Uranium prices jumped as Kazakhstan, the world’s largest producer of the radioactive metal, struggles to cope with deadly protests that pose the biggest challenge to the country’s leadership in decades.
The Central Asian nation, a 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 a bid to quell the unrest. The Kremlin said Russia and its allies in the Collective Security Treaty Organization will send “peacekeeping forces” after Kazakh President Kassym-Jomart Tokayev appealed for assistance.
Uranium surged almost 8% to $45.25 a pound on Wednesday from $42 Tuesday, according to UxC data. The turmoil could lead to more reliance on suppliers outside Kazakhstan, resulting in a surge in shares of uranium companies in North America and Australia.
Given Kazakhstan’s role as the world’s No. 1 uranium supplier, “it’d be like if the Saudis had issues in oil,” said Jonathan Hinze, president of UxC LLC, a leading nuclear fuel market research and analysis firm. “Even if there isn’t a shortage right now, the potential for this to create a shortage is what people now are trading on.”
The nuclear fuel made a stunning comeback in September, with prices surging 24% for the best monthly performance since late 2008. Investors are betting nuclear power will enjoy a renaissance as governments turn away from fossil fuels.
While prices are rising on news of Kazakhstan’s unrest and potential supply disruptions, there isn’t an immediate uranium shortage or nuclear power plant shutdowns. Unlike facilities that run on oil or natural gas, nuclear power plants can continue operating if shipments are delayed as many have built up stockpiles over the last several years.
And at least some mining operations are continuing. The activity of Katco, a uranium mining joint venture between NAC Kazatomprom JSC and France’s Orano SA, isn’t suspended at this stage as the mining site is far away from the tension areas, a spokesman for Orano said.
Still, shares of Kazatomprom, the top uranium miner in Kazakhstan, are down 10% over the last two days in London. Most uranium companies in North America extended gains Wednesday from earlier this week after the European Union pushed ahead with a plan to label certain nuclear projects as sustainable.
With the unrest in Kazakhstan, “people wake up to the fact that maybe we can’t rely on one major producer,” said Nick Piquard, a portfolio manager at Horizons ETFs.
(Updates with status of Katco mining joint venture in seventh paragraph)
–With assistance from Yuliya Fedorinova and Francois de Beaupuy.