Uranium: Supply Shortages, New Demand and Geopolitical Uncertainty
Tom Everill | 14 February 2024
Summary
Uranium Shortage: Kazatomprom predicts uranium supply shortages, driving prices to 16-year highs amid a global demand surge.
Nuclear Revival: Major economies recommit to atomic power to reduce fossil fuel dependence and enhance energy security.
Supply Chain Concerns: Western fears over uranium supply security, especially from Kazakhstan, due to geopolitical ties with Russia.
In January, Kazakh firm Kazatomprom, the world’s largest producer of uranium, responsible for roughly half of global output, announced that it is expecting supply shortages over the next two years. The production bottleneck is due to a shortage of sulfuric acid, vital for extracting uranium from its ore. These shortages come as global demand surges amid a renewal of interest in nuclear power, creating both supply and demand-side inflationary effects as prices reach 16-year highs. These surging prices contrast over a decade of surplus uranium and low prices stemming from fears over nuclear power following the 2011 Fukushima Nuclear Power Plant disaster.
However, many countries appear to be warming to nuclear power’s reliable, low-emission energy once again. EDF Energy, the French state-owned operator which owns Britain’s nuclear power stations, announced in early January that it would delay the closure of four British plants by at least two more years. The British government also plans to expand its nuclear energy capacity further, including two more plants currently being constructed by EDF and others down the line. This resurgence of interest in nuclear power partially allows for Britain to address its dependence on Russian gas and shores up domestic energy supplies in an era of growing geopolitical tension.
Also in January, the United States and the United Kingdom announced investments of USD 500 million and GBP 300 million, respectively, in nuclear power projects. This is mirrored in Asia Pacific as China builds 22 out of the 58 reactors currently under construction globally, and Japan begins to restart its nuclear projects now that the dust has settled post-Fukushima. Last year, at the United Nations COP 28 summit at Expo City in Dubai, the US and 21 other nations announced plans to triple nuclear power output by 2050 as part of ongoing efforts to lower global carbon emissions. A US poll by Gallup this January illustrated that public support for nuclear energy is at a 10-year high, suggesting this changing mindset is not restricted to policymakers.
However, Western nations are concerned about the geopolitical insecurity of uranium supply chains. For instance, Kazakhstan, which generates 43% of the global uranium supply, shares deep historical ties with Russia, sparking fears that Western powers could lose access to this uranium if Kazakhstan falls again into Russia’s sphere of influence. Additionally, there are concerns over the production capacities of the Niger-based French firm Orano following the armed removal of the country’s president, Mohamed Bazoum, last year.
NAC Kazatomprom JSC/Wikimedia
Forecast
Short-term: Uranium prices will likely continue to rise.
Medium-term: More developed nations will likely invest further in nuclear energy.
Long-term: It is moderately likely that geopolitical tensions over the control of uranium reserves will rise.