Uranium uses
According to the Canadian Government website (GC), uranium is mainly used to produce fuel for nuclear power plants, accounting for more than 99% of the total demand. Other uses of less than 1% include the production of medical isotopes and research reactor fuel.
Demand for nuclear power installations is expected to continue to rise due to energy security and transformation considerations. According to “Extracting Minerals from Seawater: An Energy Analysis”, 1GW of nuclear power consumes 170 tons of uranium every year. Mining investment media Crux Investor previously reported that about 60 nuclear power plants are currently under construction around the world and will consume 30 million pounds of uranium as fuel every year in the future.
Uranium resources are too concentrated
Fifteen countries in the world own 95% of the world’s uranium resources. The three largest uranium resource countries in the world are Australia (accounting for 28%), Kazakhstan (13%), and Canada (10%).
Uranium manufacturers
Since the world’s major uranium mining projects have basically lowered their production expectations in 2023, some projects will only begin to resume production and increase production in 2024.
For example, Cameco’s (ticker: CCJ) Cigar Lake and Key Lake projects have lowered their production expectations in 2023 due to facility maintenance and other reasons. Kazatomprom (ticker: NATKY) has increased its 2024 production plan, and Paladin (ticker: PALAF) plans to resume production of the Langer Heinrich project in the first quarter of 2024.
Two major catalysts
The global increase in uranium is already limited, and the overall global production growth is slow. As the growth of nuclear power plants drives up the demand for natural uranium, as the gap between supply and demand expands, uranium prices are expected to turn around.
After the outbreak of the Russia-Ukraine conflict, nuclear energy, regarded as low-carbon energy, once again entered the vision of decision-makers in various countries, and market demand continued to recover.
These two major reasons make uranium trading expected to enter a ten-year bull market cycle from the bottom of the past decade.
Prices skyrocket in 2023
In the past two or three years, geopolitics, energy diversification and other factors have driven a wave of global nuclear energy renaissance, and the price of uranium, the main fuel for nuclear power generation, has followed the trend. The price of uranium has risen by 125% since the end of 2020, and by the end of November in 2023, the cumulative increase in uranium prices has exceeded 60%.
On November 20, 2023, the uranium futures price on the New York Mercantile Exchange (NYMEX) reached a maximum of $80.25 per pound, a new high in 15 years. Uranium prices have risen strongly this year, mainly because after the Russia-Ukraine war started in early 2022, Western countries have changed their stance on phasing out nuclear power and regarded nuclear power as one of the options for energy diversification to get rid of the constraints of relying on imported Russian oil and natural gas.
Related Uranium Trading Index
As of November 21, 2023:
- The North Shore Global Uranium Mining ETF (URNM.US), which tracks the North Shore Global Uranium Mining Index, has surged 55.67%.
- ETF tracks the Solactive Global Uranium and Nuclear Content Total Return Index (Solactive Global Uranium & Nuclear Components Total Return Index) Global X Uranium Price ETF (URA.US) also surged 42.98%.
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