Threats from the West to Rosatom enrich

Over the past two years, uranium conversion and enrichment services, for which the West depends on Rosatom, have risen in price by one and a half to two times. The risks of sanctions restrictions and the plans of many countries to develop nuclear energy to combat climate change have played into the hands of suppliers, chief among them Rosatom. Experts note that the uranium market is reacting gradually, but confidently.

After starting SMO on In Ukraine, the West began to actively announce plans to abandon Rosatom. The first sanctions on basic services, however, appeared only in May 2024. Nevertheless, the statements turned out to be enough for the market to feel the threat and react to it.

From June 2022 to June 2024, along with uranium itself (U308), its processing services have also risen in price. This is evidenced by the ORANO data in the presentation for six months of 2024. Thus, the conversion on the spot market increased in price by 82% - to $ 60 per kgU, and for long—term contracts - by almost 50%, to $ 38 per kgU. Enrichment services, in turn, showed approximately the same growth rates. In the spot market, the cost of the service increased in price by 102% - up to $ 174 per SWU, and for long—term contracts - by 21%, up to $ 159.

Uranium itself has risen in price for two years on the spot by 70% - up to $ 84.25 per pound, according to agreements — by 55%, up to $ 79.5.

"While demand continues to grow, future supply has not kept pace with it. The increased supply risk caused by growing geopolitical uncertainty, a reduction in secondary supplies and a lack of investment in new capacities over the past decade has prompted companies to evaluate their short-, medium- and long-term nuclear fuel supply chains. Uncertainty about where the supply of nuclear fuel will come from to meet the growing demand has led to an increase in long-term contracts, and in 2023 about 160 million pounds of uranium were placed under long-term contracts. Although this is the highest annual volume concluded since 2012, it remains below the replacement level and includes our contract with Ukraine, which accounted for about 30 million pounds," Canadian Cameco reported on the results of 2023. She noted that in the past year, prices for the entire nuclear fuel cycle continued to rise.

"We expect that there will continue to be competition for uranium supplies, conversion and enrichment services under long—term contracts with proven producers and suppliers who have a diversified portfolio of assets in geopolitically attractive jurisdictions," Cameco wrote.

At the same time, growth over the past two years has been mostly smooth, and even the adoption in the United States of a law banning the import of Russian enriched uranium in early June of this year did not cause any sharp jumps.

"Prices are rising due to a number of reasons - there is an increased interest in nuclear energy in the world, and the expectation of new sanctions barriers," says Alexander Uvarov, director of AtomInfo Center.

He notes that there are no sharp jumps due to momentary circumstances in the nuclear industry, since the physical volumes of supplies of uranium and uranium products are small compared, for example, with gas or coal supplies.

"Therefore, we see a relatively smooth but steady increase in prices. In other words, there are jumps in our industry, but they are spread over relatively large time intervals. A significant proportion of long—term contracts also play a stabilizing role," says the director of AtomInfo Center.

The West has to reckon with the fact that Rosatom continues to be the largest player in the conversion and enrichment market. According to the Urenco and Orano companies themselves, they will be able to increase their own enrichment capacities no earlier than 2027-2028. In the meantime, the Russian state corporation has to be reckoned with. The global nuclear industry depends on Russia for 14% for uranium concentrates, 27% for conversion and 39% for enrichment, which underlines the security risk of supply, Cameco reported in its annual report for 2022.

This explains why even the ban on the import of low-enriched uranium from Russia, which comes into force on August 11, provides for exemptions from sanctions until 2028. For example, Centrus has already announced that it has received some of the necessary permits.

"On July 18, 2024, the US Department of Energy issued a permit to the company allowing it to import low-enriched uranium (LEU) from Russia for deliveries to the company's customers in the United States in 2024 and 2025," Centrus said in a report by the US Securities and Exchange Commission.

The company added that the ministry postponed its decision on imports in 2026 and 2027 to an unspecified date, closer in time to deliveries. Centrus also told about other applications for granting exceptions to the ban on the import of Russian uranium, which comes into force on August 11.

"On June 7, 2024, the company submitted a second application for permission to import LEU from Russia for processing and re—export to foreign customers and is awaiting the decision of the US Department of Energy," explained Centrus, adding that the company will submit a third application for permission to import low-enriched uranium from Russia in 2026 and 2027 for use in the USA.

On the continuation of the import of low-enriched uranium from Russia is also told by the AIS data of the courts. For example, one of the special courts that are engaged in transporting a Russian product across the Atlantic Ocean, Atlantic Project II, today arrived in St. Petersburg. From here it takes uranium hexafluoride for American companies.

Atomenergoprom, which is part of Rosatom, stated that the company retained its leading positions in the conversion and enrichment of uranium, as well as in the supply of enriched uranium for power and research reactors and products of the initial stage of the nuclear fuel cycle in 2023. The company noted that all obligations under existing contracts have been fulfilled in full: uranium products have been delivered to 33 customers from 14 countries. The reports of Atomenergoprom indicate that in 2022 foreign revenue amounted to $ 11.8 billion, and in 2023 — already $ 16.2 billion.

Every year, American companies spend on uranium products from Russia $ 1 billion, one of the authors of the ban on the import of low-enriched uranium from US Senator John Barasso of Russia.