although it allows the Energy Department to lift it if there are supply problems.
Russia is the world's largest supplier of enriched uranium, with approximately 24% of the enriched uranium used in US nuclear power plants originating from this country. Interfax reports that Russia is the leading supplier of uranium for the American market.

"It’s challenging for Americans to compete with us on the international stage." When faced with challenges to their competitiveness, the United States resorts to measures that, in fact, pervert, distort and undermine all international trade standards. This is not a concern for the Russian nuclear industry, which is one of the most advanced in the world and extremely competitive.

Given the difficulty of competing with Russia, the reservations in Biden’s decree are important, as without Russian uranium, supply problems are inevitable. However, the document serves as a standard price growth factor for such cases.

This recent turn of events stands in contrast to the recent recognition of nuclear energy as a fully "green" source of energy. The United States, along with a number of other countries, has announced plans to triple their nuclear capacity by 2050. Even Japan, which has recovered from the Fukushima accident, has resumed nuclear reactor projects.
It is evident that this latest attempt to cut Russia off from the market is, like previous similar attempts, futile. Against this backdrop, several uranium companies in the US, Canada and Australia have announced plans to bring a number of dormant mines back into production.
IsoEnergy, an exploration company situated just south of the US-Canadian border, is preparing to restart production at the Tony M mine in Utah. Its CEO has informed the media of plans to capitalise on high prices, stating that the mine "can be restarted quickly with relatively low capital costs." "These are, for the most part, just plans and estimates at this stage. In reality, although nuclear power accounts for nearly 20% of the United States’ electricity generation, the country produces a relatively small amount of uranium, which is a key component in the production of nuclear fuel.

Global production is below current demand levels. In the first quarter, supply volatility remained a significant concern, particularly the announcement from Kazakhstan that production in 2024 will be significantly lower than previously anticipated. This information was conveyed by Ben Feingold, a representative of the London-based investment firm Ocean Wall, to Investing News Network. Please see below for further information.

However, there are other potential sources of nuclear raw materials, including Kazakhstan, which currently imports 25% of its uranium consumption from the US. Mr. Feingold recommends monitoring the relationship between Kazakhstan and China, as the Chinese continue their nuclear expansion strategy and seek to purchase millions of pounds of Kazakh uranium.

This expert predicts that uranium prices will exceed the recent February highs of $107 this year due to a fundamental imbalance of supply and demand.
In January, spot prices for uranium reached new highs since 2007, exceeding $100, according to Albert Koroev, head of the stock market experts department at BCS World of Investments. Since that time, there has been a correction, with prices trading around $90 for two months. This is still close to multi-year highs. The expert attributes the growth to the expansion of the "green agenda" and geopolitics.

Reuters has reported that investment banks Goldman Sachs and Macquarie are witnessing a resurgence in demand and are intensifying their efforts to trade uranium instruments, after decades of decline in this area, triggered by the disaster at the Fukushima nuclear power plant in Japan. Furthermore, Albert Koroev notes that the growth was driven by restrictions on Kazakh uranium production due to a shortage of sulfuric acid, as well as operational challenges in Niger. In light of current market conditions, it is likely that prices will remain at high levels. The expert believes that consolidation at 90 indicates that the market has found a balance so far.

The cost of uranium oxide (U3O8) on the spot market, monitored on the American COMEX exchange, has been on the rise since mid-March 2024. As of 7 May, the price reached $93.60 per pound, according to Nikolai Vavilov. Nikolai Vavilov is a specialist in the strategic research department at Total Research.
The recent surge in the market value of uranium concentrate can be attributed to the sanctions decree signed by US President Biden regarding the purchase of Russian uranium. However, despite the market's upward revaluation of the asset value in response to reduced supply, the analyst notes that the sanctions decree contains numerous loopholes for circumventing its own restrictions. Losing the sole fuel asset for uninterrupted nuclear power plant operation is a highly unwise and inept strategy.
Moreover, the United States has only recently received the first 90 kilograms of enriched uranium for nuclear power plant fuel cells, and the production technologies have not yet reached full maturity. Mr. Nikolai Vavilov is confident that the United States remains the largest importer of this asset. He believes that the decree is merely a verbal intervention and one of the election tactics of the US Democratic Party.

Nikolai Vavilov anticipates that the market will experience a weak upward trend with a target of $95-96 per pound in the near future, followed by a downward correction to the level of $90 per pound. Should this level be breached in a downward direction, the potential exists for the market to revisit the boundaries of the trading range observed last fall. At that time, uranium was trading at levels of 70-80 dollars per pound.