The Kazakh crisis is the only threat hanging over the uranium market

WhoAzakhstan Is often Uranium is called Saudi Arabia. In fact, its market share, more than 40% of the world’s nuclear energy, is not far off from the oil market share of petroleum exporting countries and Russia’s joint venture. So when unrest, severe repression, shook the country earlier this month, metal buyers shuddered. Spot uranium prices rose 8% on January 5 to 45 45 per pound, according to the report A.X.C, A data provider. Now that the protests have subsided, the market has stabilized. Still, the product, often referred to as “yellowcake”, seems set for a turbulent decade.

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The immediate effects of the Kazakh unrest may be limited. Although the protests took place far from the uranium-producing region, there is a possibility of a small drop in global production. For uranium extraction, Kazakhstan uses a method that involves pumping acid into the soil to dissolve the ore, recovering the solution, and then using chemicals to separate the metal. Shipping of compounds and equipment may be disrupted due to stuck trains or communication problems, tasks may be slowed down.

Deficits may not be a big deal right now. Large buyers of uranium, such as China and France, who are heavy users of nuclear fuel, have years of valuable inventory. Most open utilities can borrow from foreign colleagues in case of immediate shortage, Toktar Turbe thinks CRU, A suggestion. Most of them buy nuclear fuel using long-term contracts, which keeps them far from short-term jumps in spot prices. All this creates a buffer against a pressure.

Nevertheless, the case in Kazakhstan, which for decades has been the world’s most stable uranium supplier, could ultimately push buyers to avoid the risk of relying too much on a single source. The day may come when the Kazakh government will collapse or state resources will be attacked (Kazatomprom, the country’s only uranium producer, 75% owned by a sovereign fund). Some consumers therefore want to diversify the source of their supply. Since Kazakhstan is by far the lowest cost producer, this would mean paying a premium.

An increase in overall demand could push prices even higher. From Belarus to Bangladesh, many emerging markets are providing nuclear assistance to decarbonize them. China plans to build 150 new reactors over the next 15 years. Even in the West, those who have long been divided over nuclear power could change attitudes. The European Commission plans to classify atoms as green in its “classification” for investors, which could lead to funding for new projects. NuScale, the first firm seeking to commercialize a small, modular reactor approved by American regulators, is preparing to go public (through a merger with a special-purpose acquisition company).

Outside of the near term, supply may not be able to grow fast enough to satisfy a larger appetite for metals, further supporting prices. New mines are planned in Africa and America, but they need at least $ 50-60 per pound of uranium to be profitable. If demand is to be satisfied 2 a conservative estimate 2 of 2% annual growth by 2030, then all those projects need to be launched and run, says Tim Bergin of Calderwood Capital, a hedge fund. That may not be realistic. One such mine, in Canada, is at the bottom of a lake; The other involves freezing the ground 400 meters below the surface. The price of fossil fuels could become increasingly flammable. 3

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This article appeared in the section “Finance and Economics” in the print edition under the title “Atomic and Abroad”

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