the price of uranium soars

The price of uranium is at its highest in almost 17 years. This escalation in prices is the result of a rebound in demand, coupled with uncertainties linked to the supply of oil and gas.

The price of this fuel reached its highest level since 2007 in December, reaching $85.75 per pound (around 450 grams). Geopolitical tensions and the energy transition explain this increase. Nuclear power is coming back into favor. Gone is the post-Fukushima accident period in 2011, when countries like Germany decided to ban atomic energy.

Now, it’s quite the opposite. The energy transition encourages the promotion of low-carbon energies, and nuclear power is one of them. Result: in the United Kingdom, as in France, India, Turkey, Egypt and China, more than 100 new reactors are currently under construction or planned around the world. In Sweden, the law which prohibited any new power plant has just been repealed. Other countries are maintaining reactors that they planned to close. This is the case in Diablo Canyon, California. In Belgium, two reactors were extended for ten years, for fear of supply disruption, after Russian gas deliveries were limited.

Tensions weigh on several producing states

Niger was hit by a military coup last summer, while Russia was subject to sanctions. Certainly, there is no shortage in sight, these two countries together represent only 10% of world production. But these tensions create uncertainty, and therefore risk, which always drives up prices on the markets. Added to this are difficulties in extracting ore in Canada and Kazakhstan, two other major producing countries. This is how supply struggles to keep up with demand. Without forgetting a small dose of speculation, with investors saying “Hey, it’s smart to buy uranium”, since the price will continue to rise, and you have the ingredients for this rise. This year alone, the price of uranium, in short-term purchases, has more than doubled.

This increase in the price of uranium is not the cause of the significant increase in our electricity bills. What costs the most in nuclear energy is the construction of the power plants and their maintenance. The fuel, in this case enriched uranium, represents only 5 and 10% of the total cost of electricity production. Bills are going up, yes, but that’s because of taxes, not uranium. In addition, most contracts are concluded over several years, which avoids price shocks. There is also no risk of shortage, because uranium is much more easily stored than oil. France, for example, has uranium reserves to fuel power plants for more than two years. For comparison, strategic oil stocks represent only 60 days of consumption.