TERM contracts for uranium entered into between nuclear utilities and uranium miners have been strengthening consistently for the past five years, and will continue to drive the outlook for uranium prices, Paladin Energy showed in its latest quarterly results presentation.
Over the past five years, the midpoint of term pricing for uranium has risen from $40/pound to over $80/pound. The midpoint of spot pricing, which is far more volatile, touched $100/lb in early 2024, and is now slightly below term pricing.
Although term contract volumes have improved since 2020, contracted activity remains below replacement levels, Paladin said. Global nuclear utilities have about a billion pounds of uncovered uranium requirements over the next decade.
There is significant incremental demand for nuclear energy in the pipeline, Paladin showed. At COP28 and COP29, 38 countries pledged to treble nuclear power by 2050. President Trump has issued executive orders to quadruple nuclear energy generation in the US to 400GW by 2050. This implies an additional 150 million pounds of U308 demand a year until 2050 for the US alone. Currently, 79 nuclear reactors are under construction around the world (39 of them in China), which will need to be fuelled by an additional 43 million pounds of U308 a year.
Paladin MD and CEO Paul Hemburrow said on a conference call that the company was realising just under $70/pound for its book, which was very pleasing. It sells about 22 million pounds under contract, a volume that tends to stay stable, but as it increases output from Langer Heinrich in Namibia and brings its Patterson Lake project in Canada into production, it will have more volumes to sell and will be able to realise more of the current upside in the price.
In the March quarter, Paladin produced 1.29 million pounds of uranium at Langer Heinrich, a 5% improvement, driven by strong processing plant performance. It sold 1.03Mlb at an average realised price of $68.30/lb, with more sales into base-escalated contracts. As a result of the mine’s stronger performance, Paladin has upgraded its production guidance for the full year.
Langer Heinrich, which was mothballed between 2018 and 2024 due to persistently low uranium prices, is on track to achieve full ramp up by the end of Paladin’s current financial year, Hemburrow said.
