For commodity investors, uranium has long been a radioactive asset. The price of the metal, which in its enriched form is used to fuel nuclear power plants, has languished since the Fukushima disaster in 2011. Political chaos in Niger, where the military government has suspended exports of uranium to France, should spark a rethink.
The crisis will not cause immediate shortfalls. Niger is a major supplier to the EU, which buys a quarter of its uranium from the west African country. But globally its importance pales in comparison to Kazakhstan, by far the largest producer, Canada, Namibia and Australia. On top of that, the metal is widely stored. In 2022, global stockpiles stood at about 3.8 times annual demand, according to Alexander Pearce at BMO.
The main impact of instability in Niger will be to highlight improving fundamentals. The market is already tight. Low prices over the past decade reduced production, which fell a quarter from 194mn pounds in 2013 to 145mn pounds last year. As a result, global demand already outstrips supply by some 50mn pounds per year. This is depleting stockpiles.