A global rush to lock in nuclear fuel is putting fresh pressure on Canada, the world’s second largest producer of uranium.
Prices for the critical mineral are surging as utilities in the U.S., Europe, and Asia rush to secure long-term supply to fuel power plants, which is increasingly seen as a solution to climate change and power for data centres.
With sanctions on Russian uranium and the world’s top producer Kazakhstan facing its own mining challenges, Canada sits at the centre of the uranium squeeze with high grade deposits in Saskatchewan. But can it meet the world’s demand?
Actually, it’s in “great shape to step up to the ball,” Brooke Thackray, research analyst at Global X, told BNN Bloomberg. “There really are not a lot of places to get uranium.”
Even with 10 per cent tariffs on Canada’s uranium, American companies, don’t care because they’ve already spent billions on reactors that need the fuel, and they don’t have time to grow their own industry, he said.
“The U.S. is extremely dependent on Canada, and it’s going to become more dependent on Canada,” said Thackray.
Canada produces 13 per cent of the world’s uranium according to Natural Resources Canada, and it knows it stands to benefit.
Last year, it exported nearly $4.6 billion in uranium products and 90 per cent of production served global markets, NRCan told BNN Bloomberg.
“Uranium is a cornerstone of Canada’s energy strategy,” the department said.
Is Canada ramping up?
Even with soaring demand, Cameco, a leading uranium producer, does not plan to ramp up its production aggressively unless it locks in more contracts.
The company said it is sitting on “tier-one uranium mining assets that are licensed, permitted, long-lived, and proven, with capacity to expand,” but stressed that it does “not produce speculative pounds of uranium based on demand estimates.”
“We won’t pull a pound out of the ground without a home for it,” Jonathan Charlton, spokesperson for Cameco, told BNN Bloomberg.
In fact, Cameco announced it is reducing its forecasted output in its McArthur River/Key Lake operation from 18 million pounds of concentrate to approximately 15 million because of operational delays.
Canada has the mineral, the companies, and government support. But "the path from exploration to first production is long, capital intensive and often technically challenging," said Charlton.
NRCan highlights that the federal budget introduced new initiatives to accelerate critical mineral development which include $1.5 billion in support for projects and processing facilities and a $2-billion Critical Minerals Sovereign Fund.
A ‘funny, funny market’
Unlike oil or copper, uranium demand is mostly hard wired into long term reactor fleets.
“Uranium is a funny, funny market. It’s totally unique,” said Thackray.
He said while companies know what the supply and demand is, the price of the mineral still moves around and the industry is well aware of a looming uranium deficit in 2035.
“So there’s a game of chicken going on,” said Thackray “Because we know we’re going to go into the deficit, and we need more nuclear power.”
He said the AI industry’s biggest bottleneck right now is energy, which it is trying to fill with natural gas.
“But investors are hanging on…but you can be too late, because it can really move fast.”
Another supercycle?
Thackray says today’s environment feels a lot like the period leading into the last supercycle in the 90s to the early 2000s, when tech dominated market attention until a shock revealed shortages in copper, uranium and oil.
“We’re in the same mentality where the technology sector investing is sucking all the oxygen out of the room,” said Thackray.
He cautions the path won’t be smooth and uranium equities can drop sharply, but argues the long-term setup is strong because “we don’t have enough uranium.”
He also says large caps like Cameco tend to benefit first, but smaller players such as NexGen Energy tend to perform better later in the cycle.
Cameco’s $80 billion deal with the U.S. government to build nuclear reactors, and its refining capacity gives it an even stronger footing as demand grow, he said.
Utilities with “multi-billion dollar fixed cost” reactors must buy fuel regardless of price, while producers gain from selling more at higher levels. “
“Ultimately, high uranium prices help the nuclear industry,” he said.
Small modular reactors and AI centres
Right now, Canada has four operating uranium mines in Northern Saskatchewan and three proposed mining projects.
“Prices were very depressed for most of the last decade. Everyone was expecting it to turn around. It took longer to turn around than people thought it would,” said Pierre Gratton, president and CEO of the Mining Association of Canada.
Gratton pointed to China’s nuclear build out as a key driver.
“Reactors take forever to build, but it’s now starting to kick in and uranium prices have skyrocketed,” said Gratton.
He said the next demand will be driven by small modular reactors, or SMRs, as provinces like Saskatchewan and Alberta look for non-emitting alternatives to coal and gas.
Both Thackray and Gratton point to a second wave behind that: data centres and artificial intelligence.
By 2040, Thackray said, “they’re going to need double the amount of nuclear fuel for the reactors.”
