- Citibank expects uranium prices to average $110 per pound in 2025.
- The world's largest miner of uranium, Kazatomprom, warns of falling short of production targets through 2025.
- Global demand for uranium surges amid a major reactor build program, contributing to a decade-long supply deficit.
The uranium market is witnessing a potential rally as the world's leading uranium miner, Kazatomprom, anticipates a production shortfall over the next two years. This announcement comes at a time when uranium prices have already reached 16-year highs and are expected to experience further upward momentum.
Kazatomprom cited construction delays and challenges related to the availability of sulfuric acid, a critical component in the uranium extraction process, as primary reasons for the anticipated production issues. As the largest contributor to global uranium production, accounting for over one-fifth of the world's output, Kazakhstan plays a crucial role in shaping the uranium market.
The deficit in uranium supply is not unique to Kazatomprom, as other major producers face obstacles. Canada-based Cameco has signaled lower production, and France-owned Orano has shut down its operations in Niger. This supply challenge is occurring in the midst of the most significant reactor build program in decades.
Uranium is a vital material for nuclear power production, and its demand has surged as governments globally seek alternatives to carbon-emitting fuels, aiming to reduce reliance on Russian oil and gas. With around 60 nuclear power reactors under construction and another 110 in the planning stages, the uranium market faces increased pressure.
According to Citibank, uranium prices are expected to average $110 per pound in 2025. The closure of mines due to overproduction and low prices has been a fundamental driver of the current bull market. Additionally, short-term dynamics and geopolitical factors could push prices even higher, potentially exceeding the all-time highs reached in June 2007.
Geopolitically, concerns about Russia's potential retaliation to proposed U.S. legislation banning the import of Russian enriched uranium add to the supply worries. If approved, this legislation could further disrupt the nuclear fuel supply chain, creating a larger projected supply deficit in the coming years.
While disruptions in uranium supply may pose challenges for countries heavily reliant on nuclear power, immediate impacts on consumers are not anticipated. Most utilities operate under long-term contracts, mitigating the instant effects of higher prices. However, the industry is closely watching for potential developments that could impact electric utilities and power prices in the future.
