CHAMWE KAIRA
Uranium supply uncertainties escalated in the quarter ending 30 September as Kazakhstan’s state uranium production company, Kazatomprom, announced substantial reductions in planned output for 2025.
According to Deep Yellow chief executive officer John Borshoff, Kazatomprom revised its production guidance for 2025 to reflect a downgrade of about 15 million pounds due to a variety of production-related issues, including the limited availability of sulphuric acid needed for the in-situ recovery process.
Deep Yellow is developing the Tumas uranium project in the Erongo Region.
Furthermore, Kazakhstan announced a significant increase in future delivery commitments to the Chinese nuclear utility group, CNNC Overseas Limited and China National Uranium Corporation, which has necessitated an Extraordinary General Meeting of Shareholders on 15 November in order to gain approval for the transaction, the total value of which exceeds fifty percent (50%) of the total book value of Kazatomprom’s assets.
“This will reduce availability of supply outside China and Russia, further exacerbating the dire uranium supply situation,” said Borshoff.
He said one recent study concluded that the global market for modular data centers is projected to reach US$81.2 billion by 2030 compared to its current value of US$25.8 billion.
Borshoff said the quest for low-cost, zero-carbon, reliable electricity has led hyperscale data center developers to enter into long-term power off-take agreements with nuclear utilities, primarily in the United States but also elsewhere on a global scale.
In March 2024, Amazon Web Services signed a contract for 960 MW of capacity from Talen Energy’s Susquehanna nuclear power plant in Pennsylvania.
In September, Constellation Energy announced a 20-year power purchase agreement to provide electricity to Microsoft data centres from the undamaged Unit 1 reactor at the Three Mile Island nuclear power plant, which has been shut down since 2019 but will now be refurbished and brought back into operation by 2028.
“This incremental surge in demand for nuclear power generation has obviously caught the utility industry ill-prepared to provide the necessary electricity to support the explosive growth of hyperscale required data centres,” said Borshoff.
He cited that, to accommodate this unprecedented situation, a number of these high-tech companies are now aggressively pursuing the accelerated development of small modular reactor (SMR) technology, which will effectively bypass the established nuclear utilities and integrate SMRs into the data center infrastructure.
He said looking forward, uranium demand continued to show exceptional growth potential, for which challenging supply issues already exist.
“The new nuclear fuel requirement from the rapid hyperscale data centre development will place additional stress on the fuel supply chain. Further, add to this the turmoil being caused to the fuel supply chain by the supply inefficiencies due to geopolitical developments, and the case for concern is cemented,” Borshoff said.
He said uranium supply looks increasingly problematic, especially as nuclear utilities hesitate to make the necessary long-term commitments to support not only uranium production from restarts but, more importantly and critically, the development of greenfield projects, as this will be the only source from which the huge amounts of additional production requirements can come from.
