Uranium Week: The Need For New Supply

Weekly Reports | Apr 02 2024

With the attitude towards nuclear energy shifting positively worldwide, the need for new and restarted uranium production is becoming critical.

-New/restarted uranium production needed
-Spot price down month on month
-Baltimore bridge collapse adds to issues
-Paladin Energy produces first uranium

By Greg Peel

Last week Morgan Stanley hosted a webcast with S&P Global focusing on the current dynamics playing out in global uranium markets.

S&P Global sees a dramatic shift in attitude toward nuclear energy continuing to transpire, particularly as Western countries work towards becoming more self-reliant with regard to enrichment capacity as they move away from Russian supply.

Historically, Russia has played an outsized role in uranium enrichment. Enrichment remains a key pinch point for the industry, according to S&P Global, but not as much as uranium conversion capacity.

S&P Global sees sustained strength in uranium prices as having the potential to incentivise new projects to come online and/or projects to be restarted. New supply is potentially seen to be coming from the US, Canada and Africa, as exploration budgets continue to expand, led by investment from Canada.

The extent of supply shortfalls depends on the number and size of nuclear developments that are greenlit in the next 2-4 years, with S&P Global noting development of reactors requires significant amounts of capex. Despite a vast number of nuclear plant designs being developed globally, many of these have not operated in a commercial setting, posing risks to their viability.

Uranium inventories have been on the decline in North America and Europe since peaking in 2014-15, according to S&P Global. Current inventory levels are seen as supportive for new contracts to be signed between suppliers/buyers, with a number of US utility companies recently signing deals with new/emerging producers for supply.

S&P Global forecasts 7.9GW of new nuclear capacity to be added by 2050 in North America, with most of this ramping supply back-end weighted in the 2040 decade.