Uranium mining stocks surged on Tuesday as the United States considers imposing sanctions on Russia’s top uranium supplier, a move that could reduce global supplies of the nuclear fuel and drive up prices.
The U.S. Treasury Department is reportedly weighing sanctions on Russia’s state-owned nuclear energy corporation, Rosatom, which supplies about one-third of the world’s uranium. The sanctions would be in response to the company’s alleged involvement in a wide range of illicit activities, including election interference and cyberattacks.
Shares of Cameco Corp., the world’s largest publicly traded uranium producer, rose more than 5% in Toronto, while shares of Uranium Energy Corp. and Ur-Energy Inc. were up around 7%. Shares of Energy Fuels Inc., a major uranium producer in the U.S., surged more than 10%.
The potential sanctions come at a time when uranium prices have been languishing and uranium mining stocks have been under pressure. Prices have been stuck in a range of $25 to $30 per pound since late 2018, after reaching a high of $75 per pound in 2007.
The uranium market has been struggling with oversupply and weak demand. The Fukushima Daiichi nuclear disaster in 2011 led to a sharp drop in demand, as countries around the world shut down nuclear power plants and shifted to renewable energy sources. But the market could be set for a turnaround if the U.S. imposes sanctions on Rosatom. Such a move would reduce global supplies of uranium and drive up prices.
“If the sanctions are imposed, it could be a game changer for the uranium market,” said Chris Saffer, an analyst at investment firm Cantor Fitzgerald. “It could create a significant supply shock, as Rosatom is the largest supplier of uranium in the world. This could lead to a sustained rally in uranium prices and a sharp increase in the share prices of uranium mining companies.”
Analysts said the sanctions could lead to a short-term spike in uranium prices, as traders and investors rush to buy up supplies before they become more expensive. But they said any sustained rally in prices would depend on the extent of the sanctions and their impact on global supplies. “It’s too early to say what the impact of the sanctions will be,” said Saffer. “It’s possible that the sanctions could be limited in scope and have only a minimal effect on global supplies. But if they are broad and affect Rosatom’s ability to supply uranium, then the impact could be significant.”
Analysts said the potential sanctions could also benefit U.S. uranium producers, who have been struggling with weak prices and low demand. “If the sanctions are imposed, it could be a boon for U.S. uranium producers, who could benefit from a surge in demand as buyers look for alternative sources of supply,” said Saffer.
The potential sanctions come as the U.S. is pushing for a global ban on the sale of nuclear fuel to Iran. The U.S. is hoping to cut off the country’s access to nuclear fuel, which could be used to make weapons. The potential sanctions on Rosatom could be part of a broader effort to limit Iran’s access to nuclear fuel. If the sanctions are imposed, it could reduce global supplies of uranium and drive up prices, making it more difficult for Iran to obtain the nuclear fuel.
It remains to be seen whether the sanctions will be imposed, and if so, what their impact will be. But one thing is certain: the potential sanctions have already boosted uranium mining stocks, and could lead to a sustained rally in prices if they are imposed.