Scramble for uranium supplies on new nuclear Silk Road

On the same day Hinkley’s reactor building was crowned, the price of uranium jumped to $85.75 a pound on the spot market.

That is the highest level since January 2007 and compares to just $24 per pound at the start of 2020.

This month, Morgan Stanley analysts predicted it will rise to $95 in the first half of next year, while others believe it could easily go much higher.

The driving force is the fear of a decade-long supply crunch, as demand for uranium ramps up but miners struggle to get the metal out of the ground quickly enough.

Demand is forecast to reach 180 million pounds this year alone, compared to just 130 million pounds of expected production, according to London research company Ocean Wall, a uranium specialist.

Normally in a situation like this, high commodity prices would prompt miners to rapidly invest in new projects to boost overall supplies. But uranium is a different story, says Ben Finegold, an analyst at Ocean Wall.

Reopening mothballed mines will barely move the needle on supply globally. Meanwhile, it typically takes more than a decade to open new ones.

“The supply response is going to be so slow,” Finegold says.

“Frankly, if the uranium price were to jump to $500 a pound tomorrow, it would do very little for meaningful volumes of supply in the short to medium term.”

Mining uranium is more complicated than mining other precious metals, partly due to restrictions on how it is transported and stored.

In the past decade, production of raw uranium concentrate (known as yellowcake) has plunged from a peak of 69,966 tonnes in 2013 to 58,201 last year. According to the WNA, that is more than 10,000 tonnes below current reactor requirements – let alone planned ones.

The malaise set in after the 2011 Fukushima nuclear disaster in Japan, which prompted some countries such as Japan and Germany to shut down reactors.