Yesterday, I showed you how the drivers behind uranium’s bull run keep stacking up.
It’s a megatrend I’ve been tracking for you in these pages.
In early 2023, I alerted readers to the rising global shift to nuclear energy and the uranium fuel that powers it. Uranium prices have more than doubled since then – from $48 to as high as $107 a pound.
I highlighted how momentum for nuclear power was quietly escalating among U.S. lawmakers. That was well before the jump in uranium prices was capturing headlines.
Since then, catalysts have kept popping up all over the world that are driving uranium prices even higher. Prices are now surpassing the $100 target I made in December when uranium traded for $82 a pound.
Today, I’ll unpack yet another reason why the nuclear revival is just getting started.
Supply Constraints Are Stacking Up
Yesterday, I showed you why the nuclear revival is set to boost demand for uranium – the fuel that powers nuclear reactors.
Most existing nuclear reactors use a specific type of uranium as their fuel. That type of uranium is known as U-235.
Right now, just a few firms produce most of the world’s uranium.
The biggest is Kazatomprom, a miner based in Kazakhstan. Kazatomprom supplies 22% of the world’s uranium.
But earlier this year, Kazatomprom warned that it could face a production shortfall.
The reason? There is a shortage of sulfuric acid that the company uses in its mining process.
You can’t just flip a switch and bring new uranium mines online to make up for the shortfall. Uranium mines can take up to 15 years to develop.
That’s why mining companies with ready-to-go operations will be in greater demand. Which is why I’ve recommended several such names at Energy Distortion Monitor.
And there’s also another weak link in the uranium supply chain.
Raw uranium is not suitable for nuclear reactors. So, after you mine uranium, you have to process and enrich it. That’s how you turn it into nuclear fuel.
The problem is that Russia accounts for 46% of global enrichment capacity. And legislation in the House could make the uranium supply even tighter.
The House is set to discuss the Uranium Russian Ban Act this year. That’s an act championed by Congresswoman Cathy McMorris-Rodgers.
McMorris-Rodgers is the chair of the Energy and Commerce Committee. That means her opinion carries a lot of weight in Congress.
And the Uranium Russian Ban Act is a priority of hers, as I learned from one of her senior staffers in a private meeting.
The Uranium Russian Ban Act would limit uranium imports from Russia by banning certain types of Russian uranium.
That means just as Washington prepares to boost the U.S. nuclear industry, it’s keen on reducing dependence on Russian uranium to achieve its nuclear energy ambitions.
It’s also another sign that the U.S. is focused on boosting the domestic uranium supply chain – and that of our allies, if necessary, to get the uranium we need – all the way from production to enrichment.
And that’s good news for the nuclear revival I see building.
Uranium Prices Could Quadruple in the Long Run
As you can see, there are a lot of things coming together to boost uranium prices.
From government initiatives around the world to rising demand for nuclear power to significant constraints facing major uranium suppliers.
All of this is creating a growing supply and demand imbalance. That’s why I’ve raised my uranium price target for 2024 to $150 per pound.
And that’s just for the short term.
The last time uranium prices bottomed in December 2000, they went on a seven-year bull run. They topped out at $140 per pound, for more than an 1,800% return.
If history is any guide, by the time this current bull run is over, we could see uranium prices not only reach new all-time highs but soar far past them.
That’s why I’ve written before that it’s not impossible to think that uranium may eventually eclipse $400 per pound.
To be clear, I don’t expect that to happen this year, or next, or even in the next five years.
But with demand for nuclear energy set to triple by 2050 and the nuclear revival gaining traction worldwide, it’s not out of the question in the long run.
Regards,
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Nomi Prins
Editor, Inside Wall Street with Nomi Prins