Nuclear Renaissance Sparks Uranium Rush
Irina Slav

The debate about whether nuclear energy has a place in a net-zero energy system has been heating up recently. Oblivious to that debate, large electricity consumers are making their own plans. While Germany shut down its last nuclear reactors, Microsoft struck a deal to re-open the Three Mile Island plant to fuel its data centers. Nuclear is back. And the race to fuel the nuclear renaissance is on.

In December last year, energy transition outlet Inside Climate News reported that Texas was reviving old uranium mines as it seeks to feed its high-tech industries. “We can make Texas the nuclear capital of the world,” the report quoted the head of the state’s Nuclear Alliance, Reed Clay, as saying.

The report followed a flurry of news pointing towards a growing appetite for nuclear power, especially from the tech industry. That Three Mile Island deal that Microsoft struck with Constellation Energy was one of the signs that nuclear is making a comeback. Google’s partnership with modular reactor developer Kairos for 500 MW of capacity was another sign. Amazon was not far behind, buying a stake in another modular reactor company, X-energy. Metal is also in the nuclear game, seeking up to 4 GW in nuclear capacity for its data centers.

There is a nuclear race on, despite Germany’s insistence it would not reverse its own ban on the only low-emission baseload form of electricity generation, for which it is paying with a surge in coal generation. That race has put uranium in the spotlight. And uranium is problematic.

An infographic by Visual Capitalist published last week shows the problem quite clearly. The infographic maps the sources of uranium for U.S. nuclear reactors. At 28%, local uranium mines are the top source—followed by Russia, which accounts for 27% of the enriched uranium used in U.S. reactors. For obvious foreign policy reasons, this is not optimal from the perspective of the State Department. Russia is also the largest supplier of processed uranium in the world, a position quite similar to China’s position as the largest processor of critical metals and minerals.

One might say the West has picked a bad time to revive nuclear power, but this is a revival borne out of necessity as the realization dawns that wind and solar power won’t cut it as primary energy sources. Not only that, but the two pillars of the energy transition have run into some serious financial trouble recently, such as negative electricity prices during peak generation periods and higher production costs.

As a result, uranium prices may be about to go through the roof—because there may not be enough capacity in operation in the world. Last year, 22 countries signed a declaration to triple their nuclear power generation capacity by 2050 as part of efforts to decarbonize. “There’s no other way to meet those net-zero carbon goals other than nuclear energy,” one nuclear industry executive, the chief executive of Thor Energy, said at the time. And then she sounded the alarm.

“Where is that uranium going to come from?” Nicole Galloway Warland asked. “There’s not enough to go around. There’s a supply deficit.” Enter Canada, one of the largest producers of uranium and a country whose federal government is firmly in the energy transition camp.

“Not only does Canada mine enough uranium to fuel our domestic reactors, but we are also the only country in the G7 that can supply uranium to fuel our allies’ reactors. Each year, Canada exports over 80 per cent of our uranium production, making us a world leader in this market,” resource minister Jonathan Wilkinson said earlier this month in a statement to the Financial Times.

The Visual Capitalist infographic does not list Canada among the large suppliers of uranium for U.S. reactors, meaning it falls in the “Other” category, which accounts for 12% of the U.S. total in uranium imports. Yet Canada is the world’s second-largest producer of the radioactive element and boasts the world’s largest high-grade uranium. It is little wonder that Canadian uranium miners are preparing for a boom as the price of nuclear fuel is expected to surge.

“We’ve never seen tailwinds quite like this,” Grant Isaac, chief financial officer of uranium mining major Cameco, told the FT. “There is no doubt that there is growing demand for uranium.” Indeed, demand is growing, even though opposition from the climate activism circles is also growing, as activists point to the long construction times for nuclear, the emissions footprint of that construction, and their general dislike for this competitor to their favored wind and solar.

The fact remains, however, that even such a staunch proponent of the energy transition as the International Energy Agency has acknowledged the lead role that nuclear power is set to play in the decarbonization of the world’s energy systems. And this means that those uranium miners in Canada—and elsewhere—have a good reason to be optimistic.

By Irina Slav for Oilprice.com

 

 

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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