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The price of fuel for nuclear reactors has hit a record high as demand from artificial intelligence data centers exacerbates market tensions following Russia’s invasion of Ukraine.
Prices for enriched uranium have risen to $190 per unit of separation work – the standard measure of effort required to separate uranium isotopes – up from $56 three years ago, according to data provider UxC .
A surge of interest in nuclear energy has occurred as governments and businesses consider carbon-free energy sources large enough to power major industrial facilities and communities.
Big tech companies such as Microsoft and Amazon are now interested in using the fuel to run the extremely power-hungry data centers they are working to build as they compete for market share in generative AI.
Growing competition in the energy sector has increased concerns in the sector following Russia’s invasion of Ukraine almost three years ago. Russia is a major player in the process of turning mined uranium into enriched fuel needed for a nuclear reactor, but U.S. sanctions and a ban on Russian exports have helped drive prices to record levels.
“We just don’t have enough conversion and enrichment in the West and that’s why the price has seen this kind of movement, and that price is only going to go up,” said Nick Lawson, the group’s chief executive. Ocean Wall investment fund.
Executives and analysts say the problem is likely to be exacerbated by the expiration of a U.S. waiver for importers at the end of 2027. The push has put pressure on the industry to find new facilities capable of converting uranium into pellets for nuclear reactors. . Apart from Russia, the main Western countries with operational uranium conversion facilities are France, the United States and Canada.
“There are a lot of very important policy decisions that need to be made” about investments in the nuclear and uranium supply chain, Lawson said, adding that building new facilities would take “years” and cost huge sums of money. money.
About 27% of U.S. enriched uranium imports in 2023 came from Russia, according to Berenberg analysts. Although U.S. utilities likely had enough fuel for this year, their coverage will decline significantly within four years, analysts add.
“US utilities will need to begin contract discussions this year to obtain [uranium]especially with the restriction on Russian uranium imports to the United States coming into effect at the end of 2027,” they said.
Most uranium is sold under long-term contracts rather than on the open or spot market. But prices for immediate delivery could rise due to a possible reduction in the availability of uranium itself, industry analysts say. Kazatomprom, Kazakhstan’s state mining company and the world’s largest uranium producer, has warned in recent months of lower-than-expected production.
“We are seeing more and more that Kazakh materials will go to China and Russia and less will go to the west,” which poses a “problem for Western utilities,” Andre said Liebenberg, chief executive of London-listed uranium investment vehicle Yellow Cake. “We could easily see a shortage of supply in the medium term, simply due to the lack of new projects that can start quickly. »
