Uranium Supply Crunch Looms as Major Producers Cut Output by 10%

The global uranium market is currently experiencing a pivotal moment, with supply reductions, surging demand, and geopolitical tensions converging to potentially create a bottleneck for nuclear energy development and a geopolitical pressure point. The supply of high-assay low-enriched uranium (HALEU), a critical fuel for advanced nuclear reactors, is extremely tight. This scarcity is not only a challenge for companies but also for the entire advanced nuclear energy industry. The advanced reactors rely on HALEU as their primary fuel source. The current global supply chain for HALEU is under significant strain, making it a critical bottleneck for the industry. This issue is compounded by the complex and lengthy process of obtaining the necessary licenses and permits for nuclear projects, which can further delay the deployment of new nuclear technologies. The geopolitical landscape adds another layer of complexity, as tensions between nations can disrupt the supply of uranium and other critical materials needed for nuclear energy production. These factors combined create a challenging environment for the nuclear energy sector, with potential implications for energy security and the global transition to cleaner energy sources.

Major uranium producers have been reducing their output, exacerbating the supply shortage. For instance, Kazatomprom plans to cut its 2026 production by 10% to 77 million pounds, while Cameco has reduced its MacArthur River mine output from 18 million pounds to 13 million pounds. Additionally, secondary supplies, which have traditionally filled the gaps, are rapidly depleting. The proportion of secondary supplies from government stockpiles and re-enrichment has dropped from 50% in 2021 to around 15% in 2025, with further declines expected by 2030. This supply crunch is expected to drive prices higher, as the market seeks to balance supply and demand. However, with utilities in the U.S. and EU holding approximately three years of inventory, panic buying is not imminent in the short term.

On the demand side, global uranium needs are surging at an unprecedented rate. Demand is projected to rise from 188 million pounds in 2025 to 230 million pounds in 2030. This growth is largely driven by the rapid expansion of nuclear power plants, particularly in China, and the increasing energy demands of AI and data centers. Tech giants are turning to nuclear energy to power their high-energy consumption operations. For example, Meta has signed a 20-year virtual power purchase agreement with Constellation, while Amazon has secured nearly 2 gigawatts of nuclear power from Talon Energy for its AWS data centers.

One of the most pressing issues is the dependency on Russia for uranium enrichment services. The next generation of small modular reactors (SMRs) requires HALEU with an enrichment level of 20%, significantly higher than the 3-5% used in traditional reactors. Global demand for enriched uranium is expected to rise from 50 million SWU annually to 75-100 million SWU by 2040. However, Russia currently supplies over 25% of the world's enriched uranium. If trade restrictions lead to a complete halt in Russian supplies by 2028, the market could face a shortage of 15-20 million SWU. To mitigate this risk, the U.S. has allocated 27 billion dollars, along with 7 billion dollars from the Inflation Reduction Act, to enhance domestic enrichment capabilities. Centris Energy aims to produce 3.5 million SWU at its Ohio facility within the next few years.

The global uranium supply is highly concentrated, with Kazakhstan accounting for approximately 40%, Canada for 20%, and Africa (primarily Namibia) for 12% by 2025. Future dynamics are expected to shift, with Kazakhstan's reserves depleting post-2030 and Canada's position strengthening as new projects come online. Geopolitical instability in regions like Niger adds further uncertainty to the African supply. Investors are advised to closely monitor key catalysts, including U.S. strategic uranium reserve purchases, activities by financial institutions like Sprott and Yellowcake, further production cuts by suppliers, funding decisions by the U.S. Department of Energy, and any developments related to Russian supply disruptions. These factors will collectively shape the future trajectory of the uranium market.