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A mining and enrichment capacity crunch looms for US, Canadian, and EU utilities

Someone pitches you on a “new” technology: it’s green, safer than nearly every other source of energy, and produces the most reliable base load electric power possible. You say: my lucky day — why tilt at windmills that kill bats, or build solar and hydro projects that devour resources and scar the landscape?

After fits and starts, the world has come around to the view that nuclear power is the best way to achieve broad societal goals: protecting the environment, weaning off fossil fuels, and powering electrification of transportation and industry. Over 60 nuclear reactors are under construction (21 in China) with plans for another 110 (70 in China). At the recent Dubai climate conference, 22 nations committed to trebling nuclear capacity by 2050.

Of course, nuclear power never really went out of style: it supplies nearly 20 per cent of US (50 per cent of zero carbon) and roughly 25 per cent of European electricity (68 per cent in France).

That’s good news — a victory for rational thought.

Not such good news is that, thanks to fearsome environmental politics and the Western policy myopia, we are facing a trifecta: a structural global deficit in uranium production, a choke point in enrichment (the process that turns the raw material, U308, into usable fuel), and the fact that agents of chaos have snatched the keys to the nuclear power kingdom. If that sounds pretty bad, self-inflicted wounds could make matters worse.

Belatedly recognising that nuclear energy production is a national security issue, the US House of Representatives just voted to ban imports of Russian uranium. Predictably, Russia threatened to cut the US off immediately — including recalling a ship already on the high seas carrying enriched uranium. It’s a fair point that ceding power over Western energy to Russia was never a good idea, but poking the bear without having a back-up plan seems reckless.

Cruel irony: American and European ratepayers are financing both sides of Russia’s war on Ukraine — Rosatom drops more than $1bn annually into Putin’s pocket through its uranium sales to US utilities alone.

Here’s a not-so-fun fact: the supply chain for uranium runs from Kazakhstan through Russia, which together account for 40 per cent of US supply — and Putin controls half of the world’s enrichment capacity. Even more concerning: in plain sight, Russia and China have cornered the market for U3O8.

Here’s some math:

Supply: 59mm pounds of U308 — 44 per cent of current global uranium production — are currently sourced from Kazakhstan, the Saudi Arabia of uranium.

Kazakh-origin uranium, either directly or indirectly, covers 40 per cent of US utility needs — 44 per cent for the EU. How long Western utilities can count on Kazakh production is an open question for a couple of reasons. Not least, President Kassym-Jomart Tokayev owes his tenuous grip on power to the Russian army.

More to the point: Russian and Chinese companies have cemented a corporate takeover of the national uranium operator; Russia owns some 26 per cent of Kazakh uranium deposits, and has rights to a further 22 per cent of annual production; China National Uranium Corporation (CNUC) and its confrères hold rights to almost 60 per cent of future Kazakh production; and CNUC is erecting a warehouse in Xinjiang just over the Kazakh border as a hub for uranium trading. Elsewhere, CNUC and China General Nuclear Power Group own stakes in uranium mines in Niger and Namibia, as does Russia’s Rosatom.

Further complicating geopolitics is the fact that Kazakhstan is landlocked, bordering both Russia and China. For decades, the only viable export route for Kazakh uranium to Western markets has been through the port of St Petersburg.

Existing and potential sanctions on Russian uranium exports, together with limited shipping options due to vessel availability and insurer concerns make shipment exquisitely vulnerable to disruption. Kazakhstan and a few of its Western partners had been discussing the development of an alternate Trans-Caspian shipping route. For now, it’s cheaper and safer to send ore through China by rail. 

The implications for US, Canadian, and EU nuclear utilities are profound. After 2028, when the new supply contract cycle kicks in, Western nuclear utilities will have to replace approximately 40mn pounds of uranium concentrates annually that are currently sourced from Kazakhstan — no small feat. By then, annual uranium demand in the US, Canada, and EU will be running close to 94mn pounds. But annual production in countries not aligned with or dominated by China and Russia will amount to only 48mn pounds. Inventory drawdowns and secondary supply can fill a small part of that 46mn pound gap, but the deep hole created by the loss of Kazakh production would need to be filled with uranium from OECD nations.

Given the permitting, licensing, funding and supply chain bottlenecks that new uranium mining faces, closing that gap will be a heavy lift. It’s not that the US and the OECD miners can’t address the supply problem. There are prospective mines in Australia, Canada, and the US that could produce more than enough uranium given the right market assurances. In fact, US miners alone could produce enough to supply 50 per cent of US requirements — if policymakers and environmentalists allow it. 

Enrichment: supply won’t matter as much as the ability to enrich uranium. The US hasn’t added new capacity in decades. There is momentum in the form of proposed projects spearheaded by Urenco, Orano, Global Laser Enrichment and Centrus, but Russia controls over 50 per cent of the world’s enrichment capacity (Rosatom) and 27 per cent of US supply. Rosatom is so critical to Western utilities that until recently it has been given a free pass on economic sanctions — enabling it to funnel billions into Vladimir Putin’s war effort. To accommodate US utility supply concerns, even the ban proposed by the US Congress wouldn’t fully kick in until 2029.  

On-again-off-again conversations about increasing the production of Separative Work Units (SWUs) have been going on for decades, but now we’re facing the urgent need to bring on new facilities. Assuming Russia doesn’t cut off supplies precipitously, there’s — at best — a five-year window. A crash effort to ramp up US capacity needs to get under way immediately. But, even with massive US government funding and permitting (a big “if”), the timeline is long.

Reflecting structural deficits in uranium mining and enrichment — and geopolitical uncertainties, uranium prices have more than doubled over the past year — with significant purchases by financial investors. But we’re likely only in the early innings of problems for US and EU nuclear power producers.

From an energy and national security perspective, we can now add deficits in uranium (particularly enriched uranium) to deficits in the mining and processing of rare earth minerals, EV metals, and computer chips. The golden opportunity to deploy nuclear power as a transitional (or ultimate) source of power is now held hostage.

As we negotiate the foothills of this new Cold War (as Henry Kissinger had it), our adversaries begin with massive advantages. China, seeking self-sufficiency in energy production, has secured the resources that ensure an industrial transformation that will eliminate its need to import 14mn barrels per day of oil.

Russia, already avoiding sanctions on Rosatom, has American utilities — and the US Congress — over a barrel. Vladimir Putin holds the whip hand over the cost of American nuclear power — and, potentially, whether US nuclear power plants can keep the lights on at all. That is, of course, unless and until replacement mining and enrichment capacity is built in the West.

Western policymakers didn’t see the 1973 Arab oil embargo coming, and, today, in the midst of a multi-front Cold War that stretches from the South China Sea to Ukraine to the Middle East, they’ve so far missed the nuclear cloud gathering on the horizon. The 1973 embargo saw oil prices quadruple. In hindsight, $90 uranium may look like $3 oil.

Intel, intent on making bigger moves in the market for AI-powered enterprise software, is spinning out a new platform company with the backing of Boca Raton, Florida–based asset manager and investor DigitalBridge.

Called Articul8 AI (an awkward abbreviation of “Articulate AI”), the new entity builds off a proof-of-concept from an Intel collaboration with Boston Consulting Group (BCG) early last May. Reuters reports that Intel, using its hardware and a combination of open source and internally sourced software, created a generative AI system that can read text and images — running inside BCG’s data centers to address BCG’s security requirements.

The system was developed within Intel over the course of two or so years. But it was more recently fine-tuned for BCG’s specific uses, according to CRN.

Initially, BCG was the sole go-to-market supplier and customer of the system. Over the last few months, however, Intel’s worked to scale the platform — which is optimized for Intel hardware but supports alternatives — to companies in financial services, aerospace, semiconductor, telecommunications and other industries that “require high levels of security and specialized domain knowledge,” according to an Intel spokesperson.

“Articul8’s gen AI software product was built from the ground up to address the needs of enterprises and is optimized for speed of deployment, scalability, security and sustainability — including costs,” the spokesperson told TechCrunch via email. “The Articul8 platform delivers AI capabilities that keep customer data, training and inference within the enterprise security perimeter. The platform also provides customers the choice of cloud, on prem or hybrid deployment.”

Arun Subramaniyan, formerly a VP and GM at Intel’s data center and AI group, will become the spinout’s CEO. The rest of the Articul8 team will also comprise ex-Intel employees, and Intel will retain an undisclosed stake in the firm.

Beyond Intel and DigitalBridge, which is publicly traded and a major investor in data centers, Articul8 investors include Fin Capital, Mindset Ventures, Communitas Capital, GiantLeap Capital, GS Futures and Zain Group.

“Intel and Articul8 will remain strategically aligned and Intel plans to leverage Articul8’s enterprise gen AI software for internal use cases as well as offer it to end customers as part of a joint go-to-market partnership,” the spokesperson said. “This collaboration will drive consumption of Intel compute offerings [and] Intel will continue to leverage Articul8’s AI domain knowledge and expertise as Intel continues to grow its footprint in the generative AI market.”

Reuters notes that Intel’s move to launch Articul8 is its latest endeavor to seek outside capital for business units. The chipmaker spun out car chip firm Mobileye, sold off its memory chip division and intends an eventual initial public offering of its programmable chip unit.

The spinouts are part of Intel’s strategy to raise capital for CEO Pat Gelsinger’s comeback plan, which involves building out new chip factories in the U.S. and Europe, as well as introducing new advanced chip manufacturing nodes within the next four years. In particular, Articul8 fits into Gelsinger’s plans to deliver new software products and services — including GenAI-powered products — that rival those from competitors like Nvidia and AMD and make Intel hardware more attractive for a range of applications.

OpenAI has offered some media firms as little as between $1 million and $5 million annually to license their news articles for use in training its large language models, according to two executives who have recently negotiated with the tech company. That’s a tiny amount even for small publishers, which could make it difficult for OpenAI to strike deals.

Meanwhile, Apple, which is trying to catch up to OpenAI and Google in the generative artificial intelligence sector, is also trying to strike deals with publishers for use of their content, said one executive. Apple is offering more money but also wants the right to use content more widely than what OpenAI is seeking, according to a person familiar with the matter. Apple wants to be able to use content for future AI products in any way the company deems necessary, this person said.

For some in the industry, the efforts by OpenAI and Apple to negotiate AI licensing deals recall deals struck in the past decade by tech firms such as Facebook, now known as Meta Platforms, and Google to license news content for use on social media and in search. Those deals have left some publishers feeling burned, particularly as Facebook has reduced the importance it puts on news and has cut back on what it pays, hurting media businesses that had come to depend on the payments and traffic. That experience has prompted publishers to approach recent negotiations cautiously, ensuring they get good value for their content.

Last week The New York Times Co. sued OpenAI and its partner, Microsoft, which uses OpenAI’s tech in its products, for copyright infringement. The Times said in the lawsuit that it had tried to negotiate an agreement to “ensure it received fair value for the use of its content,” but the negotiations hadn’t led to a resolution. More such lawsuits are likely, predicted one executive this week.

OpenAI said in a statement that it respected "the rights of content creators and owners and are committed to working with them to ensure they benefit from AI technology and new revenue models." The company said it was "surprised and disappointed" by the Times' lawsuit and are "hopeful that we will find a mutually beneficial way to work together, as we are doing with many other publishers.”

OpenAI is holding talks with as many as a dozen publishers, executives say, hoping to strike deals similar to those it has already done with Axel Springer, publisher of Politico and Business Insider, and the Associated Press. The owner of ChatGPT has concentrated most recently on negotiating deals with owners of global news publications rather than firms that publish other types of content on subjects such as entertainment and lifestyle, said one executive. Details of the Axel Springer and AP deals couldn’t be learned, but Axel Springer is receiving tens of millions of dollars over several years, according to industry executives. Axel Springer declined to comment and the AP didn't respond to a request for comment.

Publishers may be able to pressure OpenAI to improve its terms by striking deals with rivals such as Apple. In recent weeks, Apple executives have told industry executives they are nearing AI deals with about a dozen media companies, this person said. Apple had offered multiyear deals worth at least $50 million to news organizations including NBC News, Condé Nast, which owns The New Yorker, and IAC, parent company of The Daily Beast, The New York Times reported. Apple didn't respond to a request for comment.

Then there’s Google. The search giant has developed its own LLMs it is rolling out to consumers and corporate customers, but it has fallen behind OpenAI and Apple in negotiating licensing agreements with publishers, a person familiar with the matter said. But Google has deeper ties than OpenAI and Microsoft to publishers through existing products like Google News, a major source of traffic for news sites. It also has bespoke agreements with some publishers, like The New York Times, under which the companies collaborate on distribution and advertising. A Google spokesperson didn’t comment.

AI developers use news content to help power question-and-answer chatbots or handle other information requests. Some of the large AI developers, as well as startups, have trained their LLMs on copyrighted works, AI practitioners say.

The Times is not the only publisher to sue LLM developers over copyright infringement. Comedian Sarah Silverman and other authors in July filed a lawsuit against Meta Platforms, alleging it had ripped off their intellectual property in its development of open-source LLMs. In November, a federal judge dismissed most of their claims, saying it was “nonsensical” to argue that Meta’s models couldn’t function without the information from the authors’ books.

The Times has a more compelling case than the other plaintiffs suing OpenAI because of the verbatim examples the publisher filed with the court, said Geoffrey Manne, president and founder of the International Center for Law and Economics, a think tank that advocates for policies promoting economic growth.

Because The New York Times registers all its printed articles with the U.S. Copyright Office, it’s entitled to higher penalties, or statutory damages, from copyright violators than an online publisher. With millions of registered articles, The Times could force OpenAI to pay it more than $750 million in damages.

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