Uranium price spikes over Russia supply fears

Cameco’s Cigar Lake uranium mine in northern Saskatchewan. Credit: Cameco

The uranium spot price surged more than 10% on Wednesday closing in on $60 a pound after media reports that the Biden administration is considering imposing sanctions on Russia’s state-owned atomic energy company, Rosatom.

Rosatom not only represents some 42% of global uranium refinement capacity, but accounts for nearly a quarter of US imports of the nuclear fuel powering the country’s fleet of reactors. 

At the same time, Rosatom has several joint ventures in Kazakhstan, which is responsible for 45% of the world’s primary uranium production. Russian mines produce 8 million pounds of U3O8 per year out of a global total of estimated 117 million pounds in 2021 and the country also adds roughly 15 million pounds to supply through tailings reprocessing.    

Spot uranium prices are up more than 30% so far this year and are now trading at the highest since September 2011, boosting stocks of major explorers and producers. 

The world’s largest listed uranium miners, Canada’s Cameco (TSX:CCO) is up 14% this week while state-owned Kazatomprom (LSE:KAP), has reversed its slide to add 10% in value since Monday.

Denison Mines (TSX:DML) and NexGen Energy (TSX:NXE) are both up by a third in value while Uranium Energy Corp (NYSE MKT:UEC) has surged 62% over the last month. 

Global X Uranium ETF (NYSEArca:URA) has gained 18% over the last month while Sprott Physical Uranium Trust (TSX: U.U) jumped 6.2% on Thursday bringing its gains for the month to 32%.

In a note, BMO Capital Markets says it calculates that Sprott has added around 400,000 pounds to its holdings over the week to date, adding to the roughly 4.1 million pounds accumulated over the prior two weeks:

“This is helping to reduce the addressable inventory overhang in uranium at a relatively fast pace.”