Dirk Hoozemans
Senior portfolio manager

Key takeaways

  • Generating nuclear power does not cause carbon emissions. Combined with high capacity of nuclear power plants, it makes nuclear power a reliable and stable source of energy.
  • Nuclear waste remains the major environmental and safety drawback related to nuclear power.
  • A few high-profile incidents in the history of nuclear power have led to improved safety designs in reactors.
  • Uranium needs to be enriched to be used in nuclear power reactors.
  • Kazakhstan is the world’s biggest producer of uranium, but nearly half of enriched uranium exports worldwide comes from Russia.
  • Constrained and insecure supply meeting elevated clean energy and energy security demand has driven uranium prices to new highs in recent months.

Uranium price between January 2020 and March 2024 (U308 in USD/pound)

A chart depicting the price of uranium 308 per pound rising from around USD 25 per pound in January to USD 93.5 in March 2024.

A quick history of uranium

Uranium was discovered in 1789 by the German chemist Martin Heinrich Klaproth and was named after the then-recently discovered planet Uranus. It occurs as a naturally radioactive silvery-white metal and is one of the more common chemical elements in the Earth’s crust. Denoted by the symbol U, it has atomic number 92 in the periodic table of elements, meaning its nucleus contains 92 positively charged protons, orbited by 92 negatively charged electrons.1

Which uranium isotope is key in generating nuclear energy?

Uranium has three different naturally occurring isotopes: U234, U235 and U238.2 The most common isotope is U238, which accounts for over 99% of natural uranium. The important nuclear energy carrier U235 used in power generation makes up for around 0.7% of all uranium, while U234 occurs only in very small quantities.3

Picture 1: Nuclear fission process

An image of the uranium 235 atom being hit by a neutron and then split while releasing radiation and energy.

Splitting atoms to create nuclear power

All nuclear power plants currently in operation are based on the principle of fission. In nuclear fission, a neutron is made to collide with a uranium atom, thereby splitting the atom. This releases both radiation and the energy that holds the atom together in the form of heat. The split also causes more neutrons to be released and bump into more uranium atoms, creating a nuclear chain reaction that generates significant amounts of heat. That heat is then used to fire a steam turbine, generating electricity. Most nuclear reactors use fuels containing U235, which is nature’s most fissile isotope.

Nuclear fuel needs a higher concentration of U235 than found in nature. Hence after mining, uranium needs to be “enriched”: the content of U235 needs to be taken up to 3%–5% (for LEU or low-enriched uranium, fuel for most reactor designs), or as high as 20% (HEU or highly enriched uranium, used in e.g. submarine propulsion).4 Uranium is considered weapons-grade when it has been enriched to 90%.5

Enriched uranium has a super-high energy density: one single uranium fuel pellet, the size of a gummy bear, can create the amount of energy of a ton of coal, 149 gallons of oil, or 17,000 cubic feet of natural gas.6

Nuclear energy: a clean and reliable force in the net-zero economy

Contrary to traditional fossil-fuel-based electricity generation, nuclear power generation is carbon emissions free and contributes to net zero outcomes7.8 Also, nuclear power plants operate at high round-the-clock capacity factors, making nuclear power a reliable and stable source of baseload power generation. The major environmental and safety drawback related to nuclear power is nuclear waste, especially used nuclear fuel, which can remain radioactive for many years.

There have been headline-grabbing and serious disasters related to nuclear power plants in the past: the 1979 Three Mile Island partial meltdown,9 the 1986 Chernobyl accident10, and the 2011 Fukushima disaster11 caused by a tsunami spring to mind immediately. While these incidents have caused public concern and anxiety around nuclear power, and have led to NIMBY-ism12 in the past, it should be noted that the track record of nuclear power versus other sources of energy13 points to the safety of nuclear energy. Note also that accidents and near-accidents have led to improved safety designs in existing and new reactors.

Total Energy Supply

Total Energy Supply

IEA

IEA

IEA

IEA

IEA

IEA

IEA Stated Energy Policies Scenario STEPS

IEA Stated Energy Policies Scenario STEPS

-

-

-

-

-

-

IEA Announced Pledges Scenario APS

IEA Announced Pledges Scenario APS

-

-

-

-

-

-

IEA Net Zero Emissions Scenario NZE

IEA Net Zero Emissions Scenario NZE

-

-

-

-

-

-

Total Energy Supply

Share of Energy

IEA

2010

IEA

2021

IEA

2022

IEA Stated Energy Policies Scenario STEPS

2030E

-

2035E

-

2040E

-

2050E

IEA Announced Pledges Scenario APS

2030E

-

2035E

-

2040E

-

2050E

IEA Net Zero Emissions Scenario NZE

2030E

-

2035E

-

2040E

-

2050E

Total Energy Supply

Coal

IEA

28%

IEA

27%

IEA

27%

IEA Stated Energy Policies Scenario STEPS

22%

-

19%

-

17%

-

14%

IEA Announced Pledges Scenario APS

20%

-

15%

-

12%

-

7%

IEA Net Zero Emissions Scenario NZE

17%

-

9%

-

5%

-

3%

Total Energy Supply

Gas

IEA

21%

IEA

23%

IEA

23%

IEA Stated Energy Policies Scenario STEPS

22%

-

22%

-

21%

-

20%

IEA Announced Pledges Scenario APS

21%

-

19%

-

17%

-

14%

IEA Net Zero Emissions Scenario NZE

21%

-

14%

-

10%

-

6%

Total Energy Supply

Oil

IEA

32%

IEA

29%

IEA

30%

IEA Stated Energy Policies Scenario STEPS

29%

-

28%

-

27%

-

26%

IEA Announced Pledges Scenario APS

28%

-

25%

-

22%

-

16%

IEA Net Zero Emissions Scenario NZE

26%

-

21%

-

15%

-

8%

Total Energy Supply

Nuclear

IEA

6%

IEA

5%

IEA

5%

IEA Stated Energy Policies Scenario STEPS

6%

-

6%

-

6%

-

7%

IEA Announced Pledges Scenario APS

6%

-

7%

-

9%

-

9%

IEA Net Zero Emissions Scenario NZE

8%

-

10%

-

12%

-

12%

Total Energy Supply

Bioenergy

IEA

5%

IEA

4%

IEA

4%

IEA Stated Energy Policies Scenario STEPS

3%

-

3%

-

3%

-

2%

IEA Announced Pledges Scenario APS

1%

-

1%

-

1%

-

1%

IEA Net Zero Emissions Scenario NZE

0%

-

0%

-

0%

-

0%

Total Energy Supply

Solar

IEA

0%

IEA

1%

IEA

1%

IEA Stated Energy Policies Scenario STEPS

3%

-

5%

-

7%

-

10%

IEA Announced Pledges Scenario APS

4%

-

8%

-

11%

-

17%

IEA Net Zero Emissions Scenario NZE

6%

-

12%

-

18%

-

26%

Total Energy Supply

Wind

IEA

0%

IEA

1%

IEA

1%

IEA Stated Energy Policies Scenario STEPS

3%

-

4%

-

5%

-

6%

IEA Announced Pledges Scenario APS

4%

-

6%

-

7%

-

11%

IEA Net Zero Emissions Scenario NZE

4%

-

8%

-

11%

-

16%

Total Energy Supply

Other renewables

IEA

8%

IEA

9%

IEA

10%

IEA Stated Energy Policies Scenario STEPS

12%

-

13%

-

14%

-

16%

IEA Announced Pledges Scenario APS

15%

-

18%

-

21%

-

25%

IEA Net Zero Emissions Scenario NZE

18%

-

25%

-

28%

-

30%

Total Energy Supply

Other

IEA

0%

IEA

0%

IEA

0%

IEA Stated Energy Policies Scenario STEPS

0%

-

0%

-

0%

-

0%

IEA Announced Pledges Scenario APS

0%

-

0%

-

0%

-

0%

IEA Net Zero Emissions Scenario NZE

0%

-

0%

-

0%

-

0%

Total Energy Supply

Total

IEA

100%

IEA

100%

IEA

100%

IEA Stated Energy Policies Scenario STEPS

100%

-

100%

-

100%

-

100%

IEA Announced Pledges Scenario APS

100%

-

100%

-

100%

-

100%

IEA Net Zero Emissions Scenario NZE

100%

-

100%

-

100%

-

100%

Total Energy
Supply

Total Energy
Supply

BNEF Green
Scenario

BNEF Green
Scenario

-

-

-

-

-

-

BNEF Grey
Scenario

BNEF Grey
Scenario

-

-

-

-

-

-

BNEF Red
Scenario

BNEF Red
Scenario

-

-

-

-

Share of Energy

2030E

2035E

2040E

2050E

2030E

2035E

2040E

2050E

2030E

2035E

2040E

2050E

Coal

15%

10%

6%

1%

18%

18%

19%

18%

15%

9%

5%

0%

Gas

21%

15%

11%

4%

23%

24%

24%

26%

20%

14%

10%

3%

Oil

30%

22%

14%

5%

30%

22%

15%

8%

28%

20%

12%

4%

Nuclear

6%

7%

7%

5%

6%

7%

7%

5%

15%

30%

44%

66%

Bioenergy

9%

11%

11%

11%

9%

11%

12%

12%

9%

9%

9%

7%

Solar

5%

9%

12%

18%

4%

5%

7%

9%

3%

5%

5%

6%

Wind

11%

23%

34%

52%

6%

10%

13%

17%

6%

10%

12%

12%

Other renewables

3%

3%

4%

4%

3%

3%

4%

4%

3%

3%

3%

2%

Other

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

Total

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Source: World Energy Outlook 2023 Free Dataset - Data product - IEA; Bloomberg New Energy Finance New Energy Outlook 2021: Data Viewer (1.0.3). Latest data point: December 2022 (E: Estimates)

In the International Energy Agency’s (IEA) World Energy Outlook 2023, the role of nuclear energy increases in all three scenarios outlined, whereas in Bloomberg New Energy Finance’s (BNEF) so-called red scenario (economic transition to nuclear energy and nuclear-produced hydrogen), the role of nuclear energy becomes even more significant. The growth outlook for nuclear energy was bolstered in 2023 as the 28th United Nations Conference of Parties (COP28) called for accelerated deployment of nuclear technology.14

Kazakhstan and Russia – key players in uranium production and enrichment

While uranium is mined in only a few countries globally, enrichment is even more concentrated: there is only a handful of fuel enrichment companies operating in a limited number of countries. Russia makes up only 5% of global uranium production,15 but the country accounts for almost half of the world’s enrichment capacity,16 mainly supplied from Kazakhstan.

Russia-Ukraine war impacts uranium imports

Prior to passing a bill banning Russian nuclear fuel imports in the wake of the Russia-Ukraine war,17 the US imported nearly half of its nuclear fuel from Russia.18 Europe relies on Russia for 40% of its nuclear fuel supply. Sanctions on Russia have increased demand for non-Russian nuclear fuel, which has led to increased demand for uranium to be enriched outside of Russia.19

On top of this, Kazakhstan’s state-owned uranium miner Kazatomprom is experiencing production problems due to shortages in process chemicals,20 and Canadian producer Cameco is also struggling to meet production targets.21


Table 2: Uranium supply–demand balance (million pounds)
 

Primary Supply Forecast

Primary Supply Forecast

2017

2017

2018

2018

2019

2019

2020

2020

2021

2021

2022

2022

2023E

2023E

2024E

2024E

2025E

2025E

2026E

2026E

2027E

2027E

2028E

2028E

2029E

2029E

2030E

2030E

Primary Supply Forecast

Australia

2017

14.0

2018

16.7

2019

16.9

2020

16.1

2021

10.8

2022

11.8

2023E

12.0

2024E

13.3

2025E

13.7

2026E

14.1

2027E

14.1

2028E

14.1

2029E

14.1

2030E

13.1

Primary Supply Forecast

Canada

2017

34.2

2018

18.1

2019

18.0

2020

10.3

2021

12.2

2022

19.5

2023E

28.5

2024E

34.5

2025E

36.9

2026E

36.7

2027E

36.9

2028E

56.6

2029E

67.2

2030E

76.0

Primary Supply Forecast

Kazakhstan

2017

60.6

2018

56.4

2019

59.3

2020

50.6

2021

56.7

2022

56.3

2023E

54.9

2024E

57.0

2025E

66.1

2026E

73.3

2027E

78.5

2028E

80.0

2029E

76.7

2030E

77.3

Primary Supply Forecast

Nambia

2017

11.2

2018

15.2

2019

14.2

2020

14.1

2021

15.0

2022

14.6

2023E

13.7

2024E

14.9

2025E

18.5

2026E

19.7

2027E

19.8

2028E

19.8

2029E

19.8

2030E

19.8

Primary Supply Forecast

Niger

2017

9.0

2018

7.6

2019

7.8

2020

7.8

2021

5.0

2022

5.2

2023E

3.9

2024E

3.9

2025E

5.0

2026E

6.0

2027E

8.0

2028E

7.5

2029E

6.7

2030E

6.1

Primary Supply Forecast

Russia

2017

7.7

2018

7.6

2019

7.0

2020

6.8

2021

6.8

2022

6.5

2023E

6.9

2024E

9.9

2025E

10.9

2026E

11.7

2027E

11.7

2028E

11.7

2029E

11.7

2030E

11.7

Primary Supply Forecast

Other

2017

18.8

2018

19.5

2019

17.9

2020

18.5

2021

17.1

2022

16.7

2023E

12.5

2024E

12.4

2025E

13.3

2026E

14.9

2027E

14.8

2028E

14.4

2029E

14.3

2030E

13.9

Primary Supply Forecast

Primary supply total 

2017

155.4

2018

141.1

2019

141.1

2020

124.2

2021

123.6

2022

130.7

2023E

132.4

2024E

146.0

2025E

164.4

2026E

176.3

2027E

183.9

2028E

204.2

2029E

210.5

2030E

217.8

Primary Supply Forecast

Inventory and secondary supply total

2017

30.5

2018

32.4

2019

31.5

2020

28.5

2021

29.4

2022

28.9

2023E

22.6

2024E

21.1

2025E

23.2

2026E

24.2

2027E

22.5

2028E

22.0

2029E

21.6

2030E

23.2

Primary Supply Forecast

Total supply

2017

185.9

2018

173.5

2019

172.5

2020

152.7

2021

153.0

2022

159.6

2023E

155.0

2024E

167.2

2025E

187.6

2026E

200.5

2027E

206.4

2028E

226.1

2029E

232.1

2030E

241.0

Demnad forecast ex buffer Inventories

Demnad forecast ex buffer Inventories

2017

2017

2018

2018

2019

2019

2020

2020

2021

2021

2022

2022

2023E

2023E

2024E

2024E

2025E

2025E

2026E

2026E

2027E

2027E

2028E

2028E

2029E

2029E

2030E

2030E

Demnad forecast ex buffer Inventories

USA and the Americas

2017

54.9

2018

53.4

2019

52.8

2020

48.3

2021

50.7

2022

54.6

2023E

53.2

2024E

52.6

2025E

53.2

2026E

55.3

2027E

54.0

2028E

55.3

2029E

55.4

2030E

57.2

Demnad forecast ex buffer Inventories

Europe

2017

55.4

2018

51.0

2019

53.2

2020

46.7

2021

47.5

2022

48.7

2023E

53.6

2024E

48.9

2025E

48.9

2026E

49.7

2027E

51.6

2028E

51.9

2029E

50.6

2030E

52.1

Demnad forecast ex buffer Inventories

China

2017

25.1

2018

23.0

2019

25.5

2020

22.7

2021

23.1

2022

27.5

2023E

29.8

2024E

35.0

2025E

38.8

2026E

42.0

2027E

48.9

2028E

57.7

2029E

58.6

2030E

59.0

Demnad forecast ex buffer Inventories

India

2017

2.6

2018

2.6

2019

2.6

2020

4.2

2021

5.9

2022

5.2

2023E

5.3

2024E

4.6

2025E

4.6

2026E

7.0

2027E

7.8

2028E

9.5

2029E

8.9

2030E

10.5

Demnad forecast ex buffer Inventories

Japan

2017

1.2

2018

2.2

2019

5.8

2020

4.3

2021

6.5

2022

9.3

2023E

8.1

2024E

8.6

2025E

9.5

2026E

12.4

2027E

9.8

2028E

9.6

2029E

9.6

2030E

9.6

Demnad forecast ex buffer Inventories

Russia

2017

16.5

2018

14.0

2019

14.0

2020

14.2

2021

15.8

2022

13.1

2023E

12.9

2024E

12.7

2025E

12.5

2026E

14.4

2027E

13.5

2028E

15.8

2029E

17.0

2030E

14.4

Demnad forecast ex buffer Inventories

Rest of Asia

2017

12.2

2018

12.7

2019

11.8

2020

11.5

2021

16.2

2022

12.6

2023E

14.1

2024E

12.5

2025E

11.5

2026E

12.3

2027E

14.0

2028E

14.1

2029E

13.0

2030E

13.0

Demnad forecast ex buffer Inventories

Other countries

2017

2.2

2018

2.5

2019

5.8

2020

8.0

2021

7.4

2022

6.2

2023E

5.1

2024E

5.1

2025E

5.1

2026E

6.3

2027E

7.0

2028E

6.0

2029E

12.9

2030E

13.3

Demnad forecast ex buffer Inventories

Reactor Demand subtotal

2017

170.0

2018

161.4

2019

171.6

2020

160.0

2021

173.3

2022

177.3

2023E

182.1

2024E

180.0

2025E

184.1

2026E

199.4

2027E

206.6

2028E

219.9

2029E

226.0

2030E

229.0

Demnad forecast ex buffer Inventories

Financials

2017

0.0

2018

8.4

2019

1.2

2020

-0.3

2021

30.7

2022

21.4

2023E

10.0

2024E

10.0

2025E

10.0

2026E

5.0

2027E

5.0

2028E

0.0

2029E

0.0

2030E

0.0

Demnad forecast ex buffer Inventories

BMO Demand Forecast Excluding Buffer Inventories

2017

170.0

2018

169.8

2019

172.8

2020

159.7

2021

204.0

2022

198.7

2023E

192.1

2024E

190.0

2025E

194.1

2026E

204.4

2027E

211.6

2028E

219.9

2029E

226.0

2030E

229.0

Demnad forecast ex buffer Inventories

Supply/Demand Imbalance

2017

15.9

2018

3.7

2019

-0.2

2020

-7.0

2021

-50.9

2022

-39.1

2023E

-37.1

2024E

-22.8

2025E

-6.5

2026E

-3.9

2027E

-5.2

2028E

6.2

2029E

6.1

2030E

12.0

Sources: BMO Capital Markets (Research, 09.02.2024, p.3); World Nuclear Association. Latest data point: December 2022 (E: Estimates)

Another market tightening factor has been financial buying of uranium, especially by Sprott Physical Uranium Trust22, which bought around 20 million pounds of uranium in 2022, and another 4 million in 2023; the trust currently holds approximately 64 million pounds of physical uranium, or about one-third of annual global demand.

Constrained and insecure supply meeting elevated clean energy and energy security demand has driven prices to new highs in recent months.

The future of nuclear energy

Research into nuclear energy is ongoing, especially into nuclear fusion: nuclear energy can also be released in a reaction that combines two atoms to form a larger atom. However, this reaction is much less controllable than a fission reaction.23

Other advancements are being made in reactor design. Especially the so-called SMRs (small modular reactors) look promising due to their lower projected cost and safety attributes.24 The first SMR design was approved by the US Nuclear Regulatory Commission in 2020,25 with construction planned in the coming years.

About the author
  • Dirk Hoozemans

    CFA, Senior portfolio manager, Thematic Equities

    Dirk Hoozemans (MA, CFA, ESG CFA), Director, is Lead Portfolio Manager of the Energy Evolution strategy. In 2022, he joined Credit Suisse Asset Management, now part of UBS Group, from Triodos Investment Management, where he was fund manager of a global small- and mid-cap-focused thematic impact strategy and responsible for outlining a new impact-driven investment process, including ESG integration and active ownership policies. Prior to that, Dirk held various portfolio management positions at Robeco Asset Management, including portfolio manager of a global energy strategy. Dirk holds a master’s degree in Econometrics from Tilburg University, The Netherlands, is a CFA charterholder, and has obtained the CFA Institute Certificate in ESG Investing.

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