Uranium can supply energy for the world’s electricity with less greenhouse effect than virtually any other energy source.
As the largest clean energy source, the development of nuclear power can ensure that the future generation’s energy demands are met effectively and efficiently. The strong long-term demand for uranium can be attributed to the energy needs of emerging countries in Asia, particularly China and India, that seek cleaner alternatives to fossil fuels.
The following countries are the top producers of uranium, based on 2019 figures (world Nuclear Association):
|1. Kazakhstan||22808 tons|
|2. Canada||6939 tons|
|3. Australia||6613 tons|
|4. Namibia||5476 tons|
|5. Niger||2983 tons|
According to the World Nuclear Organisation, as of July 2021, there were 448 operational nuclear reactors in 32 countries plus Taiwan, with a combined capacity of about 400 GWe. In 2020 these provided 2553 TWh, about 10% of the world’s electricity. Another 58 power reactors being constructed in 19 countries under construction across 32 countries or being planned, notably China, India, Russia and the United Arab Emirates. As such, nuclear power capacity worldwide is increasing steadily, and Significant further capacity is being created by plant upgrading. In addition, plant lifetime extension programmes are maintaining capacity, particularly in the USA.
Over 150 power reactors with a total gross capacity of about 110,000 MWe are on order or planned, and over 300 more are proposed. Most reactors currently planned are in Asia, with fast-growing economies and rapidly-rising electricity demand.
Many countries with existing nuclear power programmes either have plans to, or are building, new power reactors. About 30 countries are considering, planning or starting nuclear power programmes.
|China||India||Russia||U.S.A.||South Korea||World Total|
Uranium Supply, Demand and Pricing
Governments are in the process of re-establishing nuclear programmes. As of mid 2021 there were 448 nuclear power plants operating worldwide and 58 nuclear reactors currently under construction. The low operating cost of nuclear power generation and the increasing concern for the environment and climate change are driving this nuclear renaissance. There are now 514 new reactors planned around the world plus a new generation of Small Modular Reactors (SMRs) which offer a lower initial capital investment, greater scalability, and siting flexibility for locations unable to accommodate more traditional larger reactors. They also have the potential for enhanced safety and security compared to earlier design.
Existing nuclear reactors consume around 67,500 tons of uranium per year, though The International Atomic Energy Agency (IAEA) estimates that global uranium demand could rise to 79,400 tonnes by 2030 and as high as 112,000 tonnes in 2040 to meet the additional demand for new nuclear power plants. World uranium production has significantly declined, however, due to mine curtailment and over the last two years due to imposed measures to prevent the spread of COVID-19, requiring producers to make spot market purchases to meet contractual obligations. The World Nuclear Association (WNA) estimate that production is only meeting 74% of usage requirements and that this supply demand gap will only widen over the next 20 years. The industry trade association noted that “world uranium production dropped considerably from 63,207 tonnes of uranium (tU) in 2016 to 47,731 tU in 2020”.
Recently, on February 2, 2022, the European Commission approved the Taxonomy Complimentary Delegated Act (CDA) and included nuclear as “green and sustainable”, opening the door for new uranium reactor builds, development and deployments of SMRs, and funding for plant life extensions. The CDA has noted that it will provide €150 billion per year of low-cost financing to achieve this which is unprecedented and should be approved by the Europe Parliament with a view to investing €500 billion by 2050 towards building new nuclear reactors as well as €50 billion by 2030 to extending the life of Europe’s fleet of existing reactors.
Most countries that use nuclear-generated electricity do not have sufficient domestic uranium supply to fuel their reactors and therefore secure the majority of their required uranium supply by entering into medium-term and long-term contracts with foreign uranium producers and other suppliers. However, since 2020, government-imposed measures to prevent the spread of COVID-19 resulted in a decline in production, requiring producers to make spot market purchases to meet these contractual obligations.
Whilst uranium sales have usually been made under these longer-term contracts, the uranium spot price can be more volatile than the long-term contract price. During the last two years, as producers suspended production due to COVID-19 lockdowns and then purchased uranium in order to meet contractual obligations, the spot price declined to a low of US$27.98/lb on February 28, 2021 and has since recovered, reaching US$59.37 on March 25, 2022, hitting a high of $60.23/lb on March 10, 2022. Market analysts are forecasting long-term prices to rise above US$60/lb.
Uranium prices have also been impacted by the increased activity by investment firms acquiring physical inventory for storage. New and existing market participants have acquired significant levels of physical inventory. As of December 31, 2021, one large participant held 15.8 million lbs of U3O8 with agreed additional purchases which will increase U3O8 holdings to 18.8 million lbs on delivery, and another participant has acquired 41.2 million lbs of U3O8.