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The price of nuclear reactor fuel has soared to a record high as AI data center demand exacerbates market pressure following Russia's invasion of Ukraine.
Enriched uranium prices reached $190 per separation work unit — a standard measure of the effort required to separate uranium isotopes — compared with $56 three years ago, according to data provider UxC.
The resurgence of interest in nuclear power has come as governments and companies seek carbon-free energy sources large enough to serve large industrial facilities and communities.
Big tech companies like Microsoft and Amazon have become interested in using fuel to run energy-intensive data centers they are racing to build as they compete for market share in generative artificial intelligence.
Growing competition in the energy sector has added to the industry's other concerns Russian invasion of Ukraine almost three years ago. Russia is a major player in the process of turning mined uranium into enriched fuel needed for a nuclear reactor, but US sanctions and a Russian export ban have helped push prices to record levels.
“We just don't have enough conversions and enrichments in the west and that's why the price has seen this kind of movement and that price is only going to go higher,” said Nick Lawson, managing director of investment group Ocean Wall.
Executives and analysts say the problem is likely to get worse with the expiration of a U.S. importer exemption at the end of 2027. That pressure has put pressure on the industry to find new equipment that can turn uranium into pellets that go into nuclear reactors. . Outside of Russia, the main Western countries with operational uranium conversion facilities are France, the US and Canada.
“There are a lot of very important policy decisions to be made” about nuclear and uranium supply chain investments, Lawson said, adding that building new facilities would take “years” and cost huge sums of money.
About 27 percent of U.S. enriched uranium imports in 2023 came from Russia, according to Berenberg analysts. While U.S. energy companies likely had enough fuel for this year, their coverage will shrink substantially in four years, the analysts added.
“U.S. energy companies will have to start negotiating contracts this year to secure them [uranium]especially with the restrictions on the import of Russian uranium to the US, which will come into effect at the end of 2027,” they said.
Most uranium is sold under long-term contracts rather than on the open or spot market. But prices for spot delivery could rise due to potential restrictions on the availability of uranium itself, industry analysts say. Kazatomprom, Kazakhstan's state-owned miner and the world's largest uranium producer, has warned of lower-than-expected production in recent months.
“More and more we're seeing Kazakh material going to China and Russia and less going west,” which posed “a problem for Western companies,” said Andre Liebenberg, chief executive of London-listed uranium investment vehicle Yellow Cake. “In the medium term, we could easily see a supply crunch just because of the lack of new projects that can start up quickly.”
