Uranium prices hit record high as demand for artificial intelligence data centers increases

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Prices for nuclear reactor fuel have soared to record highs as demand for artificial intelligence data centers in the wake of Russia’s invasion of Ukraine has exacerbated a market squeeze.

According to data provider UxC, the price of enriched uranium has reached $190 per separation unit – a standard measure of the amount of work required to separate uranium isotopes – compared with $56 three years ago.

Renewed interest in nuclear power comes as governments and businesses focus on generating carbon-free energy large enough to serve major industrial facilities and communities.

Big tech companies like Microsoft and Amazon have become interested in using the fuel to run power-hungry data centers, which they are racing to build as they compete for market share in generating artificial intelligence.

Worries in the industry have been fueled by rising energy competition following Russia’s invasion of Ukraine nearly three years ago. Russia is a major player in the process of turning mined uranium into enriched fuel needed for nuclear reactors, but U.S. sanctions and Russia’s export ban have helped push prices to record highs.

“We don’t have enough conversion and enrichment in the West, and that’s why prices are seeing this volatility, and they’re only going to go higher,” said Nick Lawson, chief executive of investment group Ocean Wall.

Executives and analysts say the problem is likely to intensify as U.S. exemptions for importers expire at the end of 2027. Particles entering a nuclear reactor. Apart from Russia, the main Western countries with operating uranium conversion facilities are France, the United States and Canada.

“There are a lot of very important political decisions that need to be made” regarding investment in the nuclear and uranium supply chains, Lawson said, adding that construction of the new facilities would take “several years” and cost a lot of money.

Berenberg analysts said that about 27% of the enriched uranium imported by the United States in 2023 will come from Russia. Analysts added that while U.S. utilities may have enough fuel this year, supplies will decline significantly in four years.

“U.S. utilities must begin contract discussions this year to ensure [uranium]Especially with Russian restrictions on U.S. uranium imports coming into effect at the end of 2027,” they said.

Most uranium is sold under long-term contracts rather than on the open or spot market. But industry analysts say prices for immediate delivery are likely to rise as supplies of uranium itself may be squeezed. Kazakh state-owned mining company Kazatomprom, the world’s largest uranium producer, has warned in recent months that output is lower than expected.

Andre Liebenberg, chief executive of London-listed uranium investment company Yellow Cake, said, “Increasingly, we are seeing that Kazakh material will go to China and Russia, and less material will go to the West. ”, which creates “problems for Western utility companies.” “With a lack of new projects that can come online quickly, we could easily see a supply crunch in the medium term.”