Uranium price revives as fears mount about COVID-19 impact on concentrated supply

Yellow cake

THE price of uranium has been on the increase in the past two weeks owing to the potential disruption to supply which is divided between a handful of major companies.

“Demand for uranium is very distributed — there are 442 reactors across the globe — but the supply side is very, very concentrated,” Andre Liebenberg, CEO of Yellow Cake, a London-listed investment vehicle told the Financial Times. Yellow Cake has stockpiled a large amount of the mineral in anticipation of higher prices.

“I think there are four or six mines that produce two-thirds of global supply. If we have any issues on the supply side, that is going to have a real impact,” said Liebenberg.

Last week, Canada’s Cameco announced the closure for a month of Cigar Lake which produces about 13% of global uranium mine supply. This was followed by a 21-day lockdown of mines in another important uranium supplier, Namibia. So far, supplies from Kazakhstan have not been affected, said the Financial Times.

Uranium demand was less exposed to downside as a result of COVID-19 as per other metals and commodities, said Richard Hatch, an analyst at Berenberg.

“We have seen power demand ease slightly because less industry is working but the need for base load power remains,” said Hatch. Nuclear reactors supply about 10% of the world’s electricity.

“To see a sustained breakout and recovery in prices you need to see utilities going into the [contract] market. And apparently some of them have been testing the market already this year,” said Liebenberg.