PDAC: TradeTech warns of faster uranium booms, busts

The uranium market is heading into shorter, sharper price cycles as trade restrictions reshape nuclear-fuel supply chains and power demand from artificial intelligence tightens electricity markets, according to TradeTech, a Denver-based nuclear fuel consultant.

TradeTech’s uranium spot price touched $100 a lb. last month, before easing to $85, one of only a handful of times the benchmark has reached triple digits since the firm began publishing uranium prices in the late 1960s. The long-term price stands at $90, after rising more than fivefold from a $17.75 low in 2016.

“Our market is going to experience accelerated price cycles going forward,” President Treva Klingbiel said Sunday during a commodities session at the Prospectors and Developers Association of Canada annual convention. “We need capital to develop new production in order to bridge the supply deficit.”

Higher prices alone won’t fix a widening supply-demand gap because new mines take years to permit, finance and build. Utilities and governments are also shifting procurement to favour “friendly” supply, adding a policy premium to contracting decisions and putting a tighter focus on where future pounds will come from.

Investment needed

Identified recoverable uranium resources are about 7.9 million tonnes as of Jan. 1, 2023, according to the latest “Red Book” uranium report by the Organization for Economic Co-operation and Development’s Nuclear Energy Agency and the International Atomic Energy Agency.

However, sustained investment is needed to support higher-growth nuclear scenarios, Klingbiel said. Exploration spending has started to rise again after years of stagnation, but not fast enough to erase a structural deficit.

Klingbiel tied the demand outlook to two trends: keeping existing reactors running longer and building new capacity, including small modular reactors (SMRs). Reactor uprates and life extensions are lifting fuel requirements even before new-build demand arrives, while advanced reactors could steepen the curve later this decade.

SMRs

On SMRs, Klingbiel said TradeTech tracks more than 70 companies in 20 countries working on over 80 designs, with about 10 units under construction. Permitting momentum is improving, pointing to early approvals in several jurisdictions.

In Canada, regulators have already issued a construction licence to Ontario Power Generation to build one GE Hitachi BWRX-300 reactor at the Darlington New Nuclear project site east of Toronto.

In the United States, the Nuclear Regulatory Commission has certified NuScale Power’s design, the first SMR design to clear that hurdle, and it has issued construction permits for Kairos Power’s Hermes test reactor, a step that signals regulators are prepared to license non-traditional reactor technologies.

On supply, Klingbiel said the key trends are industry concentration – a small group of miners dominating global output – and geopolitical moves that limit access to certain sources of uranium and enrichment services. Dozens of emerging producers are advancing projects towards final investment decisions, but timelines remain the market’s weak link, Klingbiel said.

“It takes a long time to bring a uranium mine into production,” she said. “Those capital requirements and long lead times require a level of certainty that only long-term contracting and targeted investment can provide.”