At the recent 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28), 22 countries signed a joint declaration committing to tripling nuclear power generation capacity by 2050. This underscores the crucial role of nuclear energy in achieving a net-zero path and the necessity of nuclear power development.
The International Energy Agency (IEA) and the International Atomic Energy Agency (IAEA) have recently increased their projections for nuclear power capacity, electricity generation, and market share by 2050. The IAEA’s “PRIS Power Reactor Information System as of 31 December 2022” report shows that 32 countries operate a total of 411 nuclear power units with a capacity of 371.0GW, while 18 countries have 58 units under construction with a capacity of 59.3GW.
Industry experts and mining companies predict a continued increase in uranium demand in the coming years due to nuclear power plant expansion. However, concerns arise about whether there is enough uranium globally to meet this demand.
Nicole Galloway Warland, Managing Director of Thor Energy (THORF), points out the potential shortage, citing a recent production warning from the global uranium mining company Kazatomprom (KAP.IL) due to delayed mining construction and insufficient sulfuric acid.
In the context of the U.S., which historically imported a significant amount of uranium from Russia, the supply strategy has pivoted to other friendly countries, such as Canada, the world’s second-largest uranium producer. Additionally, the U.S. has invested $700 million to support the construction of a domestic high-assay low-enriched uranium (HALEU) supply chain. However, new uranium mines take 5 to 15 years to come online.
The popularity of uranium has continued to climb this year. Just this month, the price of uranium has surged to over $106 per pound, reaching levels not seen since 2007.
It’s imaginable that stocks related to uranium have also been soaring. The stock price of the Canadian uranium mining giant, Cameco Corp (TSX: CCO) (NYSE: CCJ), has risen by 83% in the past year, while the stock price of Kazatomprom, listed on the London Stock Exchange, has soared by over 60% in the last 6 months. Simultaneously, the stock price of the American company, Energy Fuels Inc (AMEX: UUUU), has increased by approximately 25%.
While these significant gains has sparked concerns about a potential investment bubble, proponents argue that the current prices are supported by genuine market fundamentals before the large-scale uranium mines come online.
Said Curtis of Energy Fuels stated that although prices have surged, they do not believe there is a bubble, as the current stock prices are supported by genuine market fundamentals. Until the production of large uranium mines globally, the price of uranium may still be at the beginning of a sustained multi-year uptrend.
