Uranium Market
Demand
An ever-increasing demand for energy, coupled with the global push to reduce carbon emissions and transition to cleaner sources of energy, is driving interest in nuclear projects as a critical low-carbon energy source.
This is expected to bring uranium into the limelight in the coming years, and drive investment into the sector, in order to achieve the net zero carbon targets set out by world leaders, such as the Paris Accord. These targets should underpin stronger spot prices in the market, especially in desirable jurisdictions like Australia, as nuclear power’s proven and clean energy source will be crucial to reliably decarbonise global energy grids.
The change in sentiment is likely to results in the easing of regulations around exploration, permitting and production of uranium assets, to meet global targets. This will enable well-funded and established exploration companies with an exciting proposition to gain a foothold into many untapped target areas that have not been thoroughly explored to date e.g. Australia, where uranium exploration and development has been strictly regulated to da
Supply
Mines in 2021 supplied some 56,961 tonnes of uranium oxide concentrate (U3O8) containing 48,303 tU, 77% of global utilities' annual requirements. The balance is made up from secondary sources including stockpiled uranium held by utilities, and in the last few years of low prices those civil stockpiles have been built up again following their depletion over 1990-2005. At the end of 2020 they were estimated at about 40,000 tU in each of Europe and the USA, about 130,000 tU in China, and about 60,000 tU in the rest of Asia.
With the main growth in uranium demand being in Russia and China, it is noteworthy that the vertically integrated sovereign nuclear industries in these countries (and potentially India) have sought equity in uranium mines abroad, bypassing the market to some extent. Strategic investment in uranium production, even if it is not lowest-cost, has become the priority while world prices have been generally low. Russia’s ARMZ bought Canada-based Uranium One in 2013, and China holds equity in mines in Niger, Namibia, Kazakhstan, Uzbekistan, and Canada.
Australia has some of the largest proven Uranium resources in the world, alongside Cana and Kazakhstan, and is one of the most sought-after jurisdictions to do business.
Source: Uranium Markets: World Nuclear Association - World Nuclear Association (world-nuclear.org)
Impact On Investment / Opportunities
As demand for uranium grows, there may be opportunities to invest in uranium mining companies, exploration and development projects, and other related businesses which have established themselves in with previous successes, as well as jurisdictional presence in key uranium locations.
While there are some challenges and risks associated with the uranium market, as with any material or energy source, the societal benefits outweigh these, making uranium an attractive investment option for those looking to fast track the clean energy transition.
Energy Mix Diversification
As countries work to reduce their reliance on fossil fuels, diversifying the energy mix can help to enhance their energy sovereignty. Nuclear power, which relies on uranium (a relatively common metal, found in rocks and seawater) as a fuel, can provide a useful source of diversification in many regions, due the energy density properties it has and low carbon emissions impact.
Technological Advancements
Advancements in nuclear technology, such as small modular reactors and advanced fuel cycles, will help to make nuclear power safer, more efficient, and more cost-effective. This results in nuclear power being a more attractive option for countries looking to transition to low-carbon energy sources.
