After the planned phase-out of nuclear energy made investing in uranium a highly controversial investment for years, many experts’ predictions of a supercycle for uranium as a raw material now seem to be coming true.
The acceptance of nuclear energy as a clean, CO2-free and safe energy source has gained momentum worldwide in recent months and, at the latest since the last UN Climate Change Conference in Glasgow, it should have become generally clear that pure wind and solar energy will not be sufficient to maintain the energy supply while meeting all climate targets.
Even if this may seem like an absolute no-go for environmentalists and opponents of nuclear power – without nuclear power and the associated fuel uranium, the energy transition away from carbon-intensive energies and toward a climate- and environmentally friendly energy supply will not be possible. This opens up unprecedented opportunities for uranium investors, as uranium prices are forecast to rise sharply in 2022.
Uranium outlook for 2022
The freshly released 2022 uranium outlook from industry consultant UxC projects a significant supply deficit this year. Thus, experts expect uranium production of about 135 million pounds for the current year. Demand, meanwhile, will be around 200 million pounds. Uranium producers will therefore hardly be able to produce as much uranium as needed.
The fact that this forecast could well be correct is made clear by the projects planned worldwide for new nuclear power plants alone. Poland, for example, has just confirmed its strategy of switching from coal-fired to nuclear power plants. In addition, construction projects for new reactors are on the agenda in many other countries, from the Netherlands to Canada.
The uranium stock market has been continuously characterized by falling prices over the past 10 years. As a result, most utilities direct their price inquiries to uranium producers whenever possible and avoid the spot market.
However, with new reactors coming online around the world, this common practice will not be sustained, making spot market purchases inevitable and further driving up the price of uranium.
Currently, the price of uranium is hovering around the $46 mark. For the current year 2022, however, experts expect prices to rise to triple-digit levels.
Stable energy prices despite price increase
If the uranium price rises to previously unimagined heights in the course of the year, uranium shares and investors are in for exciting and promising times. But what about energy costs for consumers?
Unlike oil or gas, the price increase for uranium is hardly noticeable in consumers’ electricity bills. This is due to the small share of the uranium price in the total costs incurred by a nuclear power plant.
