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The price of fuel for nuclear reactors has risen to a record high as demand from artificial intelligence data centers exacerbates a squeeze on the market following Russia’s invasion of Ukraine.
Prices for enriched uranium have reached $190 per unit of separation work – the standard measure of effort required to separate uranium isotopes – compared with $56 three years ago, according to data provider UxC.
A resurgence of interest in nuclear power has come as governments and companies look to carbon-free energy sources sufficient to serve major industrial facilities and communities.
Big tech companies like Microsoft and Amazon have been interested in using the fuel to run the energy-intensive data centers they’re trying to build as they compete for market share in generative AI.
Increased competition for energy has added to industry concerns following Russia’s invasion of Ukraine nearly 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 ban on Russian exports have helped prices hit record highs.
“We just don’t have enough conversion and enrichment in the west and that’s why the price has had this kind of movement, and that price is only going to go higher,” said Nick Lawson, chief executive of investment group Ocean Wall.
Executives and analysts say the issue is likely to be exacerbated by the expiration of a U.S. waiver on importers at the end of 2027. That push has put pressure on the industry to find new facilities that can convert uranium into pellets that go in nuclear reactors. Outside of Russia, the main Western countries that have operational 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 and uranium supply chain, Lawson said, adding that building new facilities would take “years” and cost huge sums. money
About 27 percent of US enriched uranium imports in 2023 came from Russia, according to analysts at Berenberg. While U.S. utilities probably had enough fuel for this year, their coverage will drop sharply four years from now, analysts added.
“U.S. public companies will need to begin contracting discussions this year to secure (uranium), especially with the cap on Russian uranium imports to the U.S. coming 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 possible squeeze 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 output.
“We see increasingly that Kazakh material will flow to China and Russia and less of it will go to the West,” which poses an “issue for Western enterprises,” said Andre Liebenberg, the investment vehicle’s chief executive. of London-listed uranium, Yellow Cake. “We could easily see a supply crunch in the medium term just because of the lack of new projects that can come on stream quickly.”
