A worker steps off a mining winch during routine maintenance at the Energy Fuels Inc. uranium Pinyon Plain Mine on Jan. 31, near Tusayan, Ariz.Ross D. Franklin/The Associated Press
David Morrison is the chief executive of Eight Capital, one of the largest independent investment banks in Canada.
Earlier this month, the U.S. Senate passed legislation to ban Russian uranium imports, and President Joe Biden signed off on it. The ban involves a phase-in period, until the end of 2027, to allow domestic production and supplies from allies to ramp up. Given that Russia supplied the U.S. with roughly a quarter of its uranium needs in 2022, this is no small task. According to U.S. officials, Washington is counting on Canada to step up and fill the gap. We have just three years to prepare – less if the Russians retaliate by pre-emptively restricting their exports. Our usual glacial pace will not cut it.
Even before this ban was considered, uranium had already been hurtling toward an inflection point. With the surge in demand for low-emission, reliable nuclear power, paired with a prolonged drought in the development of new mines, uranium catapulted into the investor spotlight over the past year. Prices have risen from US$30 a pound in 2021 to almost US$100 today. But investors would be mistaken to read the 75-per-cent price increase over the past year alone as a simple boom. It’s becoming increasingly evident that uranium, much like oil in the 1970s and copper in the early 2000s, is setting a new floor price that will redefine its market. The days of cheap uranium are over.
Practically all of the world’s current uranium supply is accounted for over the next few years. Yet even with prices nearly quadrupling in a three-year period, the world’s largest producers have not begun to dramatically expand capacity. In fact, when Kazakhstan-based Kazatomprom, the world’s largest uranium producer, updates the market in August with its quarterly report, it is widely expected to lower output yet again.
While there have been production shortfalls, construction delays and other uncertainties at mine sites contributing to the drought, the simple truth is their assets are depleting. Burgeoning demand will likely draw down inventories to dangerously low levels over the coming months. Utilities will rush to buy supply while they can and deplete remaining stocks. The scale of the shortage won’t truly be understood until the price of uranium rises dramatically, well above US$100. The prices we have seen to date do not yet reflect that coming trend. There is so much pent-up demand from end users that this is the new floor.
For Canada, this represents a golden opportunity – particularly given our abundant, high-grade uranium reserves, primarily in Saskatchewan and Nunavut. We should be positioned as a key global player, but this potential is shackled by regulatory red tape that slows down Canada’s ability to capitalize on these changing market dynamics.
Canada has become roadkill in global economic competition
This is a great time to increase Canadian uranium production. But the length of the federal regulatory process for the licensing and construction of uranium mine and mill operations is a major barrier. It makes it nearly impossible for the industry to expand quickly to meet global demand.
In response to the Supreme Court of Canada ruling the Impact Assessment Act unconstitutional, some changes were included in the recent federal budget. But the best thing the federal government could do is scrap the act in its entirety. While robust environmental reviews must continue, this legislation is inconsistent and has created uncertainty. Next, the government should expedite the development of uranium mine and mill projects by increasing support to the Canadian Nuclear Safety Commission to reduce regulatory timelines.
Premier Scott Moe of Saskatchewan has offered some of the best lessons for eliminating the red tape holding Canada back while maintaining “best in class” environmental standards. His province’s streamlined processes and reduced bureaucracy should serve as a model for the federal government. These changes won’t just help Canada’s uranium industry, they’ll help Ontario’s world-class nuclear-generating capabilities expand to attract even more manufacturers looking for low-emission, reliable energy jurisdictions.
The U.S. is counting on Canada to step it up. With the largest producers facing aging assets, and startups taking longer, Canada must speed up the permit process and ensure that policies support rather than hinder the growth of this strategically critical sector.
As uranium steps into the role once held by oil – a crucial commodity that can dictate national security and economic prosperity – Canada must not be left behind. We have the resources and expertise to lead. What remains is for our government to act swiftly to unleash this potential.