Uranium Execs Talk Supply, Demand and Pricing in 2023

Execs see newfound appreciation for nuclear energy

Uranium is gaining new appreciation as nations try to meet modern society's energy needs with a lower carbon footprint.

Grant Isaac, executive vice president and CFO at Cameco (TSX:CCO,NYSE:CCJ), spoke to an intimate audience at the conference, saying that policymakers around the world are looking for solutions to increasing demand for energy.

“Nuclear (has started) to claw its way back into the policy toolbox,” Isaac said. “And it's done it at a time when energy security has really taken the forefront, and so we've just seen this complete change in the demand outlook.”

The executive expressed excitement about the reactivation of reactors and operations across the world.

Monica Kras, vice president of corporate development with NexGen Energy (TSX:NXE,NYSE:NXE) said her company will be in production in 2028 and expects to produce 30 million pounds of uranium a year.

“If you want to decarbonize and if we want to have energy security and affordability, we need nuclear to be part of the conversation,” she said during the Future Facing Commodities event.

For his part, Tim Campbell, vice president of ESG and corporate secretary at Global Atomic (TSX:GLO,OTCQX:GLATF), told listeners that his firm is working towards production stability in Q1 2025.

“We're in a market that's beginning to recover,” Isaac added.

Russia/Ukraine war pressuring uranium supply

Isaac said although momentum is swinging in favor of the uranium market, there’s still a long way to go.

“We're seeing demand come back, we're seeing utilities begin to contract," he said. "But they're not even at replacement rate yet."

He said one of the significant catalysts for the uranium space at the moment is the freeze in Russia’s role as a leading provider of uranium to the western world.

“Suddenly, we find them on the outside trying to look in — they're responsible for 14 percent of global supply of uranium, 30 percent of the global supply of conversion and 40 percent of the global supply of enrichment,” he said.

In his opinion, the need for other uranium options is creating opportunities for miners in the space.

“As utilities in the west today are looking to get out from under their dependence on Russia, they have a smaller set of western capacity to contract from, and therefore the contracting is coming back,” he said.

Uranium price improvements widely expected

Looking over to pricing, Isaac said that after years of "punishingly low prices," the uranium sector is recovering.

“Nobody was meaningfully advancing projects. Exploration budgets collapsed,” Isaac said. The executive added that production was scaled back, leading to Cameco's closure of what he described as “the largest high-grade mine and mill on the planet.”

Problems in the industry date back to the 2011 nuclear catastrophe in Fukushima, Japan.

“The reason our market was oversupplied is because contracting — term contracting — dried up after Fukushima,” he said.

When asked about price expectations in the uranium sector, both NexGen's Kras and Global Atomic's Campbell said they think it will be around US$75 per pound this time next year.

“I think it's going to be north of US$75,” Kras said. “Personally, that's the incentive price in the US, around that US$75 mark, and we're going to be hopefully multiples of where we are currently."

Investor takeaway

Uranium investors faced serious lows when the commodity was out of favor in the energy market.

But as an upswing in momentum continues to build up, it’s clear that important industry players are ready to see uranium get a seat at the table as a legitimate energy source around the globe.