A Comprehensive Overview of the Uranium Market and its Outlooks

All you need to know about Uranium

Recent announcements from major companies like Microsoft, Alphabet, and Amazon have underscored the growing significance of uranium in the future of global energy supply. As demand surges, the price of uranium has been rising, drawing increased investor attention to uranium-related stocks.

In this article, we will delve into the uranium market, examining its key dynamics, supply factors, and future outlook. We will also highlight prominent stocks in this market.

The uranium cycle

Source: Cameco

This infographic illustrates the global nuclear fuel cycle, starting with uranium mining and progressing to conversion. It clearly highlights two pathways based on reactor type (light water or CANDU). In this article, our focus will be on the upstream supply of uranium.

To better understand the mining process, here is a simplified explanation. Once a uranium orebody is discovered and delineated through exploration, three common mining methods are used based on the depth and geological characteristics of the deposit:

• Open-pit mining is used when the orebody is near the surface. It involves drilling and blasting to extract the ore.

• Underground mining is employed when the ore is too deep for open-pit mining to be cost-effective. Access to the ore is provided through tunnels and shafts.

• In situ recovery (ISR) eliminates the need for large-scale excavation. Instead, a solution is injected into the orebody through drilled wells, dissolving the uranium, which is then pumped to the surface for recovery.

Ore from both open-pit and underground mining is processed to extract uranium, which is packaged as a powder known as uranium concentrate (U308), commonly referred to as yellowcake. The remaining processed rock and solid waste, called tailings, are stored in engineered tailings facilities.

ISR mining

ISR (In Situ Recovery) mining accounts for 60% of global uranium production and is primarily used in Australia, Kazakhstan, and the U.S. It is considered relatively ESG-friendly compared to conventional mining. Instead of large-scale excavation, ISR involves minimal ground disturbance: a fluid is injected into the uranium-containing ore body to dissolve the uranium, and the solution is then pumped to the surface. The uranium is extracted using ion exchange, precipitated, and dried to produce uranium oxide concentrate (U3O8).

The demand

Approximately 440 nuclear reactors, with a combined capacity of around 390 GWe, require about 80,000 tonnes of uranium oxide concentrate annually, containing roughly 67,500 tonnes of uranium (tU) from mines or equivalent sources such as stockpiles or secondary supplies.

The number of reactors is expected to grow for several key reasons. First, nuclear energy is a clean power source that can help many countries meet their carbon emission commitments. At COP28, 22 countries—including the U.S., Canada, the UK, and France—pledged to triple their nuclear capacity by 2050. Reflecting this growing demand, China is projected to become the largest consumer of uranium by the end of the decade.

Uranium is also easily storable, allowing countries to build strategic reserves and ensure a reliable energy supply in the event of geopolitical tensions.

Additionally, major corporations like Alphabet, Microsoft, and Amazon have recently announced initiatives to fund nuclear energy projects, including traditional nuclear power plants and Small Modular Reactors (SMRs), to meet the increasing energy demands of their data centers while maintaining their net-zero objectives.

The supply

In 2022, uranium mines supplied approximately 58,200 tonnes of uranium oxide concentrate (U3O8), containing 49,350 tonnes of uranium (tU), meeting 74% of global utility requirements. The remaining demand was covered by secondary sources, including stockpiled uranium held by utilities. After years of low prices, these civil stockpiles have been rebuilt following significant depletion between 1990 and 2005. By the end of 2022, stockpiles were estimated at about 36,000 tU in Europe, 40,000 tU in the USA, around 132,000 tU in China, and 49,000 tU across the rest of Asia. These reserves represent more than five years' worth of uranium production.

Secondary sources also include:

• Recycled uranium and plutonium used as fuel,

• Re-enriched depleted uranium tails,

• Ex-military weapons-grade uranium or plutonium.

The graph clearly highlights the importance of stockpiles and other supply sources in balancing the gap between supply and demand. Additionally, with nuclear capacity expected to increase significantly, uranium supply chains will need to adapt accordingly.

To meet the projected demand outlined in the Reference Scenario by the early next decade, additional uranium production will be needed beyond restarted idled mines, those currently under development, planned, and prospective mines. This will require substantial exploration, the adoption of innovative extraction techniques, and timely investments to transform these resources into refined uranium ready for nuclear fuel production within the necessary timeframe.

Production countries

In 2022, Kazakhstan accounted for over 40% of global uranium supply followed by Canada, Namibia and Australia. However, with new development projects on the horizon, market shares are likely to shift in the coming years.

A substantial portion of uranium production is controlled by Russia and China, making it unavailable to the open market. Furthermore, due to Russia and China's strong influence in Kazakhstan, uranium deliveries from the country are increasingly vulnerable to geopolitical risks and potential supply disruptions.

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