Last Friday, the price of uranium reached levels close to 15-year highs after Kazatomprom , the world’s largest producer, warned that it will likely miss its production targets in the next two years.
The mining company attributed these production problems mainly to a shortage of sulfuric acid and delays in the construction of new deposits, factors that could persist until 2025. In addition, it noted that it will provide a detailed assessment of the possible impacts on production in a trading update scheduled for February 1.
” Despite the ongoing active search for alternative sources of sulfuric acid supply, current forecasts indicate that the company may have difficulty achieving production levels of 90% compared to contractual levels of subsoil use ,” Kazatomprom said. in the statement.
How does the shortage of sulfuric acid affect the price of uranium?
Sulfuric acid is widely used by producers to extract uranium from raw ores due to its effectiveness and low cost. Kazatomprom warned that its projections for next year could be affected if supply problems persist throughout 2024 and if it faces difficulties in completing scheduled construction works.
Through 2023, the spot price of uranium has more than doubled, currently reaching $97.45 per pound , although it is still far from the triple-digit figures reached in 2007 and post-Fukushima disaster levels. in Japan in 2011.
This price increase comes in a context in which 24 countries, including the United States, Japan, Canada, Great Britain and France, committed last month at COP28 in Dubai to triple nuclear energy capacity by 2050. Although China, which was not part of this pledge, continues to lead global nuclear power plant construction with plans to nearly double capacity to 100 gigawatts by the end of this decade, with 22 of the 58 plants currently under construction worldwide.
Likewise, recent legislation in the United States could also have an impact on the price of uranium , potentially before other factors. Aiming to reduce its dependence on Russia, which currently supplies more than 20% of its uranium, Congress passed a bill in December requiring the United States to procure a portion of its nuclear fuel domestically.
This bill states that by the end of 2027, 20 tons of HALEU (high-purity low-enriched uranium fuel needed for the country’s most advanced reactors) must come from domestic sources. It is currently awaiting President Joe Biden’s signature.
Notably, Bank of America and Berenberg Bank indicated this week in separate research reports that persistent shortages in the uranium market could lead prices to surpass $100 in the coming days .
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