The uranium market saw a flurry of activity in 2024, beginning with a 17 year price high and finishing with an additional six countries committing to tripling nuclear power by 2050 at the COP29 event.
The energy fuel also caught the attention of major technology companies looking to power artificial intelligence (AI) data centers, and was impacted by geopolitical tensions between the US and Russia.
In addition, the market benefited from growing concerns over future supply. With uranium demand poised to grow globally, the mounting imbalance became increasingly clear in the usually opaque market.
Some companies were inspired to do deals against that backdrop, punctuating 2024 with M&A activity.
While many factors added to uranium’s story throughout 2024, the most impactful trends included geopolitical risk, the accelerating energy transition and future supply concerns.
Uranium spot price breaks US$100
Continuing the momentum of 2023 — when the U3O8 spot price rose 86 percent between January and the end of December — uranium started 2024 at the US$91 per pound level.
Its upward trajectory was fueled by news that uranium-mining major Kazatomprom (LSE:KAP,OTC Pink:NATKY) was facing a shortage of sulfuric acid, a key component of its uranium extraction and production process.
By February 5, the price had risen to US$105.91, marking a nearly two decade high.
The inability to source sulfuric acid prompted the Kazakhstan-based major to revise its annual output guidance.
“Supply side fragility continued to be one of the key themes in Q1, especially the news out of Kazakhstan that production would be significantly lower than expected in 2024 than previously thought,” Ben Finegold, an associate at Ocean Wall, a London-based investment house, said in an email reviewing the first quarter.
In its adjusted 2024 uranium production guidance, Kazatomprom projected a range of 21,000 to 22,500 metric tons on a 100 percent basis, and 10,900 to 11,900 metric tons on an attributable basis.
While in line with the output of previous years, the company had to place plans for a production ramp up on the back burner due to the sulfuric acid shortage and development issues.
Finegold described the issue as “systemic,” and said Ocean Wall didn’t see it ending any time soon.
However, uranium was unable to last at the US$105 level and had retracted to US$85 by mid-March.
The price continued to consolidate through the year, and found support around US$76. Although the energy fuel has shed 27 percent from its January high, the spot U3O8 price remains in historically high territory.
US bans imports of Russian uranium
Production challenges out of Kazakhstan weren’t the only supply and demand issues for uranium in 2024. By May, the war in Ukraine had intensified discussions around restrictions on US imports of Russian uranium.
As tensions ratcheted up, US President Joe Biden banned imports of Russian uranium in mid-May.
“This new law reestablishes America’s leadership in the nuclear sector. It will help secure our energy sector for generations to come,” said National Security Advisor Jake Sullivan at the time.
“And — building off the unprecedented US$2.72 billion in federal funding that Congress recently appropriated at the President’s request — it will jumpstart new enrichment capacity in the United States and send a clear message to industry that we are committed to long-term growth in our nuclear sector.”
The US has historically relied on Russian uranium, notably through the 1993 Megatons to Megawatts program, which repurposed 500 metric tons of Russian nuclear warhead uranium into reactor fuel.
In 2022, Russian imports still made up 12 percent of US uranium supply, according to the Energy Information Administration. This dependency highlights US reliance on Russian materials for domestic energy needs.
Niger coup aftermath disrupts uranium supply
Niger, the seventh largest uranium-producing country, also faced geopolitical strife when fallout from a military coup upended the country’s uranium sector, adding substantial uncertainty in the uranium space.
European utilities, which are heavily reliant on Nigerien uranium, faced heightened risks, underscoring the vulnerability of supply chains linked to politically unstable regions.
The instability also impacted uranium miners and juniors operating in the region.
In June, French nuclear firm Orano lost its mining permit for Niger’s massive Imouraren uranium deposit, which holds over 174,000 metric tons of reserves. While the site’s development was paused in 2015 due to low uranium prices, Niger demanded action as prices surged, warning Orano to begin work by June 19.
Despite submitting a proposal and reopening site infrastructure, Niger revoked Orano’s permit, with analysts linking the decision to shifting political dynamics following the July 2023 coup.
In mid-July, the military government revoked exploration company GoviEx Uranium’s (TSXV:GXU,OTCQB:GVXXF) rights to the perimeter of the Madaouela mining permit, placing it in the public domain.
In response to the permit withdrawal, GoviEx Uranium has initiated arbitration proceedings against Niger.
In a December 9 statement, the company alleged that Niger failed to meet its obligations under the project’s mining agreement, jeopardizing the development of one of Africa’s most significant uranium assets.
GoviEx Uranium and its subsidiaries are seeking a resolution through international arbitration, emphasizing the importance of contractual stability in the global uranium industry.
Trump threatens tariffs on key uranium trade partner
In late November, geopolitical tensions began mounting between the US and Canada.
After winning the US election, Donald Trump threatened to levy a 25 percent tariff on services and goods from neighboring countries and USMCA member states Canada and Mexico.
Canadian Prime Minister Justin Trudeau and Ontario Premier Doug Ford quickly responded to the tariff threat, underscoring the interconnectedness of both economies, as well as the energy trade between the countries.
According to the US Energy Information Administration, in 2022 the US purchased 40.5 million pounds of U3O8. Canada was the largest contributor, providing 27 percent of the country’s supply.
Fortifying relationships with ally and neighbor states like Canada could prove crucial amid the US ban on Russian uranium imports. If the ban expands to Russian allies, supply from Kazakhstan and Uzbekistan — countries that contribute 25 percent and 11 percent to US supply, respectively — could also become precarious.
As pundits debated the potential impact of a tit-for-tat tariff tussle, sector participants forged ahead with deals.
Notably, in early December, NexGen Energy (TSX:NXE,NYSE:NXE,ASX:NXG) secured its first uranium sales contracts with major US utilities, totaling 5 million pounds. The deals cover an initial five year period, a significant milestone as NexGen advances its Rook I project in Saskatchewan, home to the high-grade Arrow uranium deposit.
NexGen Chief Executive Leigh Curyer explained that the agreements highlight the exceptional quality and scalability of Rook I. They also diversify uranium supply and align with market-based pricing strategies.
“Energy demand from reliable sources is increasing by the week with the need to expand existing nuclear energy infrastructure and the construction of power consuming data centres at a time the security of uranium supply is under significant technical and sovereign risk,” said Curyer.
Tech sector turns to nuclear power for AI
Power needs for AI data centers also emerged as a key driver in the uranium market this year.
According to data from Brightlio, an IT service provider, there are more than 8,000 data centers around the globe, accounting for 4 percent of total energy consumption and 1 percent of global greenhouse gas emissions.
Data center capacity is projected to triple by 2030, making the sector’s long-term energy demands immense. It is estimated that one ChatGPT request could power a lightbulb for 20 minutes.
As the energy demands of AI surge, governments and companies are turning to nuclear power to ensure a reliable, carbon-free energy supply, with supply deals beginning to emerge.
At the end of Q3, Constellation Energy (NASDAQ:CEG) revealed plans to revive the shuttered Three Mile Island Unit 1. The restart is part of a 20 year power purchase agreement with Microsoft (NASDAQ:MSFT).
The supply deal is expected to deliver 835 megawatts of clean energy to the grid, and is also anticipated to generate over US$3 billion in taxes and US$16 billion for Pennsylvania’s economy.
A few weeks later, Amazon (NASDAQ:AMZN) subsidiary Amazon Web Services (AWS) unveiled plans to invest in small modular reactor development. The technology will be used to power AWS’ data centers.
AWS will spend US$500 million between both Dominion Energy (NYSE:D) and Energy Northwest to advance the innovative nuclear technology. AWS plans to use small modular reactors to power its data centers.
Then, in mid-October, Google (NASDAQ:GOOGL) penned an agreement to purchase power from multiple small modular reactors that will be developed by Kairos Power. The deal will supply up to 500 megawatts of carbon-free electricity to US grids, aiming to support the rising energy demand driven by AI.
Global data center power consumption is forecast to nearly double from 460 terawatt hours in 2022 to over 800 terawatt hours by 2026. As demand from the tech sector expands, concerns over supply deficits have only intensified.
This supply and demand imbalance was highlighted during the November annual general meeting address from Australian uranium company Paladin Energy (ASX:PDN,OTCQX:PALAF).
“With limited investment in new uranium mines, there is a growing supply deficit that is anticipated to increase to over 50 million pounds per annum during the next decade,” said Cliff Lawrenson, non-executive chairman.
“Diversity of supply is also becoming increasingly important as a response to recent geopolitical activities, including the recent US ban on Russian supplies.”
While all the abovementioned themes will continue to impact the uranium market, increased M&A activity is another emerging trend that is likely to play prominently in the year ahead.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
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