Uranium: Big technology companies will operate nuclear power plants

The demand for uranium is high and will continue to rise in the coming years, because once a nuclear power plant has been planned and built, it can only be operated with uranium. There are no other fuels that the operator could switch to in the short term. This will make the demand for uranium even more inelastic in the future than it already is.

The situation will also change drastically compared to today. Don’t be surprised if the nuclear power plant operators of the future are Google, Amazon and Microsoft. The big tech giants need a lot of electricity for the data centers they operate and the newly emerging AI applications in particular will not only keep this demand permanently high, but will increase it even further.

And do we really want to assume that these companies are shutting down their AI applications just because the sun has just set or there is unfortunately a lull in wind at the moment? Certainly not. The trend is therefore already moving towards securing nuclear power plants. The most recent example is the Three Mile Island nuclear power plant south of Harrisburg in Pennsylvania, which became known worldwide after an accident in the late 1970s.

Microsoft effectively buys a nuclear power plant

Its Unit I, in which the core meltdown occurred in 1979, was shut down in 2019 for economic reasons. However, a few days ago on September 20, 2024, the operator announced that the unit is to be restarted. Before this can happen, maintenance work must first be completed at an estimated cost of 1.6 billion US dollars. The work should be completed by 2028 so that the reactor can then be reconnected to the grid.

Microsoft will then guarantee to purchase the electricity generated here for 20 years and the technology group intends to use this energy to supply its data centers on the east coast while meeting its own CO2 emission targets. The operator of Three Mile Island is therefore aiming to extend the operating license until 2054.

At the moment, Microsoft is “only” securing cheap nuclear power for its data centers for the long term and the power plant is being operated by a traditional utility as before. However, we can assume that this co-earner will quickly be taken out of the game as soon as SMRs (Small Modular Reactors) become available in the next decade and a company like Microsoft can easily operate a modular nuclear power plant.

Lithium and the automotive industry are the role models

Investors who have been following the commodities sector for a while will probably remember the efforts of Toyota and General Motors a few years ago. At that time, the lithium required for electric car batteries was so expensive and in such short supply that the two car manufacturers each bought up a mine developer to ensure that they would always have enough lithium for their own production in the future.

If push comes to shove and the uranium market is dominated by the same concerns, Microsoft, Amazon, Google & Co are likely to take a similar approach and build their own nuclear power plants as SMRs and then operate them themselves. However, this is only the first step. The second step will be to secure the necessary uranium projects.

Over the past ten years, the industry has lived off existing uranium reserves. These have now been used up. This means that the great battle for the few projects and companies that will go into production in the short term is likely to begin soon, and the uranium sector is likely to see a repeat of many of the developments that have also been observed in the lithium sector in the recent past.