Uranium prices hit record as thirsty AI data centres add to market squeeze

Unlock Editor’s Digest for free

Roula Khalaf, editor of the FT, picks her favorite stories in this weekly newsletter.

Fuel prices for nuclear reactors hit record highs after Russia’s invasion of Ukraine put pressure on the market for demand for artificial intelligence data centers.

According to data provider UXC, the price of enriched uranium is $190 per unit of separation work – the standard measure of effort required to separate isotopes of uranium – compared with $56 three years ago.

There has been a resurgence of interest in nuclear power as governments and companies look to carbon-free sources of electricity large enough to serve major industrial facilities and communities.

Big tech companies like Microsoft and Amazon have become interested in using the fuel to run Huge energy-intensive data centers They are racing to build, competing for market share in generative AI.

Increasing competition for energy has added to the following industry concerns Russia’s invasion of Ukraine About three years ago. Russia is a major player in the process of turning mined uranium into the enriched fuel needed for a nuclear reactor, but US sanctions and a Russian export ban have helped push prices to record highs.

“We haven’t had enough transformation and prosperity in the West and that’s why prices have taken this kind of action, and those prices are only going to get higher,” said Nick Lawson, chief executive of investment group Ocean Wall.

Executives and analysts say the problem is likely to worsen as a US waiver for importers expires at the end of 2027. The setback has put pressure on the industry to find new facilities that can convert uranium into pellets that go into nuclear reactors. . Outside of Russia, the main Western countries with operational uranium conversion facilities are France, the United States, and Canada.

There are “a lot of important political decisions to be made” about nuclear and uranium supply chain investments, Lawson said, adding that building new facilities would take “years” and cost a lot of money.

About 27 percent of U.S. enriched uranium imports in 2023 will come from Russia, according to analysts at Berenberg. While U.S. utilities likely had enough fuel for this year, their cover will drop significantly in four years’ time, the analysts added.

“US utilities need to start contract negotiations this year to make it safer [uranium]Especially with the limitation of Russian uranium imports to the US at the end of 2027,” they said.

Most uranium is sold under long-term contracts rather than in the open, or spot, market. But industry analysts say potential pressures on uranium availability could push prices up for immediate delivery. Kazatomprom, Kazakhstan’s state miner and the world’s largest uranium producer, has warned of lower-than-expected production in recent months.

“We increasingly see that Kazakh material will flow to China and Russia and less of it will go to the West,” which creates “problems for Western utilities,” said Andrey Liebenberg, chief executive of London-listed uranium investment vehicle Yellow Cake. “We can easily see a supply crunch in the medium term because of the lack of new projects that can come on stream quickly.”