It didn’t make it into the International Energy Agency’s 282-page 2024 Global Critical Minerals Outlook report but uranium is re-emerging as the most important energy transition mineral of all, according to its renascent supporters.
The IEA zeroed in on materials it sees as vital ingredients in new energy transport and infrastructure in its May report. It is expanding research on manganese and silicon for the next edition.
The agency does talk more broadly about a potential “new dawn” for nuclear energy as the cold reality of sustainably hitting net zero greenhouse gas emissions by 2050, necessitating complete decarbonisation of electricity generation and heat production, sinks in.
Circa-413 gigawatts (GW) of nuclear generating capacity in 32 countries averts an estimated annual 1.5 gigatonnes of GHG emissions and about 180 billion cubic metres of gas demand, the IEA says.
Does it have a much bigger role to play?
IEA senior energy analyst Tae-Yoon Kim says geopolitics and the added layers of complexity in electric-vehicle battery and renewable energy supply chains compared with oil refining and gas production point to “many more weak links” – nascent and potential – in the world’s energy system than at any time in the past 100 years.
“Nuclear energy provides about 10% of the world’s electricity needs … and it’s the second largest supplier of low carbon electricity to the world behind only hydro,” says Canaccord Genuity resource analyst James Bullen.
“It does so at a fraction of the space required for the likes of solar or wind.
“Despite this importance uranium doesn’t command anywhere near the profile of other critical minerals.
“That is slowly changing [but] there’s a long way to go in our view.”
Bullen was speaking on a Resource Connect Asia Commodities webinar featuring uranium industry diehards, Peter Batten, managing director of Haranga Resources, and Murray Hill, CEO of Elevate Uranium. Toro Energy geology manager Greg Shirtliff stood in for chairman, Richard Homsany.
Aura Energy boss Andrew Grove has spent years in mining finance and the gold sector. However, he believes uranium’s time has come and that Mauritania, unlike some other jurisdictions, wants to be part of the new wave.
Bullen said uranium’s supply situation was “fragile” on account of some 60% of primary global production coming from two sources: Kazatomprom and Cameco.
“This situation in our minds is going to get further tested.
“If we flick our mind to the demand side things are far more robust.
“We’ve got bipartisan support in the US for nuclear power. We’ve had multiple life extensions there. And we’re even talking about restarts of old nuclear power plants.
“And in Europe, we’ve got the inclusion of nuclear in the sustainable taxonomy.
“When you look at the non-OECD everything is starting to improve there as well. We’re seeing a huge number of new builds.
“All up we’ve got 61 new reactors that are currently under construction in the likes of China and India, and they are not slowing down. While in the West we’re feverishly trying to extend the life of our low-cost, low-carbon existing baseload nuclear plants, outside of Germany of course.
“If you look at even the likes of California [with] Diablo Canyon last year; that was scheduled to shut down but it got an extension of its life out to 2030. So now it’s going to produce for 50 years.
“That’s the good news. The bad news was when it went to go out and find the uranium that it required to support just part of that life extension – about three million pounds – it ended up driving up the spot price by five bucks a pound.
“So it’s a tight, tight market and we do not at this point include SMRs [small modular reactors] in our analysis.
“We’re forecasting 3.6% per annum out to 2030 in terms of demand growth, and 3.2%pa beyond that.
“And it’s all getting driven by key megatrends: decarbonisation, energy security and energy demand growth.”
Bullen described the “interaction between big tech and small – and in some cases traditional – nuclear” as a significant emerging theme in the uranium and nuclear market, with data centres an increasingly important driver of electricity consumption and their owners seemingly eager to pronounce publicly their low-carbon energy credentials and reliable power supplies.
“In the US they’re sitting at about 3% [of electricity use] at the moment, but they expect them to grow to 8% by 2030,” he said.
“And if you start to layer in AI and what that could mean for it … it gets even more dramatic.”
The analyst cited Amazon Web Services’ nuclear data centre power plans.
“We’ve also seen a number of leading tech figures get involved in SMRs,” Bullen said.
“You’ve got the likes of [OpenAI CEO] Sam Altman, the chairman of Oklo and Bill Gates who sits as the chairman and founder of TerraPower.
“This is not a thematic that is going to exit anytime soon.”
The webinar heard from industry stalwarts who remember uranium prices below $20/lb and who are now plugging long-term prices of $80/lb or more into project study and resource calculations. They say that while science and economics point to a better future for the nuclear fuel, simpler dynamics have frequently trumped both over half a century and they’re not game yet to bet against regressive ideology and politics.
“I’m one of those rare geologists who agreed with climate change scientists way back in the 1990s and I actually made a decision to [do] my PhD and move into uranium based on that,” said Toro’s Shirtliff.
“I thought there is no way in the world people are going to stop needing more energy.
“I’m just one of these people that believes the solution to the climate issue is not going backwards, it’s going forwards and I’ve always believed that nuclear energy is one of the obvious, no-brainer solutions to getting towards a lower carbon future.
“I don’t think we’re going to stop producing carbon quickly. And uranium is the no-brainer solution to that.
“A lot of countries around the world are starting to realise that acres and acres and acres of solar cells, backed up by batteries, is not going to get you there.”
Bullen said new mine supply in the uranium space was even more problematic than in other mineral commodity segments: “There are no tickertape parades when you go out there with new uranium developments.
“Think about NexGen in Canada [with its] Arrow deposit. That is a tier one deposit in anyone’s language. It’s going to be supplying the market with circa-28 million pounds [U3O8] and it’s going to do so at a cost of less than US$10 a pound.
“It was discovered in 2014 but it’s not going to be in production until, now it’s forecast, 2028.
“And that’s because it is difficult to get one of these new greenfield developments up. Environmental approvals are difficult. Regulatory approvals are tough. Financing is tough. Negotiating with your TOs [traditional owners] or your first nations is extremely difficult.
“This is not lithium. It’s not a supply chain that reacts quickly.
“[In Australia] you can’t even mine uranium in Queensland and you have to have a historically approved project to mine uranium in WA. Those are two premier mining jurisdictions and you can’t even do it.”
Bullen said required global uranium supply was heavily dependent on new mines.
“If they are pushed out [further into the future], and history suggests they will be, we’re going to see pricing a lot higher than we see today,” he said.
