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May 23, 2022

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1 big thing: Don't panic over soaring uranium prices

Illustration: Shoshana Gordon/Axios

Benchmark uranium prices have shot to their highest point in more than a decade, but the slow-moving nuclear-fuel cycle should insulate investors from the worst of the pain, market experts tell Alan.

Why it matters: Russia's invasion of Ukraine has sparked fresh interest in nuclear as a dependable, carbon-free source of electricity.

What's happening: The spot market for U3O8 or "yellowcake" — the first stage in the uranium fuel cycle after mining — is seeing record trade volumes.

  • In recent weeks, prices climbed to an 11-year high of more than $60 per pound, according to data from UxC and an S&P Global Commodity Insights report shared with Alan.

Be smart: Most uranium prices are traded under long-term contracts, but the spot-price market offers a useful bellwether.

  • "The long-term market has experienced its own jump in prices," the S&P report says.

Driving the news: Political leaders, especially in Western Europe, are looking for alternatives to Russian natural gas exports.

Meanwhile: Russia controls a small but significant share of yellowcake production — about 6% — and a far larger slice of the conversion and enrichment phases of the uranium value chain.

  • In a uranium version of "I'm breaking up with you! No, I'm breaking up with you!," European and American political leaders have debated putting an embargo on Russian uranium exports, while Russia has responded by threatening to institute a uranium embargo of its own.

Of note: Kazakhstan accounts for about 41% of global U308 production. Civil unrest there has also threatened to disrupt uranium supplies.

What they're saying: The nuclear fuel chain runs on a one- to two-year timeline — much slower than fossil fuels or, say, the minerals needed to manufacture solar panels, wind turbines, and batteries.

  • "The main reason not to panic about uranium supply is the fundamentally slow-moving character of the nuclear fuel value chain," the S&P report says.
  • "In case of a cutoff of supply of low-enriched uranium from Russia to certain countries, the impact would be felt only gradually thanks to the buffer provided by the slow schedule as well as U.S. and EU commercial stockpiles."

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