Column by Polina Smertina on the inertia of the nuclear fuel market

The global uranium market reacted coolly to the military coup in Niger, where France’s Orano produces about 3% of annual global demand. Over the past week, the spot price of nitrous oxide U3O8, despite the closure of Niger’s borders and the threat of military intervention in the country, rose only slightly to $56.5 per pound, according to an Energy Intelligence survey. NPP operators and brokers clearly did not succumb to panic, hoping for a speedy end to the conflict. It is obvious that Orano, having assured everyone of the diversification of its production, took a break and did not enter the spot market. But if the conflict drags on, then the French company will probably have to buy free U3O8 on the spot to cover the supply under the contracts. The market will surely take notice.

However, over the past year and a half, uranium buyers have become indifferent to many shocks. After the outbreak of hostilities in Ukraine, prices for U3O8 peaked at $64 per pound in April due to fears of imposing sanctions on Russian uranium, but then declined and stayed below $50 until the end of 2022. No other event has yet returned prices to these record levels. For example, the market is calmly experiencing another hitch in the supply of Kazakh uranium to Canadian Cameco, bypassing the Russian Federation through Georgia and Azerbaijan, the unstable situation in the ports of the Black Sea, and the bill on the ban on imports of uranium from Russia from 2028, which has been discussed in the US Congress since May.

High uranium price forecasts, as usual, are given by investment funds, however, acknowledging that the volume of transactions in the spot market in 2023 has fallen significantly from last year’s records. For example, spot transactions almost halved in the first half of 2023, to 18.3 million pounds U3O8. Moreover, mainly European buyers entered the spot, probably trying to get away from Russian purchases.

In the long run, replacing 2,000 tons of uranium from Niger is likely to be easy, at least if miners in Kazakhstan, Canada, and Namibia fulfill their stated plans to increase production. A more complex issue, which is unlikely to be resolved in the coming years, concerns uranium enrichment and conversion, where Russia remains one of the largest suppliers. In the services market, prices have not stopped growing since February 2022, but this does not lead to an increase in investment: European Orano and Urenco plan to only slightly expand their enterprises, which is unlikely to replace supplies from the Russian Federation.

It seems that in nuclear energy, where the return on investment takes decades, stronger shocks are needed to kick-start a new investment cycle. I think that most market players no longer believe that Russia can be pushed out of its leading position in the production of raw materials for nuclear fuel.