US nuclear power generation hits all-time highs as investors buy uranium


There has been a lot of talk lately about rising prices for fossil fuels, especially coal and gas prices. But did you know that uranium prices have risen 64% since the August low and now sit at US $ 47.20 / lb?

Uranium prices are up 64% from August 16, 2021 low (to October 18, 2021)

Source: Commerce economics

The reason uranium prices are rising is that supply has declined and demand is picking up on an upward trajectory.

Uranium supply

In 2020, ~ 46Mlbs or ~ 35% of global supply of uranium production (annualized), has been suspended due to low prices. Kazatomprom, the world’s largest uranium miner, announced a production reduction until 2023. Cameco has closed McArthur River and (the largest in Canada) the Cigar Lake mines, and there are several others. Meanwhile, uranium production in the United States is non-existent, or like Ur-Energy States: “2020 – 2021 Q2: Uranium production in the United States continues to be so low that the EIA cannot report due to confidentiality commitments.

EIA Report: Negligible 2020 U.S. Mining Production – Too Low to Report

Source: UR-Energy company presentation

Uranium demand

Demand remained strong and was recently stimulated by serious market speculators. The one who makes the most headlines is the Sprott Physical Uranium Trust who bought millions of pounds of uranium. Of course, regular buyers are the utilities that own and operate nuclear reactors and want to secure their supply.

Global and American nuclear power generation recovered from a 2011 post-Fukushima contraction and is near the historic peak generation levels

Source: Presentation of the company Western Uranium & Vanadium

As higher prices ultimately encourage supply to come back, it appears that uranium producers are in no rush to increase their volumes and flood the market; all the more so since they are now benefiting from the windfall of rising prices after 5 years of very low prices. Many find that struggling stocks have become an asset as market prices exceed production costs.

Uranium is expected to be in deficit every year until 2025

Source: Western Uranium & Vanadium Company Presentation (courtesy Canaccord Genuity estimates)

3 main US uranium producers

Energy fuels inc. (American NYSE: UUUU | TSX: EFR) has built up a stock of uranium while diversifying into the production of rare earths. The Company has significant capacity rapidly increase low-cost uranium production in the United States from proven assets and amore production facilities, capacity and experience than any other US company.

Ur-Energy Inc. (US NYSE: URG | TSX: URE) is one of the top two uranium producers in the United States and is a global low-cost uranium producer. Ur-Energy operates the Lost Creek in situ uranium recovery facility in south central Wyoming, United States.

Western Uranium & Vanadium Corp. (CSE: WUC | OTCQX: WSTRF) own the Sunday Mine Complex, which is now back in pre-production development. On October 12, 2021, the Company declared: “Active mining development operations have resumed at the Sunday mining complex, and the project is already producing strong results ……The orebody is expected to be considerably larger than indicated by the previous limited surface drilling. Development ore is stored underground. Full production of the GMG orebody can begin with improving market conditions and after development operations are completed within six months.

Closing remarks

America’s major uranium miners (as mentioned above) have seen their stock prices rise significantly over the past year, with uranium prices rising due to a growing uranium deficit.

Looking ahead, US uranium producers are well positioned to benefit from Biden’s policies that recognize the importance of smart nuclear power generation and building a large uranium reserve. After all, key parts of the US military and around 20% of US electricity are totally dependent on nuclear and therefore uranium. Today, the United States imports 95% of its annualized uranium demand. It is necessary to increase domestic and North American production if the more than 100 US-based civilian nuclear reactors are to remain in service uninterrupted by geopolitical factors.

Meanwhile, Europe, with the exception of France, which gets 80% of its electricity from nuclear, and Asia are learning that they also need a stable source of basic electricity that is not not carbon based. As the COP26 climate summit approaches on November 1, the future of nuclear and uranium has never looked brighter.

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