Uranium Prices Rebound Following Sanctions on Russia
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Uranium spot prices rallied for the first time since the Fukushima Daiichi accident in 2011
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Sanctions on Russia by Western countries precipitated the rally in prices
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According to GlobalData, Russia and Ukraine were the sixth-largest and ninth-largest uranium-producing countries, respectively, in 2021
Uranium Prices Rebound Following Sanctions on Russia
More and more countries are aiming for cleaner and better energy solutions to reduce their carbon footprint. Many countries have moved to renewable energy and nuclear energy to generate electricity and meet their energy demands. According to GlobalData, countries such as France and the US have generated nearly 70% and 19% of their power in 2021, respectively, from nuclear energy. Nuclear energy has become a major source of power generation for many countries. Russia and Ukraine are the major countries producing uranium, but the recent Russia-Ukraine war has led to the rally in the uranium market. The war also led to various sanctions being imposed on Russia by the Western countries, and these included sanctions on the import of energy products from Russia. These sanctions, combined with the possibility of Russia taking over Ukraine, have resulted in the uranium spot prices jumping over 30% since February 25, 2021. The price rally has been the highest since March 2011, when the meltdown at the Fukushima Dai-Ichi nuclear power plant shut down Japan's nuclear power plants. This accident put the future of the global nuclear sector in turmoil and increased the demand for uranium – the fuel used in reactors.
Sanctions on Russia Cause Rally
With the announcement of energy sanctions on Russia, the fear of sanctions on Russian uranium and state-owned atomic energy company Rosatom Corp caused buyers worldwide to enter the spot uranium market, resulting in a global rally in prices. Rosatom has been the global leader in the uranium conversion and enrichment market with a 38% share in 2019, whereas Rosatom ranked third in the global nuclear fuel market in 2019. Besides producing enriched uranium, Rosatom produces nuclear isotopes for medicines, conducts nuclear research, and manufactures equipment and software for nuclear handling and development. Thus, if the Western countries were to sanction Rosatom, the global market would face acute shortages, and the deadlines to complete the move towards clean energy and decarbonization could be pushed back even further.
Uranium and its Uses
Uranium is used for power generation, industrial, medical, and defense purposes. Enriched uranium is used as fuel for power generation in nuclear reactors and nuclear submarines. It is also used in nuclear weapons. Depleted uranium, a less radioactive and dense metal, is used for ammunition, armor, and counterbalances in military and civil aircraft.
With the Russia-Ukraine war intensifying, the prices have risen for many commodities worldwide, and uranium is another on the list, witnessing an increase in spot prices.
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