Uranium’s glow overshadows nuclear realities
The gulf between political ambitions and new reactors on the ground shows little sign of narrowing
Uranium investors and scientists should have a lot in common: both are focused on generating powerful benefits from a small starting point. Prices of the fuel have soared over the past three years as yet more countries show fresh interest in nuclear power. The gulf between political ambitions and new reactors on the ground, though, shows little sign of narrowing.
It isn’t hard to see why investors are optimistic about long-term demand. Governments have to square surging power needs with plans to slash carbon emissions. By the end of this decade, global electricity consumption may have risen as much as 30 per cent, say Bank of America analysts, as transport goes electric and artificial intelligence data centres come online. Hence the resurgence of interest in reliable carbon-free power.
Governments that have this year gone nuclear in their planning include coal-rich Indonesia, which has added the energy source to a $235bn project to expand its power generation over the next decade. Both Belgium and Germany have dropped long-held goals of phasing out nuclear. And the US, already the world leader by number of reactors, went really big, President Donald Trump in May calling for a quadrupling of its capacity by 2050. US energy secretary Chris Wright hinted this week at plans to increase stockpiles, boosting shares in Canadian uranium mining company Cameco.
While the political will is there, bottlenecks are likely to skew the most careful supply and demand calculations. In the US, just three reactors have been constructed in the past quarter-century — two of which ran well over budget and behind schedule. No plants are currently under construction, yet meeting Washington’s goals will involve starting work on 20 average-sized reactors each year, Morgan Stanley analysts estimate. Even China, known for streamlining bureaucracy when it wants to, usually takes between five and 10 years to design, approve and build a new plant.
Prices aren’t necessarily a straightforward guide to future direction. At about $76 per pound now, they peaked last year at more than $100 on worries that supply would be dramatically tightened by Ukraine-related restrictions imposed by the US on Russia and the potential for retaliatory actions, though the curbs ended up being less severe than feared. The spot market for uranium is pretty thin, since most mined output is sold through long-term contracts.
The potential of nuclear remains, especially if the world is to embrace electrification and move away from its dependence on oil. It’s no surprise that investors are getting interested. But those betting on its primary fuel are expecting too much too soon.