Uranium has always been associated with the color yellow, due to the color of uranium concentrate, the form in which uranium is transacted.  But this may be changing.  Recently, nuclear power has entered the green taxonomy of the European Union, and this is expected to give a boost to nuclear in the future.  However, the greening of uranium started before this recognition, due to activity in the financial markets.

When Sprott Asset Management set up its Sprott Physical Uranium Trust (SPUT) allowing investors greater access to uranium last August, it also gave investors the opportunity to express their views about the role of nuclear power in combatting climate change.  Uranium prices increased dramatically as many saw the potential for growth in nuclear power in an increasingly carbon-concerned world.  It can be argued that there was additional demand placed on uranium due to this view, and prices increased in response.

Any effort to model the uranium market and prices without taking this additional demand into account would fall short.  This is because these purchases of uranium via SPUT are placed into inventory, which is additive to what traditional players (utilities, producers, intermediaries) hold.   This additional demand places more upward pressure on price, especially since it occurs in the spot market.  Thus, while this demand is motivated in large part by the future growth prospects of nuclear power, it is manifest in the near-term market.

Another recent financial development that could boost nuclear power and uranium is the future production of bitcoin and other cryptocurrencies, where the intense use of electricity produced from fossil fuels has raised environmental issues and highlighted the benefits of nuclear power.  We have written before about this situation and the potential role nuclear power could play as crypto producers moved away from fossil fuels (see “Bitcoin + Nuclear = Atomcoin?,” October 6, 2021).   Here, we wondered whether bitcoin producers would enter the carbon market to offset their carbon footprint.

Recently, The Wall Street Journal reported that crypto producers have moved into the unregulated, voluntary carbon market to buy credits to offset greenhouse-gas emissions (“Crypto Traders Go to Carbon Markets,” WSJ, January 11, 2022).  However, while crypto traders are buying carbon credits, this is not a long-term solution to crypto’s carbon problem.  If crypto producers do not have a long-term plan for decarbonization, then they are only engaging in greenwashing by buying credits.  In fact, the only long-term solution for the continuous, carbon-free source of electricity that crypto producers require is nuclear energy.

In these ways, the positive impact on uranium prices from nuclear power’s role in combatting climate changes has preceded a more formal political recognition of nuclear’s role in this regard.  That is, financial markets and the demands associated with these markets have recognized the importance of nuclear power in fighting climate change prior to a more formal recognition, and perhaps have anticipated the recognition that is now occurring.  Of course, when nuclear gains greater political acceptance, which appears to be occurring, the combined impact likely would only be stronger.

We expect this outside financial interest in nuclear power to continue to be a factor influencing uranium prices.  If uranium (and nuclear power) becomes fully green, it would be a positive development, not only for uranium, but for the entire planet.

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Jeff Combs is founder, owner, and Chairman of UxC, LLC (UxC) and is a leading expert in the nuclear fuel market, with over 45 years of experience providing economic analysis and forecasting for the front-end of the nuclear fuel cycle. He has extensive and varied expertise, overseeing UxC market reports, providing strategic consulting to major commercial companies in the nuclear fuel industry, and advising governments and international organizations on market and policy issues. Under his management, UxC has grown to become the world’s pre-eminent nuclear fuel market information and analysis company, issuing reports and publishing prices for all front-end nuclear fuel markets. In 2007, UxC teamed with CME/NYMEX to introduce the world’s first uranium futures contract. That same year UxC began reporting on the backend of the fuel cycle. In 2018, Mr. Combs created the atompeace.org website to advance understanding of peaceful uses of the atom in today’s world. During his career, Mr. Combs has presented papers at a variety of nuclear industry and energy economics conferences throughout the world. In addition, he has had his work published in academic and public policy journals. Mr. Combs earned a bachelor's degree in Economics at the University of Virginia, where he also completed his doctoral course work in economics. He is a charter member of the International Association of Energy Economics and is a member of the American Nuclear Society.