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The price of nuclear reactor fuel has risen to a record high as demand from artificial intelligence data centers exacerbates pressure on the market following Russia’s invasion of Ukraine.
Enriched uranium prices reached $190 per work unit for separation — a standard measure of the effort required to separate uranium isotopes — compared with $56 three years ago, according to data provider UxC.
The resurgence of interest in nuclear power has come as governments and companies consider carbon-free energy sources large enough to serve large industrial plants and communities.
Big tech companies like Microsoft and Amazon have taken an interest in using startup fuel data centers that consume a large amount of energy are racing to build as they compete for market share in generative artificial intelligence.
Growing competition for energy has added to the industry’s concerns Russian invasion of Ukraine almost three years ago. Russia is a major player in the process of turning mined uranium into the enriched fuel needed for a nuclear reactor, but US sanctions and a Russian export ban have helped push prices to record highs.
“We just don’t have enough conversion and beneficiation in the west and that’s why the price has had this move, and that price is only going to go up,” said Nick Lawson, CEO of investment group Ocean Wall.
Executives and analysts say the problem is likely to worsen with the expiration of a US exemption for importers at the end of 2027. That pressure has put pressure on the industry to find new facilities that can turn uranium into pellets that go into nuclear reactors. Outside of Russia, the main Western countries with uranium conversion facilities are France, the US and Canada.
“There are a lot of very important political decisions to be made” about investments in the nuclear weapons and uranium supply chain, Lawson said, adding that building new facilities would take “years” and cost huge sums of money.
About 27 percent of U.S. imports of enriched uranium in 2023 came from Russia, according to Berenberg analysts. While U.S. utilities likely had enough fuel for this year, their coverage will drop significantly in four years, analysts added.
“U.S. utilities will need to begin contracting negotiations this year to secure (uranium), especially with a cap on Russian uranium imports into the U.S. that goes into effect at the end of 2027,” they said.
Most uranium is sold under long-term contracts rather than on the open or spot market. But prices for immediate delivery could rise as a result of a potential decrease in the availability of uranium itself, industry analysts say. Kazatomprom, Kazakhstan’s state-owned miner and the world’s largest uranium producer, has warned in recent months of lower-than-expected production.
“We see material from Kazakhstan going more and more to China and Russia and less going west,” which has been “a problem for Western utilities,” said Andre Liebenberg, chief executive of uranium-listed Yellow Cake. “We could easily see a decline in supply in the medium term just because of the lack of new projects that can be started quickly.”
