Uranium’s price surged more than 70% to decade-highs in 2023 as countries targeted nuclear energy to help meet net-zero targets in the coming years.
The momentum has continued into the new year with uranium price surging to a 16-year high earlier this week, exceeding US$93 per pound. This followed the United States Department of Energy's announcement of a US$500 million (~$747.5 million) initiative to secure domestic enriched uranium supplies.
The U.S. is seeking bids from contractors to help establish a domestic supply of enriched uranium for use in a next generation of reactors, a fuel currently only available in commercial levels from Russia.
The latest rally in uranium prices has driven many uranium plays higher this month compared with a 1.4% per cent drop for the broader S&P/ASX 200.
GTI Energy Ltd (ASX:GTR, OTC:GTRIF) surged 37.5% year-to-date while Aura Energy Ltd (ASX:AEE, AIM:AURA) is up 9.43% and Alligator Energy Ltd (ASX:AGE, OTC:ALGEF) rose 12.71%.
Uranium 16-Year High ????: Uranium going parabolic as it hits its highest price since November 2007 pic.twitter.com/a1HxkCXy9U— Barchart (@Barchart) January 12, 2024
Morgan Stanley (NYSE:NYSE:MS) named uranium as its top commodity pick last year, projecting the price to reach around US$95 per pound by the second quarter of 2024. Amy Gower, a commodities strategist at Morgan Stanley (NYSE:MS), anticipates sustained demand coupled with limited mine supply.
The demand for uranium had been subdued for much of the past decade, especially after Japan's Fukushima nuclear disaster in 2011, which dampened the global nuclear energy outlook. However, the current scenario, marked by dwindling supplies, reduced primary production, and increasing demand, echoes the conditions of the 2007 uranium price peak, which was above US$140 per pound.
Countries like China, India, and nations in the Middle East have been traditional demand drivers. Still, recently, European countries, including France, Japan, the United Kingdom, and the Netherlands, are increasingly turning to nuclear power. Geopolitical tensions with Russia, a significant global uranium supplier, add to the potential catalysts for uranium demand in 2024.
Australia, holding about 33% of the world's uranium reserves and ranking as the third-largest producer after Kazakhstan and Canada, earned $564 million from uranium exports in the financial year 2022.