Uranium prices have been climbing into the new year as plans to shut many nuclear power plants around the world reversed course in 2022. Many utility operators are now more interested in extending the lifespan of existing plants well beyond 40 years. Germany and Japan are two key nations that have seen public sentiment toward nuclear shift in a positive direction over the past year, coinciding with a significant reconsideration of energy policy.
More uranium is demanded per year than produced, a pattern likely to continue for some time as miners work through a large inventory of supplies built up throughout the 2010s. Still, risks remain to the resurgence of nuclear power, particularly Russia’s war in Ukraine, which has boosted uranium prices, but could also cause them to crumble if power plants continue to become embroiled in the conflict.
For a number of years, demand for uranium (the commodity from which nuclear energy is derived) has outpaced supply. Key miners have been intentionally cutting production since the late 2010s to work through massive inventories that wiped out commodity prices for uranium. Per Cameco data, long-term pricing of uranium supplies were more than halved from $71.50 per pound at the start of 2011 to just $32.50 by the beginning of 2017. Years of reducing mine output has had a significantly positive impact on pricing, as long-term prices closed out 2022 at $52 per pound.
Per Bloomberg, Belgium, Finland and Slovakia are now extending reactor lifetimes. Germany, which relied heavily on Russia for natural gas before the invasion of Ukraine, was set to shut down all of its nuclear plants by the end of 2022, but sanction-induced shortages of natural gas have given the country’s nuclear capacity an extension to at least April 15 of this year.
At one point in the 1990s, 19 nuclear reactors generated one-third of Germany’s electricity. Like many of the world’s governments, Germany’s largely fell out of love with nuclear after the Fukushima nuclear disaster in 2011. By the time August 2022 had rolled around, however, and plans to phase out nuclear were imminent, just 15 percent of surveyed Germans in a poll by ARD-DeutschlandTrend were in favor of shutting down the country’s remaining reactors. Now, 41 percent of Germans support extending the operation of the existing units.
Polling results in Japan have also been encouraging. In April, 53 percent of Japanese respondents to a survey from Nikkei said nuclear reactors should restart, if safety can be ensured. That marked the first time since the Fukushima disaster in 2011 that an increasing role for nuclear had been favored in the semi-regular surveys conducted by the newspaper. Along with the passage of time, rising power costs have spurred the Japanese back toward a demand for nuclear power — now regulated much more stringently than it was prior to Fukushima. As of June, Nippon.com notes that 10 nuclear reactors at six power stations have been given approval to restart.
According to Rick Rule, CEO of Sprott US Holdings, Japan still has a total 40 existing nuclear reactors that could still come back online in the future. The restart of these plants could “raise the structural demand for uranium by between 10 and 12 million pounds a year,” Rule recently told Mining.com.
This story was excerpted from a report from McAlinden Research Partners. Read its full report at the McAlinden website.