Kazakhstan produces more than 40 percent of the world’s uranium and unrest in the country has experienced the prices of the radioactive metal boom.
Uranium prices rose as Kazakhstan, the world’s largest producer of radioactive metal, struggled to face deadly protests that have posed the country’s biggest challenge for decades.
The Central Asian nation, part of the former Soviet Union that produces more than 40% of the world’s uranium, has disrupted communications networks and restricted some travel in an effort to stem the turmoil. The Kremlin said Russia and its allies in the Organization for Collective Security Treaty would send “peacekeepers” after Kazakh President Kassym-Jomart Tokayev asked for help.
Uranium rose nearly 8% to $ 45.25 a pound on Wednesday from $ 42 on Tuesday, according to UxC data. The turmoil could lead to more dependence on suppliers outside Kazakhstan, leading to an increase in shares of uranium companies in North America and Australia.
Given Kazakhstan’s role as the world’s number 1 uranium supplier, “it would be as if the Saudis were having problems with oil,” says Jonathan Hinze, president of UxC LLC, a leading nuclear fuel market research and analysis firm. “Even if there is no shortage at the moment, the potential is that it could create a shortage that people are now trading with.”
Nuclear fuel made an astonishing return in September, with prices rising 24% for the best monthly performance since late 2008. Investors are betting that nuclear power will enjoy a revival as governments turn away from fossil fuels.
While prices are rising on news of Kazakhstan’s unrest and possible supply disruptions, there is no immediate uranium shortage or nuclear power plants. Unlike facilities that run on oil or natural gas, nuclear power plants could continue to operate if shipments were delayed, as many stocks had built up over the past few years.
And at least some mining operations continue. The activity of Katco, a uranium mining joint venture between NAC Kazatomprom JSC and France’s Orano SA, is not suspended at this stage, as the mining site is far from the voltage zones, a spokesman for Orano said.
Yet shares of Kazatomprom, Kazakhstan’s leading uranium miner, have fallen 10% in London over the past two days. Most uranium companies in North America on Wednesday extended profits earlier this week after the European Union went ahead with a plan to label certain nuclear projects as sustainable.
With the unrest in Kazakhstan, “people are waking up to the fact that we may not be able to rely on one big producer,” says Nick Piquard, a portfolio manager at Horizons ETFs.
(Updates with status of Katco mining joint venture in seventh paragraph)
– With the help of Yuliya Fedorinova and Francois de Beaupuy.