Uranium prices surge as tech giants go nuclear

Uranium prices have soared to 15-year highs as major tech companies like Google, Amazon and Microsoft strike deals for nuclear power to meet the rising energy demands of artificial intelligence and data centers, reported Xinhua.

Nuclear fuel is trading at 83.30 U.S. dollars per pound (about 0.45 kilogram) as of Thursday, a level not seen since 2007, as miners struggle to keep pace with growing demand. The International Energy Agency (IEA) predicts nuclear electricity generation could nearly triple in North America by 2050.

"With global uranium supply lagging behind demand, the market will likely see higher prices," John Ciampaglia, CEO of Sprott Asset Management, told MarketWatch. Sprott operates a physical uranium trust and other funds that invest in miners.

Kazakhstan, which typically supplies over one-third of the world's uranium, has slashed production due to shortages of key mining inputs, Ciampaglia noted. Other major producers like Russia and Niger are also facing potential supply disruptions.

At the same time, tech giants have rushed to sign agreements to buy nuclear power at premium prices to fuel their ambitious artificial intelligence initiatives and meet climate targets.

Last month, Microsoft agreed to purchase power from Constellation Energy at around 100 dollars per megawatt-hour, roughly double the market rate, to reopen a reactor at Pennsylvania's Three Mile Island nuclear plant.

Google announced Monday that it would buy power from Kairos Power's small modular reactors starting in 2030, while Amazon is exploring similar technology with utility Dominion Energy under a new 500-million-dollar deal.

Amazon recently spent 650 million dollars on a nuclear-powered data center campus in Pennsylvania. The company also announced a 500-million-dollar deal Wednesday with utility Dominion Energy to explore small modular reactor development.

Experts say several factors are converging to drive the shift to nuclear. In addition to tech companies' ballooning energy appetite, the Ukraine crisis has exposed risks around energy security, while worsening climate change is heightening the urgency to decarbonize.

For the nuclear industry, the moment may mark a turning point after decades of stagnation. The United States currently has 94 reactors, but only two new units have been built in recent years. Both are part of Georgia's Vogtle plant and run massively over budget and behind schedule.

Now companies are banking on a new generation of cheaper, easier-to-build small modular reactors to meet surging demand. Several startups are working on the technology, including TerraPower, backed by Bill Gates and Warren Buffett.

According to the IEA, data center energy consumption is forecast to double by 2026, topping 1,000 terawatt-hours.

"The support for nuclear energy continues to emerge across governments of all stripes, energy-intensive industries, and within the general public," Cameco CEO Tim Gitzel said on an earnings call. "It is driving durable demand, unlike anything we've seen before in this industry."

Canada-based Cameco is the world's largest publicly traded uranium miner. Its shares have surged over 75 percent in the past year, outpacing the roughly 30 percent gain for the Global X Uranium ETF.

Other major producers, including Kazatomprom, Orano, and Paladin Energy, also benefit from higher uranium prices and a brighter outlook for nuclear power.

Smaller players are also looking to cash in on the market. Based on expectations for their development projects, Australian explorers Boss Energy and Deep Yellow saw their stock prices double in 2023.

For nuclear opponents, however, the resurgence of the controversial fuel is worrying. Some environmental groups argue that safety and waste disposal challenges outweigh the emissions benefits. The 1979 partial meltdown at Three Mile Island remained the worst nuclear accident in U.S. history.

But with tech companies' nuclear push showing no signs of slowing uranium demand, Wall Street bulls said the rally has room to run.

"The market will likely see higher prices as more utilities sign long-term agreements with the producers," said Ciampaglia. "We continue to have a positive outlook for the uranium market."