Uranium Market Faces Critical Squeeze Amid Global Nuclear Expansion

The recent addition of uranium to the list of critical minerals essential to the United States economy signals a significant shift in energy policy. The Department of Energy now recognises uranium’s strategic value as nuclear power stands poised for a renaissance, with major initiatives underway to accelerate reactor deployment worldwide. A notable example includes an £61 billion partnership between Westinghouse and Brookfield Asset Management, intended to boost the adoption of nuclear power technologies at scale. Hedge funds and institutional investors are increasingly attentive to uranium oxide, or yellowcake, anticipating that growing demand for nuclear fuel could soon outpace available supply, creating upward pressure on prices and opportunities for specialised investment funds.

Nuclear power station operators depend on enriched uranium oxide, typically sourcing yellowcake from established producers such as Cameco in Canada and Kazatomprom in Kazakhstan under long-term agreements. These arrangements have shielded energy companies from the volatility of spot markets popular with financial speculators. However, the balance of demand and supply is beginning to falter. The World Nuclear Fuel Report 2025 projects uranium demand will climb from 68,920 tonnes annually to over 150,525 tonnes by 2040, reflecting planned nuclear capacity expansions across the globe. Meeting this surge will challenge current suppliers, as both Cameco and Kazatomprom have recently cut production by 22 percent and 10 percent, respectively, with Kazakhstan likely to prioritise Chinese contracts going forward.

Operating new or expanded uranium mines requires substantial investment and extensive regulatory approval, leading to inevitable supply lags. As a result, episodes of heightened spot price volatility, similar to recent surges in the yellowcake market, could recur. Investment firms such as Sprott and Yellowcake have raised capital to build uranium reserves, with the latter’s shares trading at a discount to underlying uranium values. Alternative investment vehicles, including the Sprott Uranium Miners ETF and UK-listed Geiger Counter, are positioned to benefit should prices rise. At present, uranium trades at approximately 78 dollars per pound, below 2024 peaks yet markedly higher than the sub-30 dollar levels of the late 2000s, as investment managers watch for utilities to re-enter the spot market amid tightening inventories.

Beyond price movements, the major concern remains uranium processing and enrichment. After extraction, uranium must be refined and enriched before it is suitable for reactor fuel. Russia continues to dominate global enrichment capacity, leaving Europe and the United States highly dependent on foreign sources for nuclear fuel. The United States imports over 99 percent of its uranium and faces an impending ban on Russian imports in the coming years. The United Kingdom benefits from domestic enrichment capacity, avoiding the reliance on Russian technology that affects much of Europe.

To replace Russian supply and meet future global needs, industry leaders such as Cameco are investing in next-generation enrichment technology, while investors monitor listed firms ASP Isotopes and Silex Systems for their involvement in nuclear fuel processing. Should the global shift to nuclear power maintain momentum, increased attention and capital will flow into the uranium supply chain, encompassing mining, processing and enrichment. This signals a new era of opportunity and challenge for both the nuclear industry and its investors.