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The war in Ukraine and the Russian sanctions are reshuffling the energy supply cards and questioning the role of nuclear power. A context that drives up uranium prices.
With nearly 40% increase during the first quarter of 2022, uranium prices for immediate delivery have returned to peaks not seen since the Fukushima disaster which marked a price collapse.
Even if spot contracts, as they are called, represent only 10% of transactions, they give the pulse and confirm the awakening of this very particular market. Most purchases are made via long-term contracts to secure supplies for nuclear power plants. But between January and March, even long-term prices also increased, but there by almost 15%.
Threat of sanctions against the Russian giant Rosatom
Several factors explain this increase. The United States has not ruled out the possibility of sanctions against the Russian nuclear giant Rosatom. The unknown factor weighing on Russian uranium exports may therefore explain the renewed activity seen on the markets in recent weeks. Because if Russia only extracts 6% of the world’s uranium from its mines, it does, however, hold 35 to 40% of the world’s enrichment capacities. And it is precisely the enriched uranium that keeps the power plants running.
The context of war, which is forcing countries to rethink their energy strategy, could drive up demand for uranium and therefore also affect prices: States, such as Belgium, to cite just one example, are studying the possibility of extending by several years the activity of power plants which were initially to be decommissioned much earlier. This additional demand which is looming is added to that which was already anticipated by the market, recalls the French Orano, and which already justified, on its own, outside the recent geopolitical context, a rise in prices for several years.
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Falling stocks
If deposits are not lacking in the world, insufficient production is also fueling rising prices. In effect, ” for thirty years, the consumption of nuclear reactors has exceeded production », Explains an independent expert. So far, stocks have filled the gap, but that won’t last if they aren’t replenished, he warns.
Countries like France currently have uranium stocks equivalent to two years of electricity production – based on 58 reactors in operation – according to figures from Orano, but this is not the case for all countries. . However, in recent years, investments have been insufficient to meet the new demand that is emerging and a fortiori to replenish stocks.
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