In recent years, the nuclear power industry has experienced a significant resurgence, resulting in a surge in uranium prices. For the first time in over a decade and a half, uranium prices have risen by over $80 per pound. In addition to this, the market has also seen disruptions in uranium supply, which has further contributed to the price increase.
On Monday, Bloomberg reported that the futures market for uranium, specifically the variety known as yellowcake, reached a value of $80.25.
As more countries aim to reach “net zero” emissions and nuclear energy becomes a more favorable option, the desire for uranium has risen, particularly in China and other developing markets. Nevertheless, a notable amount of the supply is concentrated in politically unstable regions. With the addition of speculative investors, prices have been further elevated, according to Konstantinos Venetis, a commodities economist at GlobalData TS Lombard.
As per data presented by GlobalData, the parent company of Mining Technology, Niger is anticipated to contribute 4.09% of the world’s uranium production in 2023. While production is predicted to increase from 2,193.02 tonnes (t) in 2022 to 2,220.51t in 2023, there are concerns that output may decrease in the near future. This is due to the current geopolitical instability caused by the recent coup, which has disrupted uranium supplies destined for western European countries.
In early September, operational hurdles were faced by Cameco at its Cigar Lake mine, Key Lake mill and McArthur River, resulting in a pessimistic outlook for the production of uranium. The anticipated total production of uranium concentrate U₃O₈ is expected to be about 30.3 million pounds, which accounts for a decrease of roughly 9% from the previous 33 million pounds.
According to Steven Schoffstall, who serves as the director at Sprott, there exists a compelling argument for the future growth of uranium prices and the sector as a whole. Looking back at the uranium prices from roughly five or six years ago, it is evident that they were hovering around $20 per pound.
According to Schoffstall, an increase in prices could serve as a motivator for producers to return to the market. As of October, Boss Energy has launched its Honeymoon mining project in South Australia, aimed at uranium production.
In the year 2023, there was a surge in the demand for nuclear power in Europe. This demand was particularly pronounced in France, where there were plans to decrease nuclear power’s contribution to electricity generation to 50%, but these plans were ultimately abandoned. China has also become a prominent player in the nuclear industry. The National Energy Administration, which oversees energy regulations in China, is anticipated to establish a nuclear capacity target of 120-150GW by 2030, a significant increase from the 38GW capacity in 2017.