Geopolitical Risk and Other Key Uranium Trends in 2022

First it was civil unrest in Kazakhstan, and now it’s Russian military action in Ukraine… as UxC stated in their recent live webinar, 2022 is the year of geopolitical risk.

For newcomers to the Fission blog: UxC is the leading research and analysis group for nuclear fuel and each year they present predictions for key trends in the uranium sector. Here are my key takeaways for this year.


Until recently, geopolitical and jurisdictional risk has been a somewhat unappreciated factor in uranium supply. The fact is, the bulk of uranium production comes from countries that are vulnerable to disruption of one kind or another. Even the US has some issues with certain economic uranium deposits located in States with prohibitive regulations that make mining them close to impossible.  Canada’s Athabasca Basin, on the other hand, not only has the largest, high-grade grade uranium reserves in the world but is also located in the pro-mining province of Saskatchewan. Of course, due to recent events in Eastern Europe, awareness of geopolitics and jurisdictional risk is growing rapidly. 

The changing relationship between major global powers is “reshaping the landscape” for the uranium sector. UxC goes as far as to say that 2022 will be among the most “complex, unpredictable and potentially one of the most dangerous political backdrops in decades.” For example, Russia is both a supplier and consumer of uranium and nuclear fuel. Moreover, it has significant political and economic influence over Kazakhstan – the world’s largest uranium producer.

It’s worth noting that although UxC’s webinar was published prior to Russia’s military action in Ukraine, their opinion is clear: political differences between the world’s three most powerful countries could lead to serious supply side disruption for uranium. This fact has not gone unnoticed and the uranium spot price has been rising steadily, day after day, since Russia entered Ukraine, and the West announced numerous sanctions. 

Nuclear Energy and Green Investment

It’s been a long-time frustration for many in the industry that nuclear is still fighting to be officially recognized as green energy in certain countries. As emissions figures show, nuclear is on par with renewable energy and even surpasses some renewables in terms of carbon emissions. It is therefore very pleasing to see the EU finally include nuclear in its taxonomy.  Interestingly, UxC does not feel this step will necessarily open up access to green financing, but they do believe it represents a major step forward in sentiment.

Nuclear Turnaround in the US

For many, the nuclear growth story is a predominantly Chinese story. China has led new construction of reactors by 60% over the last five years and UxC expects them to continue this trend with 50% of new builds through 2030. However, for the time being, the largest fleet of operating reactors is still located in the US.

Until recently, energy generation from US reactors looked set to decline, but thanks to positive action by the US administration and Congress, this trend has been reversed. UxC highlights the following:

  • Illinois saved two nuclear power plants in Sept, 2022
  • Democratic administration has proved highly pro-nuclear due to focus on climate strategy
  • The $1.2 trillion infrastructure bill passed in November, 2021 included nuclear support.
  • “Build back better” initiative could add even more nuclear support.
  • Major utilities moving to 80-year licenses

As the UxC team points out: there is more work required but we can expect the positive trend to continue.

Small Modular Reactors

I recently wrote a post of the latest advancements in SMRs. In their webinar, the UxC team echoed the positive sentiment and forward movement in this area of the nuclear industry. In particular, they highlighted the potential for SMRs to be a “huge paradigm shift” in the nuclear sector – a shift that could even change the public’s mindset. They feel the next ten years will be crucial as initial SMR construction takes place.

Spot Price Volatility

Here’s something that uranium veterans know well: spot price volatility is not new and it’s here to stay.  I’d go further and point out that the potential for sharp, significant rises in spot pricing is far greater now compared to recent years. Liquidity issues, the transition of Uranium Participation Corp. to the Sprott Physical Uranium Trust (SPUT), and the major upscaling of geopolitical strife, are at the heart of the increased spot price volatility.

Spot price purchasing from the Trust and other financial groups was around 40% of spot activity in 2021.  UxC points out that while the volume may decrease, SPUT and others remain on the bid and are providing a floor for spot prices. They also note that the buying has intensified the inventory draw downs.

Utility Term Contracting

Based on contracts signed over the last few years it’s clear that some utilities are still holding back from new purchase agreements. However, price volatility, new and resurfacing geopolitical hurdles and inflation mean that price and security of supply are becoming serious issues. UxC expects that a number of utilities will re-evaluate their position, particularly since inventory levels have been falling steadily in the US and EU.

Supply Side

According to UxC, supply diversity is becoming increasingly important as a result of China’s growing appetite for uranium and the retirement of some Western production sites. Unsurprisingly, Chinese entities have increased their global share of production.

While we are not yet seeing very low levels of inventory, the huge post-Fukushima overhang is gone. The analysts also pointed out what I’ve been saying for some time: higher sustainable prices and new contracts are needed before we see any major uptick in uranium production.  This is because, according to UxC, approximately 70% of global production is at a cost of <US$30 per lb U3O8. With inventories declining and reserves of existing mines depleting, the pressure for higher prices can only grow.

In terms of idle mine development, the timing of restarts varies from project to project. However, when it comes to new mine development, UxC makes specific note of just three companies: NexGen, Denison, and of course Fission Uranium. UxC points out that project economics is expected to become increasingly important for any project hoping to enter production due to higher inflation and “re-evaluations are expected for companies that published their FS three or four years in the past”.

I am, understandably, extremely pleased to see Fission’s name in UxC’s annual forecast on uranium trends. The fact that we are displaying prominently on the radar of the world’s top nuclear fuel analysts shows how much ground we have covered in the last twelve months. Their associated mention of project economics for any new mines is also a highly favourable comment. I say that because Fission’s PLS project has the potential to become one of the lowest operating cost uranium mines in the world.

Going Forward

Last year, UxC published an upbeat trends webinar that was followed by an exciting, very positive year for the uranium sector. My clear interpretation of this year’s webinar is that the future is bright for uranium’s supply side and specifically for projects, like Fission’s, that have the potential for robust economics.

As you will seen from our recent, important team expansion, we are continuing to advance our fantastic PLS project. If you have any questions or would like further information about Fission, please don’t hesitate to contact us.

Ross McElroy, President and CEO of Fission Uranium