Uranium prices could surpass 16-year high as world’s biggest producer runs out – NBC Los Angeles

• The world’s largest uranium miner is staring down production issues for the next two years.
• Kazakh mining company Kazatomprom has warned that it is likely to fall short of its production targets by 2025.
• Kazatomprom is one of the world’s largest uranium mines, accounting for more than one-fifth of global production.

There is a bit of a problem with the uranium renaissance. The world’s largest producer of yellowcake faces production stagnation for the next two years.

And uranium prices, already at a 16-year high, are about to rise again.

Kazakh mining company Kazatomprom recently warned that construction delays and “challenges related to the availability of sulfuric acid” may prevent it from meeting its production targets by 2025. Sulfuric acid is very important in the extraction process, as it is used to leach and recover uranium from raw ore.

Kazatomprom is one of the world’s largest uranium mines, accounting for more than one-fifth of global production. Kazakhstan also produces 43% of the world’s uranium supply and accounts for the largest portion of the global heavy metals market. Kazatom Prom’s announcement comes at a time when other major producers are struggling. Canada-based Cameco warned of a decline in production, and French-owned Orano closed its Niger operations.

“We’re coming out of a 10-year supply shortage,” said Guy Keller, portfolio manager at investment and advisory firm Tribeca. He added that the deficit would continue because “we are in the midst of the largest reactor construction program in decades.”

Uranium is a key feedstock for nuclear power, and demand is soaring as governments seek to shift away from carbon-emitting fuels and reduce dependence on Russian oil and gas.

Approximately 60 nuclear reactors are under construction in 17 countries, with another 110 in the planning stages. Most of our ongoing projects are in Asia, especially China.

At the COP28 climate change conference, more than 60 countries endorsed plans to triple the world’s renewable energy capacity by 2030, putting nuclear power back in the spotlight as an alternative power source.

This pushed up prices, sending uranium soaring to a 16-year high, according to data provided by UxC. Uranium has recently traded around $106 per pound, and analysts expect prices to continue rising.

Citibank expects uranium prices to average $110 per pound in 2025.

“The main fundamental drivers of the bull market are mine closures due to years of overproduction and low prices,” the bank said in a report released Monday.

Jeffries is also bullish on metals.

“Short-term trends remain supportive and prices appear headed for above the June 2007 all-time high of US$136/lb,” the brokerage said in a research note.

Geopolitical supply concerns

Sprott Asset Management CEO John Champaglia said there were further supply concerns, including the possibility that Russia could retaliate in response to a proposed U.S. bill banning imports of Russian enriched uranium. Ta. The House of Representatives passed a bill in December that builds on efforts to punish Russia for its war against Ukraine. It must be approved by the Senate before being sent to US President Joe Biden’s desk for signature.

Russia is the sixth largest producer of uranium and also the largest in enrichment equipment, a process that facilitates the extraction of nuclear fuel from uranium ore.

“These various factors are likely to lead to even greater shortages in the coming years, potentially disrupting the nuclear fuel supply chain,” Champaglia told CNBC in an email.

As a result, countries that rely heavily on nuclear power may need to diversify.

France, which gets up to 70% of its electricity from nuclear energy and is the most dependent country, has not received any new uranium shipments from Niger since last year’s coup. Uranium exports from Niger, the world’s seventh largest uranium producer, have virtually stopped since the military coup in July.

“If the situation is not resolved, France will have to look for alternative sources of supply,” Champaglia added. French President Emmanuel Macron recently visited uranium giants Kazakhstan, Mongolia and Uzbekistan in search of new supply partnerships.

Still, consumers are likely not yet feeling the effects of these disruptions.

“Most utilities contract their fuel under long-term contracts, so they are unlikely to experience a sudden shock from the current price hikes,” said Jonathan Hinze, president of UxC. “We don’t think there will be any major negative impact on power companies,” he added. electricity price. ”