Uranium: One of the hottest commodities for the forseeable future?

The price of uranium reached a high of USD 105 per pound this year and then came back down again In September, the price even briefly fell below the USD 80 mark to USD 79.50 per pound. However, buying quickly resumed, causing the uranium price to quickly rise back above the USD 80 mark.

As this level was not subsequently undercut, the uranium price could start to form a bottom at the current level. Further increases can then be expected from this level, as uranium will remain a raw material in high demand in the coming years. There are no longer any strategic stockpiles that could be used to meet the high demand. They have been emptied in recent years.

It is therefore already clear that the price of uranium will only be driven by one factor in the future: demand. And this will increase, as there are currently 439 nuclear reactors in operation worldwide and a further 64 under construction. China is expected to connect six to eight reactors to the grid every year in the coming years.

India and China rely heavily on nuclear energy

56 nuclear power plants are already producing electricity in China, 30 more are under construction, 37 are actually planned and a further 158 plants are at least proposed. The picture is similar in India. The amount of electricity generated in nuclear power plants is to be increased to 100,000 megawatts by 2047. Currently, only 8,000 megawatts are generated by nuclear energy in India. Even Japan continues to operate 33 reactors despite the reactor disaster in Fukushima and plans to cover 20 to 22 percent of its electricity requirements with nuclear energy in the future.

Since 2014 alone, 70 new reactors have been connected to the grid worldwide. Russia is currently building 36 new nuclear power plants in China, India, Bangladesh, Egypt and Uzbekistan, as well as in Armenia, Slovakia, Hungary, Belarus and Iran. Even Sweden, which, like Germany, announced its withdrawal from nuclear energy in the past decade, is now rethinking its plans and wants to generate a quarter of its electricity in nuclear power plants in the future. To this end, two large nuclear power plants are to be built by 2035 and the equivalent of ten normal reactors are to be added by 2045.

These calculations do not yet include the additional demand that will arise as soon as small modular reactors (SMRs) become available. They will become an issue in the 2030s and it is expected that 300 of these plants will be built in the USA alone in an initial phase.

Net Zero is an unattainable dream without nuclear energy

Many countries have resolved to significantly reduce their carbon dioxide emissions. Some, such as Japan, want to reach the net-zero target by 2050 and emit no more CO2. Without nuclear energy, however, these plans will have no chance of being realized.

As a result, many countries will inevitably have to switch to nuclear energy in the next decade, and in particular to small modular reactors. They should be much quicker to construct and, thanks to their modular nature, can be designed in such a way that exactly the amount of electricity required in their immediate vicinity can be generated. This would eliminate the costs of overland power lines and the operation of larger plants.

Major tech companies such as Microsoft, Google and Amazon also want to focus on nuclear energy and SMR in particular. Corresponding reports and announcements have only become public again in the last few days. Read more on this topic in our article: Uranium: The big tech companies will operate nuclear power plants

The existing uranium deficit will continue to grow over the years

Demand for uranium is expected to reach 192 million pounds this year. This is a problem because uranium mines worldwide will only produce 157 million pounds of uranium. This means that the deficit this year will be around 35 million pounds. As production cannot be ramped up quickly, this deficit is expected to rise to 58 million pounds of uranium next year.

By 2034, the deficit is expected to rise to 356 million pounds and by the mid-2040s, experts expect unmet demand of more than 1.04 billion pounds, which could even rise to more than 1.09 billion pounds if the number of power plants built is at the upper end of the estimates.

These figures already include those mines and projects that are already known to be going back into production or will go into production. Nevertheless, the gap is huge. For the foreseeable future, uranium will therefore be one of the hottest commodities on the market and the question for many power plant operators will no longer be at what price the required uranium will be purchased, but only whether enough uranium can be purchased at all.