Uranium sector ‘scrambling’ to fill supply gap

The price of uranium will hit triple-digits for the first time since 2007 as nations weaning off oil and seeking energy security deplete nuclear fuel supplies, the world’s largest investment fund in the physical metal says.

The spot price for uranium should rise from US$79 per lb. this week to US$100 or more per lb. within a year to 18 months, John Ciampaglia, CEO of of Sprott Asset Management, which runs the Sprott Physical Uranium Trust (TSX:U.U for US$;  U.UN for C$), said by phone on Monday. The trust holds 62 million lb. of yellowcake uranium valued at US$4.9 billion.

Global yellowcake supply might reach 145 million lb. this year or next, Ciampaglia said, citing the World Nuclear Association. But annual demand is already at 180 million lb. and the industry group expects it to nearly double to 300 million lb. by 2040. Some 60 nuclear plants are under construction globally and more are planned. Countries like Germany and Japan that considered phasing them out are reversing course.

“You've got an industry that's scrambling to meet the supply requirement that's forming and the market today is already out of balance,” Ciampaglia said in Toronto where he’s based. “Around 2030, there's a very large supply deficit that that could play out and that's why the price of uranium is obviously starting to move.”

The price of yellowcake, also known as uranium oxide or U₃O_8, has increased more than 50% this year. The green energy transition is gathering pace as governments from California to Europe ease aversion to nuclear power more than a decade after the Fukushima disaster. They also want reliable and independent backups to wind and solar energy grids after the war in Ukraine showed the pitfall of relying on Russian natural gas.