Last week, Bank of America released a research note showing that spot prices for uranium had increased significantly since Russia invaded Ukraine in February.
Russia plays a central role in the international uranium supply chain, making up over 15% of total uranium supplied this year. In terms of enrichment, Russia makes up roughly 45% of global capacity. In conversion, the Eastern European country makes up nearly 30% of the estimated production of this year and about 20% of international capacity.
The investment bank expects the mineral to experience further gains in the future as the demand for the use of nuclear energy as an alternative to non-renewable energy sources also grows.
An analyst at Bank of America, Lawson Winder, stated that the increase in price observed was primarily driven by concern about disruptions in the uranium supply chain. Bank of America added that most of the activity fueling the rise in price was driven by the Sprott Physical Uranium Trust, as opposed to producers or utilities that were actively participating in the market. This is based on a report by UxC, an industry consultancy firm.
The investment bank explained that the Sprott Physical Uranium Trust was currently the largest fund holding actual uranium instead of futures contracts.
Earlier in March, the price of uranium hit a new record, its highest figure in more than a decade. This substantial increase is believed to have been prompted by reports that the Biden administration was in talks to gauge the impact of imposing possible sanctions on Russian-owned Rosatom and how that would affect America’s nuclear industry.
Rosatom State Nuclear Energy Corp is a state corporation involved in uranium enrichment and mining. The Russian state-owned company also supplies nuclear technology and fuel to power plants around the globe.
This discussion came after President Joe Biden banned the importation of crude oil and other energy products from Russia into the United States. However, this ban did not include uranium. Some legislators in the U.S. have introduced a measure to ban imports of uranium fuel from Russia, with a Reuters report noting that Russia was also considering banning uranium exports into America.
Bank of America argues that these bans would create a positive environment for uranium, which would cause an increase in the mineral’s price, benefitting companies such as Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR). The investment bank has raised its 2022 price estimate for uranium to $60.70/pound, an increase of roughly 13%. Its long-term price estimates for the mineral have also increased by about 20%.
NOTE TO INVESTORS: The latest news and updates relating to Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) are available in the company’s newsroom at http://ibn.fm/UUUU
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