The Oregon Group reported in early 2025 that the uranium spot price has plunged from over $100/lb to the mid- $60s since January 2024, mirroring the sharp rise in investor exits and short positions in uranium equities. Against this backdrop, the fundamentals of supply and demand continue to move towards a major supply deficit that will remain unfilled for years to come.
Projected World Uranium Production Capability to 2025
Comapred to Power Plant Requirements
Since The Oregon Group’s last uranium report in 2022, forecasting a 10-year bull market, there are more nuclear reactors in operation, more under construction, and more planned. Global uranium consumption has increased. Yet no new major uranium mines have commenced production, nor are any imminent.
Long term contract pricing, where most uranium changes hands, remains near its seventeen-year high. Governments and major corporations – including those behind the AI datacenter surge – continue to push aggressively for greater investment in nuclear power. And, above everything, looms geopolitical conflict. So the big question, in fact the only question, for value seeking investors, presents itself: is there something going on that signals the party is over or are uranium equities experiencing one of the greatest disconnects between sentiment and fundamentals currently present in today’s stock market?
SUPPLY: A CRUNCH LIKE NO OTHER
Uranium supply comes from two sources, of which the largest (primary) is mining. Mining supplied around 49 490 tU in 2022, meeting approximately
74% of annual requirements for utilitiesxii. The remainder came from secondary sources such as stockpiles. But, with the days of inventory overhang well and truly over, future demand must somehow be met by future production. For utilities, that’s a problem but, for suppliers and investors, it’s hard to see it as anything but a golden opportunity.
After a decade of low prices, uranium mining is in no position to respond to a large, sustained increase in demand. Low prices meant that some operating mines reduced production or were put into care and maintenance, expansion plans were shelved, development stage projects were slow walked and exploration was cut back. While the term price today is nearly triple the 20-year lows in 2018, it’s still below the triple digit incentive price required to meet the future demand.
That’s not to say that the price growth from 2022 to 2024 had no effect. Production increased moderately thanks largely to the resumption of production at Cameco’s McArthur River mine and Key Lake mill in Saskatchewan, Canada. However, let us be clear: the approaching supply crunch will not be resolved easily or quickly. Even if prices double tomorrow, we are many years away from seeing enough new production. There is also no quick fix coming from secondary supply, no secret stockpiles that will save the day. Even the US strategic stockpile would only be a small, temporary fix. New supply will have to come from mining, and while all mining is difficult, uranium mining is especially difficult.
Uranium is among the most heavily regulated resource sectors in the world. Moving from discovery to production can take well over a decade. Moreover, economic uranium deposits are incredibly hard to find. In fact, the bulk of supply and known reserves is concentrated in just a few regions: Kazakhstan, Australia, US, and Canada.
Now, it’s important to note the mining industry does have some cards to play. The US in particular is host to a number of past producing uranium mines, and the process for restarting them has already begun. In the last two years, companies such as Energy Fuels, Penisula Energy, and UrEnergy, enCore Energy, and UEC have been front runners in restarting mines, as well as IsoEnergy, which owns the Tony M, Daneros, and Rim mines in Utah, and is in the process of refurbishing in preparation for restarts. [The I2M Corporation is stepping up with their seasoned uranium personnel and are pursuing interesting pipeline projects they are developing on a fast-track basis.]
These mines – and those that follow – have the potential to add major value to the companies and shareholders when prices are forced back upwards, but they will not deliver anywhere near enough uranium to solve the coming supply crunch.
“Secondary supplies are expected to decline significantly to 9% of total supply in 2030 and remain near this low level through 2040. Much of this
secondary supply stems from utility and government inventories, which have been drawn at an accelerated pace.”
UxC, Uranium Production Cost Study, 2023
Looking further down the line and across the border to Canada, there are some advanced, well-funded projects with great size and very impressive economics, such as NexGen’s Arrow (the world’s largest high-grade undeveloped deposit) and Denison Mines’ Phoenix (a massive ISR project). To date, neither has received construction licenses, let alone commenced construction, and therefore they will not be delivering material in the near future. Even when they do, which in our opinion is very unlikely to occur before 2030, the added production will not solve the expanding long term supply gap.
There are operating mines capable of expanding. However, Kazatomprom is behind on its growth plans – most likely due to capital costs, and, industry major, Cameco, has been clear that it wants higher prices before expansion. It’s worth considering the commentary from uranium fuel expert, UxC, which clearly stated that currently operating mines around the world are facing “dwindling reserves and falling grades”, so much so that the cost of production for most existing uranium miners will rise within the coming years.
How much is any OPEX rise likely to be? Put another way, what is the incentive price for a major uptick in production? Back in 2022 – when today’s tariff war was unimaginable – Cameco CEO, Tim Gitzel, floated $95/lb as the incentive price required for new production. Today, following some high inflation
years and a highly volatile global economy, that incentive price will be north of three figures for many uranium projects. And again, even when prices rise to the level that leads to the majors expanding their production, the long term gap will still remain open.
So what can be expected from this disconnect between supply and demand? Are utilities really holding back solely because of the uncertainty from tariffs and the Ukraine war? Also, what about the end of the war? Will it unleash new supply?
Let’s take the last question first. The answer is no. Russia is indeed a uranium producer but it is small fry compared to Kazakhstan and Canada. The country is a massive player in terms of uranium enrichment, but not in terms of raw production. Utilities know this. They are not waiting on raw material to flood the market and push down prices. Their focus on Russia has more to do with enrichment capacity, which Russia dominates with a ~45% global share. This arguably has blinded them to the elephant walking into the room, aka insufficient uranium mining and dwindling secondary supply. It’s understandable in some respects. One look at NexGen’s Arrow deposit – which will be the largest uranium mine in the world once in production – and you could be forgiven for thinking that Arrow, along with other development projects, mine restarts and mine expansions, will solve the problem. That is until you realize the size of the approaching demand.
Below is a chart from the 2024 Red Book – a biennial report on the global uranium industry produced jointly by the Nuclear Energy Agency (NEA) and the International Atomic Energy Agency (IAEA). This chart says it all.
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