(Bloomberg) -- The world’s second-biggest producer of enriched uranium, the key element used to fuel nuclear reactors, said orders are surging following Russia’s invasion of Ukraine and renewed interest in atomic energy as a solution to climate change. 

Urenco Ltd.’s long-term orders rose more than 10% over the past three months, extending last year’s 24% jump, Chief Executive Officer Boris Schucht said. The European consortium, owned by the Dutch and UK governments as well as German utilities E.ON SE and RWE AG, will invest in new production capacity to meet the rising demand. 

“We see momentum around nuclear that we haven’t seen for quite a long time, I would say three or four decades,” Schucht said in an interview. “A lot of customers are moving into very long-term contracts with us. So we have, even now, customers signing up for the rest of the lifetime of their power plants with us in Europe and the US.”

Urenco works at the heart of the so-called nuclear-fuel cycle, a series of industrial processes that convert and refine raw uranium into a heavy metal usable in power plants. Its centrifuges, spinning at supersonic speeds to separate uranium-235 isotopes, are located at factories in Germany, the Netherlands, the UK and US. 

“We need long-term contracts for our investment plans, that’s how the industry works,” Schucht said. “Customers will only move into long-term contracts when they have an understanding of the political position and what societies want.”

The German executive attended a Group of Seven meeting last month in Sapporo, Japan, where countries pledged to reduce their Russian nuclear dependency. Kremlin-controlled Rosatom Corp. is the world’s biggest exporter of atomic fuel, reactors and technology. 

G-7 nations have refrained from sanctioning Russia’s nuclear industry over the invasion of Ukraine because of concern it could damage their own economies. Rosatom provided about a quarter of the enriched uranium needed for the 92 reactors in the US in 2021. In Europe, utilities that generate power for countries with about 100 million inhabitants still rely on the Russian company.

Urenco intends to make an investment decision later this year on where to build a new plant producing fuels for the next generation of reactors. Both the UK and US are interested in hosting the facility, said Schucht, adding that the US market for so-called high-assay low-enriched uranium “is stronger at the moment.”

The urgency to mitigate climate change is the other big driver for atomic power. Without nuclear “it is simply impossible” to achieve the global target to keep temperatures from rising more than 1.5C degrees this century, Schucht said. 

Ultimately, it’s that conflict, climate and the demand for new fuels that are supporting the case for new capacity.

“The market price level is allowing for investment,” Schucht said. “This is now a pretty good balance.”

--With assistance from Petra Sorge.

(Adds CEO on market prices in the final paragraph)

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