Ben Finegold: Asia's Uranium Supply Lock-Up Leaves the West Exposed

追加: 2026-05-07

[00:00:00]We're now sort of seeing the the term price hitting 15-year highs up to about $93. How much of a big milestone is that?

[00:00:08]>> So important. So important because term pricing is what utilities are willing to pay for their uranium. And you can sit in a room with a fuel buyer like I did in Monaco for the World Nuclear Conference two weeks ago. It's almost like deja vu from a conversation I had with the stated fuel buyer five years ago and they sit there and they say, "Well, we're, you know, we're well covered. We're not in a scramble to or panic to go and buy pounds. But then why are you paying four times the price? You very rarely see commodity prices move uh linear in a linear fashion. Uranium term prices have just moved in one direction.

[00:00:46]Every single month by I think two or three months in the last five years have we seen uranium term prices not go higher or stay the same. So for me that's really the read through into how utilities feel about about future supply and also just how much tighter the market has become. You have Chinese, Japanese, Korean uh utilities who are far better covered in terms of their fuel particularly the Chinese um that than the western world. And so what this means is that if you take what I say to be true, which is the Chinese have locked up a lot of Kazak supply, the Indians as well, the Chinese have locked up pretty much all Namibian supply. Uh you sort of start to realize quite a stark picture for the West.

[00:01:29]>> Is is that something you you actually foresee is that we will get to that point where the the pounds just aren't there and they will be forced into the market?

[00:01:38]I'm joined with Ben Fineold, director over at Ocean Wall. Ben, good to be with you again.

[00:01:44]>> I'm new to Peter. Great to see you again.

[00:01:46]>> Perhaps it might be worth us just doing a reminder of the supply and demand dynamic. Any updates since we did have a chat in September. Has has the outlook shifted in any way?

[00:01:57]>> Oh, so just just to run through again, uh there's about 440 operating nuclear power plants in the world today.

[00:02:03]Collectively, those are power plants consume just under 200 million pounds.

[00:02:08]When I say pounds, I mean weight um of uranium and primary uh production to meet that demand uh is probably around 160 million pounds uh this year. So, so call it a4 million pound shortfall thereabouts for this year. We've actually operated uh or globally we have operated a supply deficit um now every year since 2018. So we have produced less uranium than we have consumed now for coming into our eighth year. Um and so what that does is is obviously it has a a bit of a a natural drag on above ground mobile inventories whether that's at the utility level whether that's at the producer level i.e. the fuel producer level or whether it's at the sovereign level in terms of sort of sovereign uh stockpiles. So the supply demand story uh in theory has got worse every single year since since 2018. And then what we're now starting to really see is the acceleration of new nuclear programs and this has been a a story in the market now for several years. Um the countries that are walking the walk are really is is China. China are improving uh and building successfully building between eight and 10 new nuclear reactors per year which is really a a sort of number that the western mind can't comprehend. Um India has planned to uh increase nuclear capacity 10fold by 2047 off about 3% of their install base. Um today uh the Japanese is a very famous example in the eastern world of a company of a country that was obviously very anti-uclear uh post Fukushima and is now looking to return to nuclear contributing 20% of their grid power. So uh that's in the east but we look in that's not the only countries in the east but I guess the sort of flagship story is in the east in the western world that ambition is sort of um if they're walking the walk then the west is really just talking the talk uh at the moment and so we are yet to see the west really uh convert what is brilliant headlines, brilliant rhetoric uh uh and and policy into electrons and in the western world we're very good at the sort of bureaucratic side of things um and porky about things but but the Chinese are very good at building things so I think that that's where this next leg of uranium fundamentals kicks into gear which is when do these projects start to reach FID um what one general comment I would make on what's changed we we've started to now see a willingness at the sovereign level to go away and stockpile fuel so I think one misconception in the market is that um project reaches final investment decision uh construction starts and then maybe a couple of years in you go and contract for your nuclear fuel. This is really not the way that that we see things playing out. And if you look at just India alone, they contracted for about $7 billion worth of fuel in the first quarter of this year. That's the largest sovereign uh uh stockpiling of uranium in their history. And this really fell on deaf ears in in our view.

[00:05:22]We spoke last time about how um ultimately prices are going to stay higher for longer when we see utilities come into the market in size and I think that this was the first real sort of domino uh in that respect. So the West needs to catch up and to move beyond the rhetoric and to start to get these projects built because ultimately that's going to have the most meaningful impact on near-term uranium demand and I guess massively impact the demand side of the supply demand story.

[00:05:52]>> Okay. And and something else that we spoke about, you mentioned um you hadn't actually seen in the commodity space the ur for with uranium for example a 4x increase in price I think from around $20 to about $80 back in September.

[00:06:06]there was still no real meaningful supply um coming back online whereas obviously if that happens in say silver or copper or or iron ore you you usually see a huge flood of new mining supply come back online um have we started to see any shift in that does arrow phoenix things like that has that has that started obviously we've seen those sort of progress since then or or was that already priced in >> so so let's talk maybe producers first developers second so even the world's longest producers have have been cutting production Um this has been part strategic in terms of supply and discipline and parters things go wrong in mining as as your listeners will be well aware um because atom from um were operating um let's say 20% below their maximum name plate capacity uh and it was it was expected that this year or sorry last year they were going to return to 100% of name plate which they did not um and they will not be doing so this year. This is for a few reasons which we'll talk about around new taxation around sulfuric acid supply and also really around in my view in our view a lack of incentive to meaningfully add new pounds to market.

[00:07:15]Um the the the other current producers and where we've seen new capacity actually the only new green field mine built in the last decade in Namibia. Um, Namibia is is really a a sort of case in point for what I said about China, which is that the Chinese have knocked up all Namibian, pretty much all Namibian supply outside of what Paladin sells at La Hyderick, even though the Chinese actually have an EC stake in that in that project. Um and and so that's on the green field sort of on the sorry on not the green field on the on the current producers um uh sort of side of things on the green field new producers uh coming to market like you mentioned nextgen like Dennis the way that you should never look at the sort of global uranium supply demand story as being equal on a regional basis. you have Chinese, Japanese, Korean uh utilities who are far better covered in terms of their fuel, particularly the Chinese um than the Western world. And so what this means is that if you take what I say to be true, which is the Chinese have locked up a lot of Kazak supply, the Indians as well, the Chinese have locked up pretty much all Namibian supply. uh you sort of start to realize quite a stark picture for the west which is the west are very reliant much more reliant than the east on green field capacity um and as I say things tend to go pretty wrong um around delays ramp ups uh etc for for for green field capacity or for new green field capac capacity particularly uh for management that that haven't gone through the process of actually uh licensing permanently producing a new uranium line. And I don't say that as a uh is is a negative to Greenfield.

[00:09:09]It's really a negative to Western Utilities, which is they have found themselves down a position where they have undercontracted within producers for so long um that they are now they have now pushed themselves much higher up the risk curve in forcing themselves to have to contract with with with these new greens uh producers.

[00:09:28]>> Okay. So really it seems like it's another case of the east being uh thinking a bit further forward than than the west again. Um is there enough supply in in the western world to to cover western reactor demand?

[00:09:44]>> There's enough uranium in the ground.

[00:09:46]That's that's for sure. Um but at current production I mean Kazakhstan is 40% of global production. Wasbekiststan comes I think in fourth in terms of global production. So you've got between just Kazakhstan and Beckistan probably just shy of 50% of global supply there.

[00:10:04]If you add in if you add in Namibia and Nijair you're getting closer to sort of 70 70% which really leaves you with Australia and Canada and the US in terms of western aligned or or or western uh producers. That doesn't mean that the Australians don't sell or exclusively sell uranium in the west because they don't. That doesn't mean that Kamako sell exclusively in the West because they just signed a multi-billion dollar contract with the Indians. Within reason, Kamako are well within their right to say, I will contract with the utility that wants to contract with me.

[00:10:40]Um, and if those aren't Western utilities, then Kamako have absolutely every right to turn around and say to a a sovereign buyer like India, well, you know, here's here's your security of supply. And um, that just means less for the West. And as I say, we have produced less uranium than we have consumed now for over seven years. So that supply demand story um is is really only heading in in one direction. We don't see even if Arrow comes online, Felix comes online on time, It Tango in Namibia comes online as locked up in Chinese contracts anyways, um there's still going to be a multiund million pound deficit regardless of whether those come online uh and ramp up as as scheduled, which if history is to repeat itself is not going to be the case.

[00:11:28]What's the possibility of we were talking about Kazakhstan earlier they I think when we last spoke they announced in August of last year that they were going to do that 10% reduction in in production but since then as well they they have essentially nationalized or somewhat nationalized um uranium production in the country. They've also had this new tiered tax system that's come out based on the amount of pounds that are produced as well. Is is there risk that potentially there's going to be less supply coming from Kazakhstan, especially if you're now compounding this sulfuric acid issue that you were talking about there and that the east are going to now have to I guess contract even further into western supply.

[00:12:11]Yeah, I think I think the picture of Kazakhstar I mean what a prog the stateowned uranium company have been able to do is is really quite formidable uh in that they've they have gone from basically not producing uranium at the turn of the millennium to becoming 40% of global uranium supply um in the space of two and a half decades. So they should be massively commended for that.

[00:12:37]Um, one thing that has meaningfully changed the last five years is really that sort of cost of production. And and when I first started to look at Kazat and Bra five or six years ago, those costs of production were completely un uh uh they were they were not competitive with anyone. It was they were $15 a pound all in sustaining or C1 cash costs at the time. They were making money at $30 uranium. They were making money at $40 uranium uh and they they're making a lot of money at $86 uranium.

[00:13:12]But what has changed is that all in sustaining and C1 cash ash costs they have been pushed consistently the last 5 years higher up the cost curve because of various reasons. The first one I'll talk about is is um the mineral extraction tax at a government level post the collapse of the USSR. Um Kazakhstan um was was was essentially signing contracts for their incredible resource base around fossil fuels around rare earth around uranium that were not favorable enough to Kazakhstan as a country. What started to change um particularly in the Tokay President Tokayv era is Kazakhstan understands how strategically important it is to the world and they want to see the country better monetizing its resource base than it has in the past. And so one of the first steps to do that was the mineral extraction tax. Mineral extraction tax essentially is a tiered system that based off higher levels of production or even higher uranium prices the government can earn higher tax as a result of that. Now what does that mean?

[00:14:19]It means that Kazaten prom in my mind in our mind is no longer incentivized to put 80 million pounds a year into the market and sell that 80 million pounds at lower uranium prices. They are the largest producer in the world.

[00:14:34]Regardless of whether they operate, whether they sell 50 million pounds, 60 million pounds, 70 million pounds, 80 million pounds, they would rather sell that let's say 70 odd million pounds at five prices because ultimately that's what's best for the government in terms of in terms of their um taxation. So that that's obviously eaten into their into their allin sustaining cost because the government's now taking a greater share o of that um of that money. The second point is around uh sulfuric acid.

[00:15:04]Sulfuric acid as I mentioned is is the number one reagent used in ISR uh mining uh which is 100% of Kazakhstan's production. They have fairly significant uh exposure to the price of sulfuric acid. I believe that last year was a 46% increase um in sulfuric acid costs um at the sort of at the group level. Um and so what does this mean for actually uh Uranian prices? It means that where they were used to where they used to have a sustaining cash cost of about 15 $20 a band that number is is closer to sort of $ 35 to $40 a pound. Now that doesn't look too dissimilar to perhaps a mine in Saskatchewan than it does um to to a mine in in southern Turkiststan in in in Kazakhstan. So the world's largest producer is being forced up the cost curve um because of various um commodity price exposure because of FX because also because of greater government involvement and that's also true in Usbekistan um which also uses um uh ISR this is not true for the US producers.

[00:16:15]The US producers basically have pretty much have no uh exposure to the price of sulfuric acid. uh that they don't use acid leeching in the US. So I think this is really I think particularly this story is very very bullish for North America and particularly the US um the US producers.

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[00:18:56]One other thing that we discussed back in September was the idea that Kazakhstan doesn't really have much line of sight of production past the 2030s.

[00:19:06]Is that have they found any more and and does this obviously we saw um one exploration company withdraw from Kazakhstan at the beginning of the year um due to the nationalization foreign investment in exploration surely is going to reduce quite a bit in Kazakhstan. Do do they have enough uranium in the ground that they're aware of to carry on producing into the next few decades?

[00:19:28]>> There's definitely an exploration program that needs that is going ahead.

[00:19:32]Um but in terms of definable resources um that production sort of almost click that you can see in their statements um is there's not been a solution found to that yet. and they've been pretty vocal about the fact that they're looking outside of Kazakhstan um to to potentially um sort of I guess elongate that that production curve. I think it's publicly it is publicly announced that that that they're collaborating with the Jordanians to potentially go and potentially go and do some um some work there. Um but but and I it actually reminded me of something I hadn't mentioned around government initiatives which is Kazakhstan want to try and derisk themselves away from just uranium mining and they've said this in their new um in a new initiative which essentially says when your joint ventures come to the end of their lives let's say the joint venture comes to their come comes to its end next year um Kazatam will automatically owe between 75% and 90% % of um of that joint venture on an ongoing basis unless you export conversion and enrichment technologies. So it's important to your question to add that in answer to your question to add that they're really looking at de-risking away from just uranium. They want to be more in the refining uh stages which is something that is pretty common across Kazak resources but so much of the uh raw material is found in Kazakhstan but very little of the processing refining is actually done in Kazakhstan. So, so I think that that's um I think that's it's a large part of of what they're trying to trying to achieve.

[00:21:06]>> Well, I think that makes sense. I mean, we saw something similar of Indonesia and nickel, didn't we, where they wanted to bring the refining inhouse and and get more of the value there. Um ju just moving on to I guess the wider market as a whole. Um for example, like the SP like spat for example, they they had a really big blowout in the first couple of months uh in terms of the amount of uranium they were buying on market. I think they've spent over 75% um they've bought over 75% of their overall allocation. They're allowed to buy 9 million pounds per year. I think they've already uh bought 6.56 million pounds of their allocation. So at this rate they're going to be out of essentially allocation by what midsummer potentially if it carries on like this.

[00:21:51]But how much does that have an impact or or how much do you think sput buying has an impact on the actual price of uranium and and does does that mean we could see a softer end to the year if if they're not able to buy any in the market?

[00:22:06]>> I mean I think the sparks had a massive impact in in terms of pricing and of course I mean they locked up call it a third of global annual supply um in the trust. So they they have and I also think that when spots acted the trading community in general is a lot more active because you have traders trying to front SPA try to profit off what is essentially the the800 gerilla in the market which obviously makes sense. Um the one thing to say there is that that 9 million pound limit is for market purchases. So for for spot market purchases. Now, this is based off just intuition alone that in theory they could go and sign off takes uh in much the same way that someone like it has an offtake for I think it's 50% of all USB production.

[00:22:54]Spark could in theory become an offtaker or WMC and and Perr and the team there could become offtakers to um uh uh uh producing or or or development stage um uranium companies or they could go and contract in the term market if they wanted to. So the one thing that I don't doubt is that um if there's someone that can be creative to get their hands on pounds that pay who runs their trading businesses is is uh the right man for that job. um he can be as creative as anyone I've ever known in this industry.

[00:23:24]So um I can't imagine that they go through the million pounds by uh June, July, whenever it is, and then they sit still, go on holiday for for 5 months.

[00:23:34]Um I I'm sure that they'll find ways to to keep generating shareholder value.

[00:23:38]>> Um something actually we had Per on recently and something he said was that we're now sort of seeing the the term price hitting 15-year highs up to about $93. How much of an impact will that make on the market? How much of a big milestone is that for for the uranium market?

[00:23:53]>> So important. So important because term pricing is what utilities are willing to pay through their uranium. And you can sit there and run with a fuel buyer like I did in Monaco for the World Nuclear Conference two weeks ago. It's almost like deja vu from a conversation I had with the same fuel buyer five years ago.

[00:24:12]And they sit there and they say, "Well, we're, you know, we're well covered.

[00:24:14]We're not in a scramble to or panic to go and buy pounds. But then why are you paying four times the price that you are today that you were paying four years ago? Were you wrong four years ago? Are you wrong today? Um for me, term prices are the higher the term price, the higher the uncertainty around future supply. And you very rarely see commodity prices move uh linear in a linear fashion. Uranium turn prices have just moved in one direction every single month by I think two or three months in the last five years. Have you we've seen uranium term prices not go higher or stay the same. So for me that's really the read through into how utilities feel about about future supply and also just how much tighter the market has become.

[00:25:03]>> And and how long do you think that linear movement can carry on for? is I guess is is there is there a price in mind where you think okay that that's probably about right or >> it can't it can't carry it can't carry them in a linear fashion forever it has to get fine at some point because because ultimately if we are producing I I know I've said it twice already if we're producing less than we consume at some point we use this sort of pressure cooker analogy of eventually everyone has to come to market and it's not going to everyone like Chinese, Japanese, Indians, US, French, but there's going to be a cohort of most likely based off what we've spoken about Western utilities who are going to call up Kamico or going to call up Kazatam or call up BHP and say I need5 million pounds for delivery between 2028 and 2032 and there's no one's going to pick up her and there's not going to be the and there's not going to be supply to fill those contracts. What happens then when an RFP is not filled for future purchasing? You're forced into the spot market to go and contract for pounds.

[00:26:11]And so when are we going to see spot prices go to whatever people think they're going to go to 100, 200, $300 a pound? The only way we see sustained higher pricing is when it's not a bunch of traders exchanging a few hundred,000 pounds in a very thinly traded market, but is when utilities are forced into the market in size together. Um, and that's where we can see the types of moves that that we saw in 2007. And this assumes that everything stays the same.

[00:26:42]Like there's not a sulfa shortage. Like the world's largest producers are not cutting production. Like any net new production out of Africa is not locked under locked up under Chinese contracts.

[00:26:52]Everything that's going to happen in in our yields by side, it's kind of already happened. The next leg higher is going to be demand.

[00:27:00]>> Is is that something you you actually foresee is that we will get to that point where the the pounds just aren't there and they will be forced into the market. Look what happened in Qatar.

[00:27:10]Petar the state has to declare a force majour event because there is this huge supply shock that that moment it feels like it's happened 10 times over the last five years. we have that cigar lake moment and and so um I hate pitching a story telling the uranian story as if it is contingent on a 2007 7x move because it's not that's not the way that nuclear buildouts work. Nuclear buildouts don't go from here to here in the space of months. they just slowly you slowly seek to build capacity out.

[00:27:50]And so why should uranium not behave in the exact same way and ultimately that's not the way that utilities are contracting. They're not contracting as though there's going to be any growth in nuclear over the next decade. They're under contracting versus replacement rate uh levels. So until they believe and comes back to I one of the first things we spoke about until the west in particular moves beyond talking about it moves beyond rhetoric good headlines we're going to triple nuclear capacity no Trump says we're going to quadruple it's all irrelevant until you start to see utilities force back into the market to come and contract the pounds that they need in power reactors. And I guess just to finish up, is there anything that you're particularly looking out for over the next six, seven months towards the end of this year? Is is there any macro or or any other industry events that that you're thinking about and looking out for?

[00:28:50]>> Yeah, I mean, US new bills again, we had Trump's executive orders a year ago this month. Uh basically seeing little to no followup from that in terms of site selection, projects reaching FID, etc. Um so really keeping my eyes peeled for any new builds in in the US.

[00:29:10]Canada has just made huge um uh or has outlined huge ambition for its own domestic nuclear power program. Um and so I think there's some really interesting companies to look at in that regard more around sort of EPC side if you actually think that these are going to get built. Um so really it's about for me it's about Western News. Um and ultimately I'm interested to see how the dust settles on this sulfur price spike.

[00:29:36]How it really impacts uh Navoan in Usbekistan, Kazakhstan, so Kazaten in Kazakhstan, how it impacts Boss Energy who use ISR in Australia. How it impacts Peninsula who use ISR acid in in the US like how much of an impact has this has this really had? So we'll see. Um the proof will be under the pudding on on that off.

[00:29:58]>> Okay. All right. Well, look, I know we're we're tight on time, so I'll say thank you, but I'd love to get you back on and we can actually dive in a bit more on the especially on the south sulfur outcomes uh down the line. Uh but you know, Ben, really appreciate your time. Thank you. And we'll st be