As the world transitions to electricity to combat climate change, nuclear energy is poised to become an increasingly vital component of the global energy mix. New nuclear power projects have recently reached unprecedented levels, with more than 20 countries pledging to triple global nuclear capacity by 2050. China alone plans to construct at least 150 new reactors in the next 15 years, investing over USD 440 billion. India has also announced ambitious plans to increase its nuclear capacity from 6,780 megawatts to 22,480 megawatts by 2031.
This surge in nuclear energy development persists despite several factors complicating the rise of uranium as a coveted metal. Chief among these are: the significant and steady decline in investment in uranium exploration and mine development over the past decade, particularly following the Fukushima incident in 2011; governments' focus on solar and wind energy; and the recent Western sanctions imposed on Russia, which have complicated the process of importing Russian uranium (especially with a complete ban on imports to the United States). Additionally, high inflation and interest rates have led to increased costs for new and existing uranium mining projects. Furthermore, conflicts in Niger have resulted in the loss of 5% of the world's uranium supply, representing more than 24% of the European Union's uranium imports.
A Steady Increase
Several factors impact the uranium market. They can be highlighted as follows:
1. Expectations of a significant increase in demand:
2. Gradual price increase:
Spot prices for uranium increased by 50% last year compared to the previous year, reaching about USD 105 at the beginning of 2024. Prices currently average USD 84 per pound (0.453 kilograms), with demand continuing to outpace supply. The new US ban on uranium imports from Russia will further tighten the supply, leading to additional price increases. The world is projected to need up to 100,000 tons of uranium annually by 2040, necessitating a doubling of mining output.
Nuclear power accounts for about 5% of the world's installed capacity, with a value of 407 gigawatts. The United States has the largest installed nuclear capacity at about 95 gigawatts, followed by France (61 gigawatts), China (56 gigawatts), Japan (33 gigawatts), and Russia (30 gigawatts).
3. Increasing reliance on nuclear energy:
Currently, 85 gigawatts of nuclear capacity are under construction (including 31 gigawatts in China alone) and 354 gigawatts are under development (including 174 gigawatts in China). In terms of power generation, nuclear power accounts for about 10% of global electricity production at 2,677 terawatt-hours. In 2022, the United States produced the largest amount of nuclear energy (805 terawatt-hours), followed by China (418 terawatt-hours), France (295 terawatt-hours), Russia (224 terawatt-hours), and South Korea (176 terawatt-hours).
A Complex Map
The map of uranium production can be described as follows:
1. Largest reserves concentrated in Kazakhstan, Canada, and Namibia:
Kazakhstan dominates the global uranium market as the world's largest producer, accounting for approximately 40% of global production in 2022. It possesses 12% of the world's recoverable uranium resources, with total reserves estimated at 1.4 million tons. Canada, the second-largest producer, boasts the world's largest high-grade uranium deposits in the Athabasca Basin, with ore grades up to 100 times higher than the global average. Canada's proven reserves total 588,500 tons, with the majority of exploration and development investment focused in the Athabasca region, despite former mines in Ontario and Quebec. Namibia ranks as the third-largest uranium producer globally, contributing approximately 10 to 15% of global production.
2. Dominance of mining operations by a few companies:
The uranium mining industry is largely controlled by a handful of major players. Kazakhstan's state-owned Kazatomprom leads with a 23% market share, followed by Canada's Cameco (12%), France's Orano (11%), China National Nuclear Corporation (10%), and Russia's state-owned Uranium One (9%).
Global uranium production is projected to grow by 11.7%, reaching over 60.3 megatons by the end of 2024. This increase will be primarily driven by higher production from major producers, particularly Kazakhstan and Canada. Kazakhstan is expected to achieve the highest growth in uranium production in 2024, largely due to the ambitious production plans of Kazatomprom, the world's largest uranium producer.
An Anticipated Race
Several potential outcomes for the demand for uranium can be anticipated as follows:
1. Reinforcing the growing importance of nuclear energy:
Geopolitical factors are exacerbating uncertainty about uranium. Countries are seeking to strengthen their reserves to accelerate nuclear energy production and, in some cases, nuclear weapons development. For example, the military coup in Niger, the second-largest supplier to the European Union in 2022, has fueled fears of Russian and Chinese rapprochement with the new leaders in Niamey. Both countries have dynamic nuclear industries that require a strong demand for fuel, and they do not hide their commercial ambitions, especially in the field of uranium extraction and conversion. Iran has also sought to strengthen ties with Niger following the regime change, signing an agreement to supply Tehran with uranium. Similarly, Turkey has recently pursued rapprochement with Niger, hoping to secure Ankara's access to uranium to support the country's nascent nuclear energy industry.
2. US and Chinese strategies to secure necessary uranium needs:
Kazakhstan has signed a long-term agreement to supply uranium to China, stipulating the provision of the first batch of uranium compounds to the latter. Russia, meanwhile, has maintained its influence over Kazakhstan and Uzbekistan to secure its uranium needs. The United States, on the other hand, has sought to secure its requirements through agreements that facilitate the access of Canadian uranium to the US market. However, the competition is not limited to securing needs; several major countries have also sought to compete for control of uranium sources in different parts of the world.
3. International competition for uranium reserves in Africa:
The interest of major countries in securing their uranium needs is evident in the fierce competition for exploration rights in numerous African countries. This rivalry is particularly apparent in the competition between American, Chinese, and French companies, all of which are vying for mining rights in the uranium-rich Bakouma region of the Central African Republic. In Tanzania, major companies representing the United States, China, and France are competing to obtain exploration concessions in the Mkuju River area. Similar competition is unfolding in Malawi, Namibia, South Africa, Chad, and Botswana, indicating the potential for increased international rivalry for uranium in the future amid rising demand for this mineral.
The competition to purchase uranium has reached unprecedented levels in recent years. Geopolitical and economic factors have significantly intensified international rivalry, driven by rising demand and increased reliance on this energy source. Several other issues have also contributed to this outcome, including technological advancements in the field of nuclear energy. These developments suggest a potential increase in uranium dependence in the future, particularly with the proven efficiency and cost-effectiveness of small modular reactors (SMR), advanced modular reactors (AMR), and small nuclear power reactors (SNPR). Nuclear energy is becoming an increasingly attractive option for countries seeking to meet their climate commitments, coinciding with the emergence of new actors and the expansion of nuclear reactor implementation—especially in Asia and the Middle East.
