Uranium Report 2023/11 - Update
Nuclear power has just moved back into the public spotlight in view of an almost exploding demand for CO²-free energy. However, clean nuclear power cannot be produced simply at the push of a button - especially if there is not enough raw material available. This feedstock is called uranium, and the price of it has recently gone through the roof. The uranium spot price, which for years after Fukushima had been hovering around a range of less than US$20 per pound, managed to jump above the US$70 mark in September 2023. But even this price level is likely to be only an intermediate step on the way to new all-time highs, because the supply-demand situation is just getting rapidly worse!
The energy suppliers' (utilities) stocks, which were still well filled just a few years ago, are almost empty, and the uranium spot market, which can only satisfy a fraction of demand anyway, has dried up. The world's two largest uranium producers, Kazatomprom and Cameco, recently reported that their entire expected production into 2025 was already "sold out." At the same time, many utilities have failed to ensure timely replenishment through appropriate long-term supply contracts.
All of this comes up against a supply that has already been lagging behind the corresponding demand volume by between a quarter and a third for years. This is primarily due to uranium mines - some of which have been closed for years - which were closed when uranium prices were around US$20 and cannot be restarted within days. In addition, the higher demand is causing problems in uranium enrichment. Corresponding capacities are limited and with higher demand, the enrichment centrifuges can no longer run as long to "squeeze out" as much as possible from the starting material, uranium hexafluoride. This means the final product is less enriched than it was just a few years ago. Accordingly, demand from utilities is once again rising sharply - for technical reasons.
The glaring undersupply of uranium, plus other problems such as the fact that Russia controls a good 45% of the world's uranium enrichment capacity, creates excellent opportunities for interested investors to participate in the uranium market.
