The rapid expansion of data centres, driven largely by artificial intelligence, is creating fresh interest in nuclear power and helping strengthen the outlook for uranium prices.
Data centres require enormous amounts of electricity to operate. As demand for computing power continues to grow, some major technology companies are exploring nuclear energy as a reliable source of electricity. This has added another factor to an already changing uranium market.
The spot price of uranium concentrate, known as U3O8 or yellowcake, has risen to its highest level since early February, according to market-data firm UxC. The price is now close to $90 per pound, significantly higher than the levels seen after the Fukushima nuclear disaster in 2011.
Long-term uranium prices have also reached their highest levels in at least 18 years, according to mining companies. The development reflects growing expectations that demand for nuclear fuel could increase substantially in the coming years.
A recent deal between Finnish utility Fortum and Google has highlighted the connection between the technology sector and nuclear energy. The agreement will support data-centre power needs in Finland while extending the operating life of the Loviisa nuclear power plant.
The uranium market is benefiting from factors beyond data centres. Several countries are looking at nuclear power to strengthen energy security and reduce dependence on fossil fuels such as coal, which contributes significantly to greenhouse-gas emissions.
However, uranium supply has not grown as quickly as market expectations. UBS has warned that supply deficits could increase through the 2030s and beyond. Rising production costs are also putting pressure on the mining industry.
Kazatomprom CEO Meirzhan Yussupov recently said that the industry is entering an era in which cheap uranium may become increasingly difficult to obtain.
Market analysts are also becoming more optimistic about uranium prices. Jefferies recently increased its long-term uranium price forecast by 36% to $95 per pound. Citi analysts have suggested that prices could reach $140 per pound by late 2027.
There are, however, reasons for caution. Nuclear power development in several Western countries has remained slow, while new mining projects could increase uranium supply over the next five years. A slowdown in data-centre construction caused by concerns over electricity demand and local opposition could also reduce the pace of new nuclear projects.
For mining giant BHP, uranium remains attractive but is currently viewed mainly as a byproduct of its copper operations. Analysts say the uranium market, currently valued at around $10 billion, would need to grow substantially before it becomes a major investment opportunity for the company.
The combination of AI-driven electricity demand, energy-security concerns and limited uranium supply is nevertheless giving the nuclear fuel market a stronger outlook than it has seen in years.
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