The Sword of Damocles has been hanging over the uranium market for weeks as a result of the political dispute between Moscow and Washington over the question of a legislative initiative intended to prevent the import of Russian uranium into the USA. But it is also independent of the question of whether the situation on the uranium market will escalate in the short term or whether things will quickly calm down again. It is undeniable that Russia is continuing to expand its strong position in the uranium and nuclear sectors.
This happens particularly in emerging and developing countries. Russian companies are already building a third of all nuclear power plants built worldwide. Russia is increasingly developing into a “one-stop shop”, i.e. a provider that offers all the goods and services you need from a single source. Russian banks are financing the construction of the planned nuclear power plants, Russian companies are then building the reactors and it is obvious that the uranium will also be supplied from Russia during the operational phase.
If you now consider that at the climate summit held in Dubai at the end of last year, 22 countries decided to triple the electricity generation capacity from nuclear power plants, and it quickly becomes clear what the growing Russian dominance in the uranium sector will mean for Moscow economically and politically in the long term.
Demand is exploding, but production cannot keep up
A World Nuclear Association (WNA) report released in September estimates that global demand for uranium for nuclear reactors is expected to increase by 28 percent by 2030 and almost double by 2040. The offer can’t even come close to keeping up at this point. In 2022, 49,350 tons of uranium were produced. Two years earlier, production was 47,731 tons. In this context, one should not forget that global uranium production fell by a quarter between 2016 and 2020.
A look at the last ten years shows what the massive expansion of nuclear energy could mean for the price of uranium. In 2013, as a result of the Fukushima disaster, the price of uranium was even below $30 per pound. Until 2018, the price remained below the 30 US dollar mark and at times even reached the level of 20 US dollars per pound.
After that, however, the supply-demand problem began to increasingly affect the ridiculous price. At the end of 2022, a pound of uranium already cost around 50 US dollars. Shortly before Christmas, just a year later, the price of uranium rose above $90 for the first time since the Fukushima nuclear disaster, reaching a new multi-year high.
Further highs are likely to follow soon because the market is tight, demand is high and there is currently no shortage of political tensions. In the past, this disastrous mix was often the recipe for sharply rising or even exploding raw material prices.