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Uranium contract prices soar on uncertain supply, AI-led power demand

https://www.mining.com/web/uranium-contract-prices-soar-on-uncertain-supply-ai-led-power-demand/

Reuters | July 29, 2024 | 9:53 am Intelligence Markets Uranium

Cigar Lake uranium mine. Image from Cameco.

Long-term uranium contract prices have hit over 16-year highs on supply uncertainty and higher demand from utilities scrambling to secure the radioactive fuel to aggressively expand their capacity to power mushrooming AI data centers.

Term prices are now around $79 per pound, the highest since 2008, and estimated to rise further in coming months.
With a stronger market environment, we’re currently locking in ceilings of about $125-130/lb and floors at about $70-75/lb in market-related contracts,” the best prices seen in over a decade, said uranium miner Cameco.

Spot prices, which rose nearly 88% last year, and hit a 14-year high in February 2024, were now around $82 per pound.

Uranium is the most widely used fuel for nuclear energy.

With a global clean energy push, nuclear generation could roughly double by 2050 and so should supply, according to the International Energy Agency.

But that seems unlikely, per Plenisfer Investments, which estimates prices must exceed the marginal cost of production, currently at $90-$100 per pound, by at least 30% to incentivize producers to invest in new projects.

The market is hence expected to remain in deficit over the next decade, Plenisfer added.

“The likes of Uranium Energy Corp or Ur-Energy have limited volumes but know there’s high demand for their available pounds so (are) again increasingly looking for higher prices or happy to run via spot sales,” said Robert Crayfourd, co-fund manager of uranium-focused Geiger Counter.