Sprott’s uranium insights are always interesting, including the five-year graphic showing the comparison of the performance of global uranium equities and physical uranium, versus other assets like bonds, US equities, the broader commodity sector and also the US$. YTD, uranium is up 54.16%, whilst senior and junior uranium miners have risen by 44.85% and 32.77%, respectively.
Uranium prices are at their highest level in more than a decade, but importantly the momentum is likely to be maintained. The World Nuclear Association’s (WNA) biennial Nuclear Fuel Report notes that world nuclear reactor requirements are forecast to nearly double by 2040, from 171 to 338 MM U3O8e pounds annually. Rising prices are also unlikely to impact demand, as uranium fuel costs represent just 4-8% of a nuclear plant’s ongoing costs.
Uranium demand has been primarily driven by increased utility contracting. A significant component of this involves the nuclear fuel supply chain’s continued moves away from Russia, which accounts for 39% of the global capacity to enrich uranium. Sprott points out that “Although no sanctions have been levied against Russian services to date, utilities are self-sanctioning by not signing any new contracts with Russian entities. In the U.S., the White House also sent Congress an enrichment request for $2.2 billion in October.”