Uranium prices have risen about 40% since Russia invaded Ukraine, reaching levels the market hasn’t seen in over a decade, even though the war has had little impact. immediate impact on the global supply of fuel used to generate nuclear energy.
Uranium prices climbed to $59.75 a pound on March 10, according to data from nuclear fuel consultancy UxC.
This is the highest since March 2011, the same month and year that a massive earthquake and tsunami in Japan caused a power outage and collapse of the Fukushima Daiichi nuclear power plant, prompting countries to rethinking the safety of nuclear energy.
Uranium prices were trading around $43 before Russia invaded Ukraine on February 24 this year. The obvious driver for this increase is warfare and “changing circumstances in all types of energy markets,” says Jonathan Hinze, president of UxC.
The invasion has no immediate impact, given that no one is going to build a new nuclear reactor overnight to compensate for the loss of natural gas or oil imports, he says. However, there are “signs that a few countries in Europe may change their stance on nuclear power and maintain existing reactors longer, or possibly build new ones sooner as they seek to diversify away from nuclear power.” Russia”. [natural] gas.”
Belgium is changing its position on the 2025 deadline for the gradual closure of its seven nuclear reactors, Hinze said. The country’s Federal Nuclear Control Agency said earlier this year that some reactors could operate beyond 2025 if phasing out nuclear power jeopardizes the security of energy supply, according to a report by World NuclearNews.
Russia’s war with Ukraine has increased global energy supply risks, given that Russia is one of the world’s largest exporters of oil and natural gas. Oil prices in the United States and around the world have reached their highest levels since 2008, while the European benchmark, Dutch TTF gas prices, recently reached record highs.
Unlike Europe, the United States is not dependent on Russian oil or natural gas, says John Ciampaglia, CEO of Sprott Asset Management, but it is “partially dependent” on enriched uranium from Russia. US utilities depend on Russia for 16% of their enriched uranium supply, while Europe depends on Russia for 20%, he said.
“Any disruption to this supply caused by Western sanctions, self-sanctions by utilities, or Russia’s decision to ban the export of enriched uranium, further exacerbates the structural supply shortfall. that already exists on the market,” says Ciampaglia.
Global nuclear power output rose 3.5% last year, China’s about 11%, although nuclear output in the United States fell 1.5% to its lowest level. lowest since 2012, according to the International Energy Agency.
Since its launch in July last year, the
Sprott Physical Uranium Trust
(ticker: SRUUF), the world’s largest physical uranium fund, saw its fuel holdings climb to over £51m from 18.1m and its net asset value rise to over $3bn from 630 million since its launch, says Ciampaglia. Shares of the trust are up more than 20% this year as of March 15.
Interest in uranium investment comes as the world tries to meet its climate change commitments, as nuclear power is a reliable source of energy that produces zero greenhouse gas emissions, Ciampaglia said.
UxC’s Hinze points out that Russia is a major exporter of nuclear reactors and that sanctions against Russia could create problems or lead to the cancellation of some nuclear projects. For now, “making predictions about the future is full of uncertainties,” says Hinze, but the recent uranium price hike is unlikely to abate, given Russian trade restrictions and related factors affecting nuclear markets.