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Decarbonization boosts prospects for nuclear industry, uranium demand: WNA

Highlights

Global capacity up to 439 GW in 2030, 619 GW in 2040

Uranium output down sharply from 2016 high

The prospects for the global nuclear power industry have improved over the last two years because of "ambitious decarbonization goals" that are likely to require significant use of low-carbon nuclear energy, driving an increase in demand for uranium that could be unmet if new mines are not developed soon, the World Nuclear Association said Sept. 8.

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The association said in its latest Nuclear Fuel report that many countries -- including China, member nations of the European Union, Japan, South Korea, the UK and the US -- have committed to such goals in their pursuit of carbon neutrality.

In a panel discussion Sept. 8 during the 2021 WNA Symposium, held virtually this year because of the coronavirus pandemic, Pierre Bertrand, a nuclear fuel market analysis manager at EDF, said "climate change mitigation is now clearly a top priority" globally.

"A lot happened in the carbon neutrality field in the last two years," he added. "Almost all major countries have committed to carbon neutrality by 2050."

The Nuclear Fuel Report was not issued in 2020 because of the pandemic.

Capacity increases in all scenarios

In all scenarios for global nuclear power growth, capacity increases from the current level of 394 GW. In the reference scenario, it rises to 439 GW by 2030 and 615 GW by 2040.

The increased capacity translated, along with updated estimates for capacity factors and fuel burn-up, to a reference scenario of annual uranium requirements from the fleet of 79,400 mtU in 2030, up from 62,500 mtU in 2021, WNA said. World reactor uranium requirement estimates in all three scenarios for 2040 increased about 12% from similar estimates in 2019, the group said.

Uranium production, however, is on the decline as a result of an extended period of low prices, WNA said. Investments in uranium exploration have fallen, it noted, and some mines have reached the end of their productive lives.

While the market is undersupplied, there are sources of supply in the form of commercial inventories, potential increased production from uranium recovery facilities operating below capacity, mothballed mines and new uranium projects, all of which are difficult to quantify, WNA said. The uranium price has risen sharply in recent weeks, with S&P Global Platts assessing the price for September at $39.75/lb Sept. 7.

Uranium production in 2020 was 47,731 mtU, down 24.5% from what it was in 2016, the group said. In 2020, uranium supply was about 30% less that reactor requirements for that year, WNA noted.

Shift in supply and demand balance

Riaz Rizvi, a partner at investment advisory company Rice Capital Partners and former chief commercial officer at Kazatomprom, said during the Sept. 8 panel discussion that the previous report had "caught the peak of primary production in 2018" of 63,000 mt of uranium and the "collapse of uranium prices down to $18/lb," which he said occurred when the previous report was being put together. This was followed by a "very significant shift in supply and demand balance" characterized by production cuts at key producers exacerbated by low output during the coronavirus pandemic, Rizvi noted.

"Inventories at producers and utilities have fallen during this period," he said.

In WNA's reference scenario, uranium production rises to 70,100 mtU in 2030 and then falls to 50,600 mtU by 2040. WNA said that "in the long term the industry needs to at least double its development pipeline of new projects by 2040."

Some of the supply needed will be found in restarts of idled mines. That is expected to begin as soon as 2023, WNA said.