Across the United States and allied countries, leftist uranium mine owners are restarting operations to capitalize on the growing demand for nuclear fuel.
At least five U.S. producers are reopening mines in states including Wyoming, Texas, Arizona and Utah, where production was growing until governments clamped down on radioactive elements after the 2011 Fukushima nuclear disaster in Japan. .
Most of these American mines were decommissioned in the wake of Fukushima, when uranium prices collapsed and countries like Germany and Japan began plans to decommission nuclear reactors.
Now, with governments turning to nuclear power to meet emissions targets and high uranium producers struggling to meet demand, prices for the silvery white metal are soaring. And it’s giving once-unprofitable uranium operations a chance to fill the supply gap.
Uranium has been used as a source of energy for more than six decades, fueling nuclear power plants and reactors. About two-thirds of global production comes from Kazakhstan, Canada and Australia.
Uranium will be the topic of conversation as thousands of mining executives, geologists and bankers descend on Toronto for this week’s meeting of the Prospectors and Developers Association of Canada. The annual event has attracted at least 10 uranium companies, including Denison Mines Corp., Fission Uranium Corp. and ISO Energy Ltd.
As countries increasingly consider nuclear power to combat climate change, demand for uranium is expected to increase. The International Atomic Energy Agency estimates that the world will need 100,000 metric tons of uranium per year by 2040 — an amount that would require nearly double mining and processing from current levels.
Canada’s Chemico Corp. and Kazakhstan’s Kazatomprom, which together account for half of global supply, have struggled to ramp up production. They warned of some operational constraints that would result in lower-than-expected uranium production in the coming years.
Read more: World’s largest uranium miner warns of production slowdown
“We’re in an old fashioned, plain and simple supply chain,” said Scott Melby, executive vice president of Texas-based Uranium Energy Corp.
Production has not kept pace due to years of underinvestment in mining and exploration, said Melby, whose company is reopening mines in Wyoming and Texas that were idled in 2018.
Energy Fuels Inc late last year launched plans to restart operations in Arizona, Utah and Colorado, while Ur-Energy Inc said it would mothball an idle mine in Wyoming. Mid-sized companies in Australia and Canada have announced similar plans.
Of course, production from these mines – many of which are small and near the end of their lives – will be a small fraction of the world’s uranium supply.
“The industry is obviously trying to respond by reopening smaller mines, but when you have a mine that hasn’t been operating for that long, it’s obviously not very important,” Sprout Asset Management chief Executive Officer John Campagli said. Spirit Physical Uranium Trust.
Top producers
Supply constraints should ease with top producers pulling millions of pounds of uranium they left in the ground when prices were low. Kazatomprom is ramping up production after years of operating below capacity.
Chemco is ramping up production at the world’s largest high-grade uranium mine and mill – MacArthur River and Key Lake in the western Canadian province of Saskatchewan – after shutting down operations between 2018 and 2021 due to weak market conditions.
Both companies “will be very concerned about losing their market share to a bunch of juniors, and so they will want to reclaim it,” said Tom Price, a senior commodities analyst at London-based investment bank Libraium. “It will take a lot of heat from the market.”
Still, the reopening of the U.S. marked the revival of an American industry that was in danger of disappearing just five years ago. U.S. uranium production fell to an all-time low of 174,000 pounds in 2019 — a drop from its peak of 44 million pounds in 1980 — as the United States began to rely more on imports from countries such as Canada, Australia, Kazakhstan and Russia.
Read more: Russia’s long arm and the politics of uranium
The US industry’s emphasis is also political, with the government trying to secure access to supply amid geopolitical uncertainty. Sanctions on Russia following Ukraine’s 2022 invasion have created challenges for uranium shipments en route from Kazakhstan, as the former Soviet state’s exports typically pass through Russian ports.
To keep up with demand, U.S. uranium producers predict the U.S. will need 8 to 10 new, larger mines to start production over the next decade.