The uranium market has faced some short-term pressure, with spot prices dropping below US$80 per lb. after hitting a peak of US$107 in February. Despite this drop, prices are still 30% higher than last year, providing good returns for producers, new analysis by BMO Capital Markets showed Tuesday.
As the World Nuclear Association Symposium begins in London, the market is dealing with mixed signals—supply issues and logistical delays are affecting the mood, analyst Alexander Pearce said in a market comment. BMO expects uranium demand to grow by 2.9% yearly through 2035, driven by China’s push to build new reactors and the potential for reactor restarts in North America.
“Despite the recent price drop, we see the potential for increased demand over the medium to long term,” Pearce said.
Cameco (TSX: CCO; NYSE: CCJ) sticks out as a top stock pick, BMO recommends, while it expects over 30% growth in earnings before interest, taxes, depreciation and amortization from 2024 to 2026.
On the supply side, BMO notes that 2024 could see the first significant growth in uranium supply in years as older projects catch up with demand. However, Pearce warns that “permitting delays, logistical issues, and political interference” could make it hard to achieve that growth.
The spot price for uranium oxide in July closed at US$84.75 per lb., according to averaged UxC and TradeTech month-end prices, with longer-term contracts settling at US$80.50.
Brian Gitt, who leads business development at California-based Oklo, a small modular reactor (SMR) specialist, emphasized the role of advanced nuclear technologies in meeting growing energy needs. Speaking on an Aug. 20 Sprott Radio Podcast, Gitt highlighted the urgent need for reliable, clean energy in the United States, especially for data centres and manufacturing.
“We’re seeing two big trends: rising power demand and the need for clean energy,” Gitt said.
“Immoral” carbon caps
Traditional energy sources like natural gas and coal face increasing challenges, making advanced nuclear an appealing solution, Gitt said.
Oklo positions its emerging SMR capabilities as a flexible, efficient way to meet this demand, especially by being placed close to energy-hungry facilities, avoiding long waits for grid expansion. While SMRs show great promise, they are still in development and not yet widely commercially adopted, making their impact more theoretical at this stage.
Gitt also stressed the importance of nuclear energy for global development. “Energy is freedom,” he said, arguing that advanced atomic technologies could play a key role in improving living standards in developing countries, where energy access is often limited.
He also strongly criticized the restrictions on energy development in developing countries, calling it “immoral” to limit their access to affordable energy sources like coal in the name of reducing carbon emissions. He underlined the critical role energy plays in improving living standards worldwide, even if it does initially come from fossil fuels.
“When you choke off energy, you’re choking off freedom and economic opportunity,” Gitt said.
Re: Small Modular Reactors (SMR; NM report, 09/08/2024)
SMRs are the obvious choice for rapid expansion of power to supply the electric grid. Ship-borne SMRs especially
could supply large coastal cities, and would be especially helpful in the event of major disasters impacting a large
coastal city, aiding in recovery from hurricanes, earthquakes, etc.