Uranium prices hit record highs as thirsty AI data centers add market pressure
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The price of fuel for nuclear reactors has risen to a record high as demand for artificial intelligence data centers adds pressure on the market following Russia’s invasion of Ukraine.
According to data provider UxC, prices for enriched uranium have reached $190 per unit of separation work – the standard measure of effort to separate uranium isotopes – compared to $56 three years ago.
Interest in nuclear energy is resurgent as governments and companies look for carbon-free energy sources large enough to power large industrial facilities and communities.
Big tech companies like Microsoft and Amazon are interested in using the fuel for operations enormously energy-intensive data centers They compete for market share in generative AI and strive to expand further.
Increasing competition for energy has added to the industry’s concerns Russia’s invasion of Ukraine almost three years ago. Russia is a key player in converting mined uranium into enriched fuel for a nuclear reactor, but U.S. sanctions and a Russian export ban have helped drive prices to record highs.
“We just don’t have enough conversion and enrichment in the West and that’s why the price has changed so much and that price is only going to continue to rise,” said Nick Lawson, chief executive of investment group Ocean Wall.
Executives and analysts say the problem is likely to be exacerbated by the expiration of a U.S. exemption for importers at the end of 2027. This push has put pressure on the industry to find new equipment that can convert uranium into pellets used in nuclear reactors. Outside Russia, the main Western countries that have uranium conversion facilities are France, the United States and Canada.
“There are a lot of very important policy decisions that need to be made” about investing in the nuclear and uranium supply chain, Lawson said, adding that building new plants would take “years” and cost huge sums of money.
According to Berenberg analysts, around 27 percent of US imports of enriched uranium came from Russia in 2023. While U.S. utilities likely had enough fuel this year, their coverage will decline significantly in four years, the analysts added.
“U.S. utilities must begin contract negotiations this year to secure (uranium), especially as restrictions on Russian uranium imports to the U.S. take effect at the end of 2027,” they said.
Most uranium is sold under long-term contracts rather than on the open or spot market. However, prices for immediate delivery could rise due to a possible shortage in the availability of uranium itself, industry analysts say. Kazatomprom, Kazakhstan’s state-owned mining company and the world’s largest uranium producer, has warned in recent months of lower-than-expected production.
“We are increasingly seeing that Kazakh material will flow to China and Russia and less of it to the West,” posing a “problem for Western utilities,” said Andre Liebenberg, chief executive of London-listed uranium investment firm Yellow Cake. “We could easily expect a supply shortage in the medium term, simply due to the lack of new projects that can be put into operation quickly.”
