Unlock Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favorite stories in this weekly newsletter.

The price of fuel for nuclear reactors soared to a record high as demand from artificial intelligence data centers exacerbated the market squeeze following Russia’s invasion of Ukraine.

Prices for enriched uranium hit $190 per separative work unit – the standard measure of effort required to separate isotopes of uranium – compared with $56 three years ago, according to data provider UxC.

The renewed interest in nuclear power comes as governments and companies look to carbon-free power sources large enough to serve large industrial facilities and communities.

Big Tech companies like Microsoft and Amazon have become interested in using fuel to run the very large power-intensive data centers they are racing to build as they compete for market share in generative AI.

The increased competition for energy has added to the concerns of the industry that follows Russia’s invasion of Ukraine almost three years ago. Russia is a major player in the process of turning mined uranium into the enriched fuel needed for a nuclear reactor, but US sanctions and a ban on Russian exports have helped push the prices to record highs.

“We don’t have enough conversion and development in the west and that’s why the price has this kind of movement, and that price is only going to go up,” said Nick Lawson, chief executive of the investment group Ocean Wall.

Executives and analysts say the issue is likely to worsen with the expiration of a US waiver for importers at the end of 2027. That push puts pressure on the industry to find new facilities that can convert uranium into pellets that go into nuclear reactors. . Outside of Russia, the main western countries with uranium conversion facilities are France, the US and Canada.

“There are a lot of important political decisions to be made” about investments in nuclear and uranium supply, Lawson said, adding that building new facilities would take “years” and cost large sums of money.

About 27 percent of US enriched uranium imports in 2023 will come from Russia, according to Berenberg analysts. While U.S. utilities may have enough fuel for this year, their supply will be significantly depleted in four years’ time, analysts added.

“U.S. utilities should begin contracting discussions this year to secure (uranium), especially with the ban on Russian uranium imports to the U.S. that will take place at the end of 2027,” they said.

Most uranium is sold under long-term contracts rather than in the open, or spot, market. But prices for immediate delivery could rise as a result of a potential squeeze on the availability of uranium itself, say industry analysts. Kazatomprom, Kazakhstan’s state miner and the world’s largest uranium producer, has warned in recent months of lower-than-expected production.

“We see more and more Kazakh material flows to China and Russia and less goes to the west,” which poses an “issue for western equipment”, said Andre Liebenberg, chief executive of the London-listed that uranium investment vehicle Yellow Cake. “We could easily see a drop in supply in the medium term simply because of the lack of new projects coming on stream.”