By Andy Home
LONDON (Reuters) – Is uranium a critical mineral?
Not according to the U.S. Geological Survey (USGS), which dropped it from its critical minerals list in 2022 on the grounds it didn’t qualify because it was a “fuel mineral”.
U.S. President Donald Trump wants it to think again.
One of Trump’s many “Unleashing American Energy” directives requires the Secretary of the Interior to instruct the director of the USGS to “consider updating the survey’s list of critical minerals, including for the potential of including uranium.”
Inclusion on the list would open up federal funds and fast-track permitting for domestic uranium projects.
It seems curious that uranium has slipped through a legal gap in the Energy Act of 2020, which stipulates only a “non-fuel mineral” can be considered a critical mineral.
Uranium ticks many of the criticality boxes. It’s experiencing a step-change in demand, global supply is heavily concentrated and the United States is almost totally import dependent.
The uranium price reflects these changing dynamics. Last year’s frothy rally to a 16-year high of $106 per lb has dissipated. But at a current price of $71 per lb, uranium is still higher than at any point in the decade that followed the 2011 Fukushima disaster in Japan.
NUCLEAR COMEBACK
Fukushima caused many countries to rethink the role of nuclear in their energy mix but the threat of global warming has brought nuclear power in from the cold.
The affirmation came at the COP28 summit in December 2023, when more than 20 countries launched the “Declaration to Triple Nuclear Power”.
It was official recognition of “the key role of nuclear energy in achieving global net-zero greenhouse gas emissions by 2050 and keeping the 1.5-degree goal within reach.”
Such green credentials likely don’t count for much with the Trump administration but Republicans view nuclear energy as a core component of national security, meaning it enjoys bipartisan support in the United States, albeit for different reasons.
Big tech is also enthusiastic as it searches for ever more power to feed its data centers. Microsoft signed a deal with Constellation Energy in September to help resurrect a unit of the Three Mile Island nuclear plant in Pennsylvania.
The re-embrace of nuclear power is a global trend.
Generation from the world’s fleet of nearly 420 reactors is on track to reach new heights in 2025, according to the International Energy Agency (IEA).
Some 63 reactors are currently under construction, one of the highest levels since 1990, and the lifetimes of over 60 reactors will be extended, the IEA said.
SUPPLY STRESS
The resurgence of nuclear power means the world is going to need a lot more uranium and supply is already struggling to match demand.
A decade of low prices has taken its toll, particularly in the United States, where production fell from almost five million lb in 2014 to just 21,000 lb in 2021, according to the IEA.
Global uranium production is now heavily concentrated. Kazakhstan, Canada and Australia accounted for around two-thirds of global output in 2022, according to the World Nuclear Association.
Indeed, one of the triggers for the January 2024 price spike was a warning from Kazakhstan’s Kazatomprom, the world’s largest producer, it might not achieve production targets due to a shortage of sulphuric acid.
Market stress is compounded by political stress.
The United States is trying to break its dependence on Russia for enriched uranium. Russian material accounted for 27% of the enriched uranium supplied to U.S. commercial reactors in 2023.
The Joe Biden administration banned Russian imports, albeit with waivers through 2027. Russia has responded by imposing restrictions on shipments to the United States, also with waivers.
Complicating things further is Trump’s threat to impose tariffs on Canada, which is the largest supplier of uranium to the U.S. market.
GOING CRITICAL
The uranium market is recharged after a decade in hibernation.
There was a lot of speculative froth in last year’s price spike with both institutional investors such as Goldman Sachs and retail investment vehicles such as Sprott Physical Uranium Trust chasing the rally.
But the uranium price remains historically high. The market is pricing in a supply shortfall relative to demand from a growing global fleet of nuclear reactors.
The United States has plenty of potential new supply projects, many of them using leach technology, with which to fill the gap.
How quickly they can be activated depends on the difference between a critical mineral and a “fuel mineral” that is increasingly critical.
The opinions expressed here are those of the author, a columnist for Reuters
(Editing by David Evans)
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