Financial Times: US Uranium Miners Resurrected By Nuclear Revival And Ukraine War

Analysts' comments.

Renewed global interest in nuclear energy, as well as concerns about importing nuclear fuel or raw materials from Russia due to the ongoing invasion of Ukraine, are leading to the restart of mothballed mines — amid rising prices for uranium ore.

“Over a 40-year career, Scott Melbye watched the US uranium industry fall from its position as the world’s leading producer of the radioactive ore that powers nuclear reactors to an also-ran with negligible production. Now, the president of the Uranium Producers of America is leading an industry charge to revive mothballed mines and invest in new production to capitalise on soaring prices and policies aimed at reducing the US’s dependence on Russian imports,” writes Financial Times.

According to the publication, at least five US-listed producers are reopening uranium mines in Texas, Wyoming, Arizona and Utah that were idled following a market crash caused by the Fukushima nuclear accident in Japan in 2011. A handful of exploration companies are searching for new deposits of uranium, which has tripled in price since the start of 2021 because of a resurgence in interest in nuclear energy.

“We’ve been on sleep mode for too long and now our membership is energised again,” said Melbye, who is also a senior executive at Uranium Energy Corp, a Texas-based company reopening mines in Wyoming and Texas.

“There is the broad bipartisan support for nuclear energy, the role it plays in the green transition and of course Ukraine-Russia has highlighted the need to secure our energy independence,” he said.

The restart of US production comes amid a global revival in the uranium industry with producers in Australia, Canada and other nations seeking to increase production.They are responding to a blistering rally in uranium prices, which reached a 16-year high above $100 a pound in January and remains elevated at $92 a pound. This is being driven by governments’ renewed interest in nuclear energy, an emissions-free power source that advocates say will play a key role in the energy transition.

About 60 nuclear plants are under construction and a further 110 are planned, according to the World Nuclear Association, which forecasts demand for uranium will double to 130,000 tonnes by 2040. A more immediate boost to demand has come from extensions to the lifetime of reactors currently producing. Last year uranium demand was 65,650 tonnes. It is forecast to rise to 83,840 tonnes by 2030.

Prices have also been raised by tight supply, after a drought of investment in new projects in the 2010s. Global uranium production dropped by a quarter to 47,731 tonnes from 2016 to 2020 following the market crash after Fukushima. Expansion plans by the world’s largest producer Kazatomprom — which accounts for 23 per cent of global output — have stalled because of shortages of sulphuric acid, which is used in their leach mining operations in Kazakhstan.

“They’ve run into some ramp up issues,” said Ur-Energy Inc chief executive John Cash, which is restarting production at two mines in Wyoming.

He said geopolitics is driving prices higher over concerns that the main export route for Kazakh and Uzbek uranium bound for the US runs across Russia and out of St Petersburg port. In 2022 Kazakhstan, Uzbekistan and Russia supplied just under half of all uranium purchased by US nuclear plants, according to US government data.

“No one really knows how Vladimir Putin will attempt to put his thumb on those countries going forward. So, diversification now is the name of the game,” said Cash, adding that US and European utilities are signing more contracts with Ur-Energy following Russia’s invasion of Ukraine.

The US Congress is considering banning Russian uranium imports in a move that would further shake up the sector.

Most analysts forecast Kazakhstan’s output will flow increasingly to Russia and China in the future because of high logistics costs to ship uranium via alternative routes that avoid Russia, such as the Caspian Sea, and an increase in long-term deals to supply China.

Many experts are sceptical about the long-term prospects for US production because of its smaller scale operations and higher cost basis than rival producers. A recent analysis of projected cost estimates of several proposed uranium projects in the US, Canada and Namibia by TradeTech and uranium.info found the cost of mining was highest at US operations.

Liberum head of commodities strategy Tom Price said the fact that Washington was keen to add domestic sources of uranium would probably underpin some of the new US mining operations. But US buyers would seek to access cheaper sources of uranium in countries such as Canada and Australia.

“As global production increases and prices get down to levels of around $70 per pound, then I think a lot of the bravado in the US industry will tone done and less projects will come into the trade,” Price believes.