Surging Uranium Demand, Supply Constraints Fuel Predictions Of Record Price Increases (CORRECTED)

Editor’s story: This story has been updated to make clear that John Ciampaglia is CEO of Sprott Asset Management.

The price of uranium recently hit fresh highs, surpassing $100/lb for the first time in years. This positive development, which prompted Denison Mines (DNN) to restart the McClean Lake mine in Canada, could just be the beginning of a long trend.

As demand for nuclear fuel keeps growing, analysts are scrambling to set price predictions, speculating whether it can surpass 2007 highs.

"Even though the price is broken out to $100, there's a lot of opportunity here because you need to basically double production globally between now and 2040," said John Ciampaglia, CEO of Sprott Asset Management, which runs the $6.5 billion Sprott Physical Uranium Trust SRUUF.

In an interview with Crux Investor, he forecasted a surge to $160/lb this year from the current $106/lb, stating, ‘It's going to have to stay elevated for a very long period of time because of the long lead times and the large capex that's required to basically get these projects built.’

Also Read: Uranium Revival: Denison Mines Resumes Operations At McClean Lake As Prices Soar

The uranium market is facing a potential squeeze owing to both supply and demand. In recent years, China took the lead in nuclear power construction, bringing the number of nuclear plants under construction up to 22. Additionally, 22 other nations just pledged to triple their nuclear electricity production by 2050, further driving the demand for uranium.

Yet, main suppliers are struggling to meet these demands, and deficits to achieve these nuclear energy goals could be anywhere between 1.5 million and 2.3 billion pounds.

Kazakhstan’s Kazatomprom NATKY, the world’s largest uranium producer, recently warned that sulphuric acid shortages and construction delays would impact its production over the next two years. Similarly, Cameco Corp CCJ, Canada’s leading producer, stated that the current uranium price is insufficient to support most greenfield mining projects.

Escalating de-globalization with multiple ongoing armed conflicts further adds to supply challenges, as the potential U.S. ban on Russian uranium imports could create further issues by 2028.

Meanwhile, Niger, another significant uranium producer, is undergoing a mining sector overhaul. This African country is suspending new mining licenses as a part of an audit to boost government revenue and ensure the sector's transparency, per a Bloomberg report.

Despite a military coup in July 2023, foreign miners like French Orano SA, Toronto-based Global Atomic GLATF, and China National Nuclear Corporation continued regular operations. Yet, high political instability and missed bond payments signal that any further destabilization in this uranium-rich country could cause a further supply disbalance in the already strained global uranium market.

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