Weekly Reports | Apr 30 2024
The extensive power required to run AI models at data centres has brought nuclear energy clearly into focus.
-A volatile uranium spot market
-Ship carrying Russian uranium released from Germany
-US tech companies move to shore up supply of nuclear power
By Greg Peel
The uranium spot market was particularly volatile last week, industry consultant TradeTech reports. The sharp price movements are attributed in large part to the lack of consensus among market participants regarding the depth of buying interest.
The price stability of recent weeks was welcomed by utilities, however, other market players viewed the lack of price movement as indicative of waning spot market demand. This resulted in some sellers lowering their offer prices throughout the week in order to encourage buying interest.
The drop in offer prices did succeed in bringing buyers to the market, but it was also read by some buyers as a sign that prices might soften further, and so they stayed away.
After bouncing around during the week, TradeTech’s weekly spot price indicator closed at US$87.35/lb, down -US$2.65.
A total of seven transactions were concluded, with prices ranging from US$91.00/lb U3O8 to US$85.95/lb.
Term Markets
In the term uranium market, utilities received welcome news when an ocean vessel carrying enriched uranium product from Russia, which has been delayed for several weeks in Germany due to the presence of EU-sanctioned plywood on board, was released and set off to the US.
The ship had to be re-routed to Philadelphia given the ongoing closure of the port of Baltimore. The delay and the increased volume that other ports must now accommodate adds another layer of concern for the enrichment market.
Market participants continue to focus on securing supply, especially in the time period between next year and 2030 when uranium production is expected to be especially tight, TradeTech notes, and availability of Russian nuclear fuel is less certain.
TradeTech’s term price indicators remain at US$95/lb (mid-term) and US$80/lb (long).
Uranium and AI
The Oregon Group has issued a report noting operating AI models requires substantial computing power, which translates to higher energy demand. Building extensive data centres and manufacturing semiconductor chips is not possible without critical minerals.
With regard uranium demand, Oregon notes:
-Amazon Web Services has bought a 960MW data centre powered by a a nuclear power plant in Pennsylvania;
-Microsoft has agreed to buy nuclear power to cover up to 35% of the energy needs for its Virginia data centres;
-The US Energy Secretary has announced a US$1.52bn loan to restart the Palisades nuclear plant in Michigan with an interview where she said conversations with big tech companies need "to accelerate, because this [AI] demand for power is only going up”;
-OpenAI CEO Sam Altman has invested in a nuclear startup called Oklo, which is working on small modular reactors;
-Green Energy Partners, a US data centre and energy developer, has proposed 30 new data centres powered by a new 1.6GW Surry Nuclear Power Plant in southeastern Virginia.
Any new nuclear power will need uranium to power it. In its recent report, The Uranium Bull Market and Coming of the Second Atomic Age, Oregon warned uranium is at the start of a ten-year bull market as supply struggles to meet demand, expected to expand 28% by 2030 and nearly 200% by 2040.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 29/04/2024 | 0.0900 | 0.00% | $0.19 | $0.05 | |||
| AGE | 29/04/2024 | 0.0600 |  9.43% |
$0.08 | $0.03 | $0.100 | 66.7% |
|
| BKY | 29/04/2024 | 0.3400 | 0.00% | $0.80 | $0.26 | |||
| BMN | 29/04/2024 | 3.7900 | 3.86% |
$4.16 | $1.19 | $7.400 | 95.3% |
|
| BOE | 29/04/2024 | 4.7900 | 4.82% |
$6.12 | $2.37 | 47.1 | $5.425 | 13.3% |
| DYL | 29/04/2024 | 1.4700 | 5.54% |
$1.76 | $0.48 | $1.770 | 20.4% |
|
| EL8 | 29/04/2024 | 0.4900 | 0.00% | $0.68 | $0.27 | |||
| ERA | 29/04/2024 | 0.0550 | 1.85% |
$0.08 | $0.03 | |||
| LOT | 29/04/2024 | 0.4500 | 8.75% |
$0.46 | $0.17 | $0.610 | 35.6% |
|
| NXG | 29/04/2024 | 12.5500 | 2.93% |
$13.66 | $5.46 | $17.500 | 39.4% |
|
| PDN | 29/04/2024 | 13.7400 |  – 1.30% |
$15.970 | 16.2% |
|||
| PEN | 29/04/2024 | 0.1000 | 5.00% |
$0.20 | $0.08 | $0.310 | 210.0% |
|
| SLX | 29/04/2024 | 5.0400 | 2.07% |
$5.78 | $2.92 | $7.600 | 50.8% |
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