Uranium, surpassing over 90 tracked commodities on TradingEconomics, has secured its position as the top performer this year, with prices reaching $91 per pound in the final days of 2023.
The commodity is undeniably in the midst of a breakout year, attaining its highest levels in 16 years and registering an impressive 90% year-on-year growth.
Despite this unprecedented surge, numerous industry experts anticipate that this is merely the inception of a historic rally for the commodity, with prices poised for further escalation.
Figure 1: Uranium price chart
Growing Demand for Uranium
The increasing need for fresh uranium sources is intricately linked to the volatility of fossil fuel prices and global pushes for decarbonisation, prompting substantial investments in nuclear power.
The recent Cop28 climate conference emphasized the transition away from fossil fuels and the acceleration of low-emission technologies, including nuclear energy.
With nations committing to this transition, nuclear power was recognised for one of the first times as playing a fundamental role in combating climate change.
This year, 21 countries worldwide have committed to bolstering their nuclear power capabilities, sparking forecasts that anticipate a threefold increase in demand and production by 2050.
However, this surging demand for nuclear energy is met by a myriad of risks to supply.
Western utilities have continued to turn away from Russian uranium imports due to its on going conflict and invasion of Ukraine.
In December, the U.S. House of Representatives took a decisive step by passing a bill to outright ban imports from Russia, the world’s leading producer of nuclear fuel.
Supply was also under a crunch through pressures asserted from the military coup in Niger and troubles in Canadian mines.
Miners and explorers of Uranium are also feeling the pressure, with a recent Wall Street Journal report outlining miners are struggling to get enough uranium out of the ground.
However, this appeared to have little sway over price and demand, with China ramping up nuclear production building 22 of the 58 global reactors, Europe’s opening its first new facility in 16 years with a new reactor in Finland, and Japan lifting the operational ban on the Tokyo Electric Power’s (9501.T) Kashiwazaki-Kariwa plant, the world’s biggest nuclear plant.
While grappling with limited material availability and the need for government and private sector funding support, the global backing for nuclear power suggests a promising outlook for sustained uranium demand in the years to come.
Boss Energy Limited (ASX:BOE)
Boss Energy Limited, a prominent figure in the Australian uranium mining sector boasting a market capitalisation of $1.71 billion, possesses an extensive portfolio of uranium assets.
Through its latest acquisition, the Company is poised to evolve into a multi-mine uranium producer by the first half of 2024.
Notably, Boss has recently inked its inaugural binding sales agreement for uranium supply from its Honeymoon Project in South Australia. This strategic move allows Boss to vend 1 million pounds of uranium to a major publicly-listed U.S. power utility over a seven-year period, commencing in 2025.
Situated 80 kilometres northwest of the town of Broken Hill in South Australia, the Honeymoon Uranium Project boasts a substantial JORC Resource of 71.6 million pounds, underscoring its potential for significant expansion.
The Project encompasses the historical Honeymoon Uranium Mine, the country’s second in-situ recovery uranium mine, which commenced production in 2011 under its previous owner.
With promising outcomes from the Project and the successful completion of the Enhanced Feasibility Study, Boss is poised to advance offtake discussions and secure project funding, positioning Honeymoon as Australia’s upcoming uranium producer.
BOE’s Australian Stock Exchange-listed share price has risen 1.95% and is currently trading at $4.13 (10.15am UTC+ 8 hours).
Deep Yellow Limited (ASX:DYL)
With a market capitalisation of $863.58 million, Deep Yellow aims to ascend to Tier-1 status as a uranium company, targeting an annual production capacity exceeding 10 million pounds.
The Company has undergone substantial growth, boasting a remarkable year-to-year increase of 58.09%.
Holding an extensive portfolio of uranium assets in Australia and Namibia, Deep Yellow leads the ASX-listed companies with the largest uranium resource base.
Recently concluding follow-up RC drilling at eight holes in the Barking Gecko North Prospect, the Company reported promising results, including intervals such as 9 metres at 382ppm eU3O8 from 203 metres and 3 metres at 260ppm eU3O8 from 64 metres.
DYL’s Australian Stock Exchange-listed share price is currently trading at $1.07 (10:15am UTC+ 8 hours).