Uranium price spike spurs more mine restarts, expansion plans

Soaring uranium prices are fueling more mine restarts and producer plans to expand capacity.

Since mid-January, the Platts-assessed spot price of U₃O₈ delivered to Canada has traded over $100 per pound and hit 16-plus year highs, peaking at $106.50/lb on Feb. 1. The price has since pulled back slightly, to $102.75/lb on Feb. 7, but is still up 103.9% from a year ago.

As the uranium price climbed in recent years, major producers Cameco Corp. and Kazatomprom began restarting operations they idled during a protracted bear market. Uranium prices crashed after the 2011 Fukushima Daiichi reactor disaster in Japan. In fresh signs of bullish momentum in the uranium sector, more miners have announced restarts over the past month, and Cameco said Feb. 8 that it would mull plans for another big expansion at Canadian operations.

"We're seeing a market that we think might need those pounds going forward," Cameco President and CEO Timothy Gitzel said during the company's fourth-quarter 2023 earnings call. "Those are probably the best pounds on the planet that are not in production."

Cameco said it would study an expansion of the McArthur River mine and Key Lake mill from 18 million pounds in annual U₃O₈ output to 25 million pounds. The uranium miner also said it planned to extend the mine life of Cigar Lake from 2031 to 2036.

Gitzel reiterated Cameco's long-telegraphed stance that it would only pursue expansions and restarts backed by contracted uranium purchases, rather than selling directly into the spot market.

Idled no more

On the back of strong pricing, other uranium miners have made concrete plans to restart idled operations this year.

On Jan. 29, Orano SA, a French nuclear fuels company, announced it would resume mining at McClean Lake in Saskatchewan. Orano, which owns 77.5% of a joint venture that operates the asset, is targeting 800,000 pounds of U₃O₈ production in 2025 and 3 million pounds of U₃O₈ production between 2026 and 2030.

Likewise, Uranium Energy Corp. announced on Jan. 16 plans to restart the Willow Creek, or Christensen Ranch, uranium operations in Wyoming. The US uranium company expects first production in August at a site with licensed capacity of 2.5 million pounds of U₃O₈ production a year.

"This is the moment we have been working towards for over a decade," Amir Adnani, Uranium Energy's president and CEO, said in a statement, pointing to uranium prices over $100 per pound as a backdrop to the decision.

The company is still assessing firm production guidance, but first-year U₃O₈ output could fall in the 500,000-1 million pound range, Scott Melbye, Uranium Energy's executive vice president, told S&P Global Commodity Insights. Longer term, Uranium Energy wants to ramp up U₃O₈ production to 5 million-6 million pounds a year by the end of the decade from its Wyoming and Texas operations, Melbye said.

Uranium Energy plans to sell at spot prices and if it inks supply contracts it will be without price floors or ceilings, Melbye said. We "want to be indexed to prevailing spot prices," Melbye said.

The latest restart plans come as other uranium companies ramp up production at idled operations. Australian uranium developer Paladin Energy Ltd. said in a Jan. 25 quarterly report that work to bring the Langer Heinrich uranium mine in Namibia back online was 93% complete. Meanwhile, Boss Energy Ltd. said in a Nov. 30, 2023, update that it expected to produce its first drum of uranium in the first quarter of 2024 from its restarted Honeymoon uranium project in Australia.

Some mine restarts have not gone as smoothly as hoped. Cameco fell short of its 2023 guidance as it worked through operational issues in part related to replacing aging equipment at once-idled operations. Cameco produced 17.6 million pounds of attributable uranium in 2023 against a revised target of 18.7 million pounds amid challenges at McCarthur River and Key Lake.

Earlier this month, Kazatomprom, the world's biggest uranium producer, slashed production guidance, citing difficulties sourcing sulfuric acid, which is key to its mining operations.