Canada is racing to become the world’s biggest uranium producer as prices for the radioactive metal surge in response to soaring demand for emissions-free nuclear power and geopolitical tensions threaten supplies.
Cameco, the country’s largest producer, has forecast that production of uranium will jump by almost a third in 2024 to 37mn pounds at its two mines in the heartland of the country’s uranium industry in northern Saskatchewan.
New mines and expansions planned by the company, as well as by Denison Mines, Orano Canada, Paladin Energy and NexGen Energy, in the same region could double domestic production by 2035, according to investment bank RBC Capital Markets.
Jonathan Wilkinson, Canada’s Energy and natural resources minister, said investment in the country’s uranium market was at a 20-year high, with spending on exploration and deposit appraisal “surging by 90 per cent to C$232mn [US$160mn) in 2022, and an additional 26 per cent in 2023 to C$300mn”.
“Not only does Canada mine enough uranium to fuel our domestic reactors, but we are also the only country in the G7 that can supply uranium to fuel our allies’ reactors. Each year, Canada exports over 80 per cent of our uranium production, making us a world leader in this market,” he said in a statement to the FT.
The industry is racing to cash in on a surge in uranium prices, which spiked above $100 a pound in January last year — a level not seen since 2008. While they have since dropped to $73 a pound, this is still far above the average of below $50 recorded annually over the past decade.
The expansion marks a turnaround for Canada’s uranium industry, which was the world’s top producer of the metal — the main component of nuclear fuel — until 2008, but shrank when prices slumped in the wake of the 2010 Fukushima disaster in Japan that decimated the west’s nuclear industry.
The downturn helped Kazatomprom, a state-owned Kazakh company, cement its position as the world’s largest producer. By 2022, Kazakhstan produced 43 per cent of all mined uranium — the largest share globally — with Canada a distant second at 15 per cent, followed by Namibia at 11 per cent, according to the World Nuclear Association.
But momentum may be shifting towards Canada’s favour, with demand for uranium set to soar following a pledge by 31 countries to triple deployment of nuclear energy by 2050 to tackle climate change.
Tech giants such as Amazon, Google and Meta are also turning to nuclear energy to run their power-hungry data centres, as the fuel does not produce greenhouse gases.
NexGen, which is developing the Rook1 mine in northern Saskatchewan’s Athabasca Basin, estimates it could outstrip Kazakhstan’s production within the next five years, boosting energy security for the west’s nuclear industry.
“Our project has the ability to elevate Canada back to being the lead, the world’s leading producer of uranium,” said Leigh Curyer, NexGen’s chief executive.
He added that US power utility companies were lining up to purchase uranium from Rook1, which is in the final stages of permitting and could start construction in mid-2025 if approvals and financing are secured. NexGen predicts the mine will cost US$1.6bn and produce 30mn pounds of uranium a year at full production — almost a fifth of current global production.
Meanwhile Denison is developing the Wheeler River project and Paladin Energy is developing Patterson Lake, which are both in Saskatchewan and together could produce up to 18mn pounds of uranium per year. Cameco is considering further expanding production at McArthur River by more than a third to 25mn pounds a year.
“We’ve never seen tailwinds quite like this,” said Grant Isaac, Cameco’s chief financial officer. “There is no doubt that there is growing demand for uranium.”
Analysts at BMO Capital Markets investment bank said big tech interest in nuclear power “opens the doors for a huge pool of private investment on top of the growing positive government policies” and marks a “resurgence” of interest in uranium.
“The conversation appears to have moved beyond gaining critical government and public support and on to financing,” they remarked in a December note.
Although uranium producers in Australia, the US and a handful of other countries are also planning uranium mine expansions they are on a far smaller scale those in Canada and Kazakhastan.
Kazakhstan’s ability to scale up further in response to the growing demand has meanwhile been hit by a number of obstacles.
Kazatomprom — which accounts for 23 per cent of global output — saw its ability to increase production stall last year because of shortages of sulphuric acid, which is used in their leach mining operations.
Geopolitical tensions linked to Russia’s full scale invasion of Ukraine in 2022 have also made it harder for the company to supply western nations.
In August, the US banned Russian uranium imports as part of its energy security efforts, although waivers exist until 2027 for some contracts considered vital. Moscow responded with similar restrictions on exporting uranium to the US.
China is the biggest buyer of Kazakhstan’s uranium and on December 17 bought stakes in some deposits jointly developed by Kazatomprom and Rosatom, Russia’s state nuclear energy company.
If the trend of most Kazakh uranium going eastward, and to China in particular, “accelerates”, that could be a “wake-up call for western utilities,” said Jonathan Hinze, president of research group UxC.
“The global uranium market is really grappling with a bifurcation . . . that never used to exist,” said Cameco’s Isaac, which owns 40 per cent of Inkai, a joint venture in Kazakhstan with Kazatomprom.
Isaac said the war in Ukraine had prompted some western utilities to switch from Russian-linked supplies, while others were waiting to see how the conflict progresses before making final decisions.
The delay meant Cameco had still not taken a final investment decision on its latest proposed expansion in Saskatchewan’s McArthur River-Key Lake site.
“This is not a ‘build it and they will come’ type market,” he said, adding that the delays only pushed this demand out further and increased the risk of a supply crunch and higher prices in later years.
