Global Uranium Supplies are Vulnerable to Russia’s Influence

By Alfred Stewart

Global demand for uranium to fuel nuclear reactors is shown in the table below from the World Nuclear Association. As can be seen, the world requires 62,496 tonnes of uranium per year for electricity generation. Nuclear power accounts for an essential part of the grid in the Western World. France generates 70% of its electricity and the US just under 20% of electric generation from nuclear power. Importantly, this is stable base load energy which is online 24/7.

The World Nuclear Association’s Country Profiles, linked to below, provide more detail of what is tabulated here.

Source: World Nuclear Association

The source of uranium supply in the world has shifted dramatically in the last twenty years. Part of the shift has been due to economics. In Situ leaching extraction has proven to be a lower cost source of uranium and it has displaced conventional uranium mining over the last twenty years, going from 16% of global supply in 2000 to 58% of global supply in 2020. But this supply is not secure. Most of it comes from Kazakhstan, a former Soviet republic which is presently in political turmoil to the point where Russia deployed troops to help the Putin allied Kazakhstan government suppress public protests about energy prices

The major Kazakhstan uranium mining company is Kazatomprom a state-controlled entity. Another significant producer is Uranium One. This was a Canadian public company launched on the TSX and a major uranium producer in Kazakhstan through joint venture with Kazatomprom and a direct producer of uranium from Africa. Who owns Uranium One? It was taken over by Russia’s state atomic energy company Rosatom in 2009-2010. In summary, directly and indirectly Russia has control or significant influence of over half of the world’s uranium supply.

Uranium requires enrichment to be used in most nuclear reactors (but not Canada’s CANDU reactors which do not require enriched uranium). Where does the uranium from Kazakhstan get enriched? In part, Russia through Rosatom provides this service.  The United States gets 17% of its refined uranium from Russia.

Source: World Nuclear News

This may have seemed like a good idea when the West was trying to accommodate Russia in the world economy but given the invasion of Ukraine this now now puts the West in a position that its supply of this vital energy source is controlled by Russia.

Uranium Producers of America President and Executive Vice President of Uranium Energy Corp Scott Melbye issued the following statement on Russia’s invasion of Ukraine: “Russia’s aggression in Ukraine highlights the danger of relying on the Kremlin and its allies for strategically critical energy supplies and minerals. Nearly half of the uranium needed to fuel U.S. reactors is purchased from Russia, Kazakhstan, and Uzbekistan. Despite ample U.S. uranium resources and the capacity to produce them at the highest environmental, safety, and health standards, U.S. production has almost completely halted. The Uranium Producers of America have repeatedly warned policymakers of the consequences of this overreliance as the predatory market tactics of these state-owned competitors have eroded the domestic uranium supply chain.”

Because of this issue, Western uranium suppliers such as Cameco, and uranium ETFs such as the Sprott Physical Uranium Trust have “caught a bid’ and the spot uranium price is trending higher.