Canada is vying to become the world’s biggest uranium producer as soaring demand for zero-emission nuclear power and geopolitical tensions threaten supply, sending prices for the radioactive metal soaring.
Cameco, the country’s largest producer, says uranium production at its two mines in the heart of the country’s uranium industry in northern Saskatchewan will increase by almost a third in 2024 to 37 million pounds. said.
According to investment bank RBC Capital Markets, new mines and expansions planned in the same region by Denison Mines, Orano Canada, Paladin Energy and NexGen Energy will reduce domestic production by 2035. is likely to double.
Canada’s Minister of Energy and Natural Resources, Jonathan Wilkinson, said investment in the country’s uranium market is at a 20-year high, with spending on exploration and mineral deposits expected to jump “90% to 200 million yen in 2022.” 32 million Canadian dollars (US$160 million).” In 2023, it will increase by another 26% to C$300 million. ”
“Not only does Canada mine enough uranium to fuel its domestic nuclear reactors, it is also the only country in the G7 that can supply uranium to fuel the reactors of its allies. “We export more than 80% of our uranium production, making Canada a world leader in this market,” he said in a statement to the FT.
The industry is desperate to profit from soaring uranium prices, which rose above $100 a pound last January, the highest level since 2008. It has since fallen to $73 per pound, but this is still well above the global average. The annual record for the past 10 years has been less than $50.
The expansion marks a turnaround for Canada’s uranium industry, which until 2008 was the world’s largest producer of uranium metal, the main component of nuclear fuel, until 2010, when it decimated nuclear power in the Western world. The market contracted due to slumping prices following the Fukushima accident in Japan. industry.
Kazakhstan’s state-owned company Kazatomprom has consolidated its position as the world’s largest producer amid the economic downturn. According to the World Nuclear Association, by 2022 Kazakhstan will produce 43% of all mined uranium (the world’s largest share), followed by Canada at 15% and Namibia at 11%.
But momentum may be shifting in Canada’s favor as demand for uranium is expected to surge following a pledge by 31 countries to triple their nuclear energy use by 2050 to combat climate change.
Tech giants like Amazon, Google and Meta are also turning to nuclear energy to run their power-hungry data centers because the fuel doesn’t produce greenhouse gases.
NexGen, which is developing the Luke 1 mine in northern Saskatchewan’s Athabasca Basin, could surpass Kazakhstan’s production within the next five years, strengthening energy security for the Western nuclear industry. It is estimated that.
“Our project has the power to return Canada to being one of the world’s leading uranium producers,” said Lee Currier, NexGen’s chief executive officer.
He added that U.S. power companies are lining up to buy uranium from Rook1. He added that Rook1 is in the final stages of permitting and could begin construction in mid-2025 if permits and funding are secured. NexGen estimates the mine will cost US$1.6 billion and produce 30 million pounds of uranium annually at full production. This is equivalent to almost one-fifth of current world production.
Meanwhile, Denison is developing its Wheeler River project and Paladin Energy is developing its Lake Patterson project, both in Saskatchewan, which could together produce up to 18 million pounds of uranium annually. Cameco is considering increasing production on the MacArthur River by more than a third, to 25 million pounds a year.
“We’ve never seen tailwinds like this,” said Grant Isaac, Cameco’s chief financial officer. “There is no question that the demand for uranium is increasing.”
Analysts at investment bank BMO Capital Markets say the tech giants’ interest in nuclear power “opens the door to significant private investment, along with the expansion of aggressive government policy,” and that interest in uranium could be “resurgent.” “It shows that it is.”
“Conversations appear to have moved beyond securing significant government and public support to financing,” the pair said in a December memo.
Uranium producers in Australia, the United States and a handful of other countries also plan to expand their uranium mines, but on a much smaller scale than in Canada or Kazakhstan.
Meanwhile, Kazakhstan’s ability to further scale up to meet growing demand is hit by a number of obstacles.
Kazatomprom, which accounts for 23 percent of global production, found that production disruptions could be extended last year due to a shortage of sulfuric acid used in leach mining operations.
Geopolitical tensions related to Russia’s full-scale invasion of Ukraine in 2022 are also making it difficult for the company to supply products to Western countries.
In August, the United States banned uranium imports from Russia as part of efforts to improve energy security, but there is an exemption period until 2027 for some contracts deemed important. Moscow responded with similar restrictions on uranium exports to the United States.
China is Kazakhstan’s largest buyer of uranium, having on December 17 bought a stake in some deposits jointly developed by Kazatomprom and Russia’s state-run nuclear energy company Rosatom.
If the trend of most of Kazakhstan’s uranium heading east, particularly to China, “accelerates”, it could be a “wake-up call for Western utilities,” said Jonathan Hinze, chairman of the research group UxC. Ta.
“The global uranium market is truly at a crossroads… it never existed before,” said Isaac of Cameco, which owns 40 percent of Inkai, a joint venture between Kazatomprom and Kazakhstan. said.
Isaac said some Western power companies are switching away from Russia-related supplies in the wake of the Ukraine war, while others are waiting to see how the conflict plays out before making final decisions.
The delay means Cameco has not yet made a final investment decision on its latest expansion plan at the MacArthur River Key Lake site in Saskatchewan.
“This is not a ‘build it and they will come’ type of market,” he said, adding that delays would only push this demand further, increasing the risk of supply shortages and price hikes later in life.