2022 has been an eventful year for both the nuclear industry and uranium market. Global sentiment towards nuclear power started a shift in 2021 and continued to improve over 2022.
The uranium spot market, which was illiquid and relatively inactive until 2020, became much more active and volatile this year as interest in the nuclear sector returned. The uranium spot price started trading at US$43/lb in January 2022, up 45% from January 2021.
Shifting Nuclear Policies
As governments announced ambitious decarbonisation goals, it
became clear that nuclear power would play an important role in achieving a
net-zero future. A major catalyst was the US Bipartisan Infrastructure Law
(BIL) providing US$6bn to prevent existing nuclear power plants from shutting
down. About 50% of the US’s carbon-free electricity is generated from nuclear
power.
The Diablo Canyon power plant, California’s only nuclear plant,
is the latest recipient of the Civil Nuclear Credit (CNC) program. US$1.1bn
will support Diablo Canyon to operate until 2030 instead of its planned
retirement in 2025. US nuclear plants will also benefit from President Biden’s
Inflation Reduction Act (IRA). Existing plants will receive a production credit
of up to US$15/MWh for zero-emission electricity.
Through the recently signed BIL, CNC, and IRA, nuclear power plants
will be able to remain competitive in the US. According to the chief nuclear
officer of the Nuclear Energy Institute, “the Inflation Reduction Act puts
nuclear on the same playing field as renewables”.
Renewed Public Support
Other countries are similarly turning back to nuclear power amid
growing public support. Japan, for the first time since the Fukushima disaster,
is preparing to restart over a dozen nuclear power plants. The mothballed
reactors were kept idled since the 2011 accident.
Japan, the world’s biggest
LNG importer, does not share its electrical grid with neighbouring countries.
The nuclear plants restart will decrease the country’s dependence on fossil
fuel imports.
Japan approved the extension of reactors’ operating life beyond
the current 60-year limit. After the Fukushima accident, Japan set the maximum
operating period to 40 years, with a possible 20-year extension.

The Japanese government announced it will consider building
next-generation nuclear reactors to replace the existing reactors set for
retirement.
Korea is also doing a U-turn on its nuclear policy. South
Korea’s new president Yoon Suk-yeol, whose term began in May, has vowed to
revive the country’s nuclear plans. The previous government planned to phase
out nuclear plants after the Fukushima disaster. Korea will resume construction
of reactors Shin-Hanul 3 & 4, which were halted in 2017 under the previous
administration. In June, the new 1.3GW Shin-Hanul-1 reactor was connected to
the grid.
Inaugural Nuclear Plants
Multiple countries have turned to nuclear for the first time
with their first reactors being developed. Egypt started construction of El Dabaa,
its first nuclear power plant, this year. El Dabaa-2 started construction in
November, only months after El Dabaa-1 began construction earlier in July. Applications
for El Dabaa 3 and 4 have already been submitted.

Poland has chosen US-based Westinghouse to build its first
nuclear power plant. Construction of the first reactor is expected to start in
2026, with commissioning planned by 2033. Subsequent reactors will be built
every 2-3 years.
Kazakhstan, the world’s leading uranium miner, is exploring a new
nuclear power development in collaboration with Korea Hydro & Nuclear
Power. The proposed power plant will be the country’s first nuclear plant since
it closed its last reactor in 1999.
Turkey began construction of the Akkuyu-4 in July, the last
reactor of its first nuclear power plant. Akkuyu-1 will come online mid-2023,
with the remaining three reactors all operational by 2026 in one-year
intervals. Akkuyu will provide up to 10% of Turkey’s annual power consumption.
In the UAE, the third reactor of the Barakah plant, the
country’s first nuclear power plant, was connected to the grid in October.
Barakah will be fully operational in 2023 once fuel loading of the fourth
reactor is complete next year.
Energy Security
Another catalyst in the sentiment change towards nuclear power
has been the increasingly important topic of energy security. Russia’s invasion
of Ukraine in early 2022 disrupted energy and commodity markets, leading to
volatile energy prices. Europe’s reliance on Russian gas was thrown in the
spotlight, with countries scrambling to stockpile enough fuel to last them over
the winter. The issue was further exacerbated by an unusually warm summer,
driving energy prices to record levels.
This unforeseen energy crisis helped to showcase nuclear power
as a reliable and affordable source of energy. According to the RePowerEU plan published
in May, nuclear power will help reduce the EU’s dependence on Russian fossil
fuels. The increased interest in nuclear resulted in uranium reaching a
multi-year-high spot price of around US$60/lb in March.
The German federal cabinet approved an executive decision to
extend the operation of Germany’s three remaining nuclear plants. Initially
supposed to be phased out by the end of 2022, the nuclear plants will stay
operational until April 2023 to help the country get past its winter energy
needs.

French president Emmanuel Macron wants a “nuclear renaissance”
in France. In February, he announced an ambitious plan to build at least six
next generation reactors at a cost of EUR52bn (US$57bn), with an option for a
further eight reactors.
Construction would start in 2028, with commissioning
starting in 2035. France has struggled with its nuclear power output this year.
State-owned EDF has been plagued with reactor maintenance and corrosion issues,
which resulted in outages across half its plants.
The UK announced eight new nuclear reactors as part of its
energy strategy. The UK aims for 95% of its electricity to come from low-carbon
sources by 2030. In October, France’s Macron and former UK Prime Minister Liz
Truss jointly announced their full support for a new nuclear power station in
Suffolk, England.
The Sizewell C plant will feature two 1.6GW EPRs. EDF Energy,
the project’s developer, will make a final investment decision for Sizewell C
by 2023. Both head of states have reaffirmed their commitment to advance the
“UK-France civil-nuclear cooperation”.
Russia’s Hold on U
Letting go of Russia is not a simple task as it controls 30% of
global uranium conversion capacity and 40% of enrichment capacity. In 2021, the
US received 28% of its enriched uranium from Russia. Until now, no sanctions
have been put on Russian-sourced nuclear fuel. The absence of restrictions on Rosatom,
the Russian state-run nuclear conglomerate, have eased supply fears. However,
calls for bans on Russian nuclear fuel are growing.
Ukraine signed a nuclear fuel supply deal with US-based
Westinghouse in a bid to cut ties with Russia’s state-run Rosatom. Czech
state-utility CEZ will switch to Westinghouse and France-based Framatome for
its uranium needs. Finland ended its contract with Rosatom for the construction
of a new reactor supposed to start in 2023. Bulgaria will stop using
Russian-sourced nuclear fuel once its contract ends in 2024.
The Biden Administration requested US$1.5bn in funding to stockpile
enriched uranium, with the goal of reducing the country’s imports of Russian
nuclear fuel. The latest nuclear-related funding request is part of a larger
US$4.3bn plan for the US to source its enriched uranium from domestic
producers. The funds would be used to develop and secure a domestic uranium supply
chain from mining to enrichment.
Betting on SMRs
Small Modular Reactors will likely play an important role among
the next generation of nuclear reactors. SMR projects received a lot of
interest and investment this year due to their smaller physical size, lower
capital cost, and modular designs.
TerraPower, a next-generation SMR developer founded by Bill
Gates, raised US$750m in funding in August. Korean group SK became a large
shareholder of TerraPower after investing US$250m. The investment will help
TerraPower advance its nuclear reactor commercialisation projects in Korea and
Southeast Asia.
Romania-based RoPower and Italian steel maker Donalam will
explore the development of Romania’s first SMR. The SMR, expected to be
operational in 2030, will be based at an old coal plant. US-based NuScale will
supply the power modules with a net capacity of 462MW. Romania’s state
controlled nuclear company Nuclearelectrica aims to produce clean energy to support
Romania’s first green steel facility.
NuScale is advancing its US SMR project which will be located in
Idaho. Six 77MW modules will make up the 462MW project. Preliminary cost
estimates of the project are currently being assessed.
In the UK, Rolls-Royce is planning a SMR project that will come
online by 2029. The company is currently assessing potential locations where
the 470MW SMR could be built.
Vattenfall, the Swedish state-owned energy company, started a
pilot study to develop two SMRs next to the Ringhals nuclear power plant. The
feasibility study will be completed by early 2024.
China’s SMR demonstration project at the Changjiang nuclear
power plant is under construction on the island province of Hainan. The
foundation of the 125MW SMR was completed in May. Commercial operation of the
SMR is expected to start by 2026.
Uranium Mine Restarts
High uranium prices are finally incentivising miners to restart
their uranium mines after a multi-year bear market that lasted until 2020.
Australia-based Paladin Energy will restart its mine in Namibia, with
commercial production expected in 2024. The mine was placed into care and
maintenance in 2018 due to low uranium spot prices.
Exploration company Deep Yellow completed a DFS of its Tumas
project in Namibia. Namibia, which mines 12% of global uranium supply, has
several uranium projects in the pipeline. A price of around US$65/lb would
incentivise other Namibian mines to expand exploration and production.
Peninsula Energy will restart and resume production at its mine
in Wyoming after taking a final investment decision. Production is expected to
start in early 2023 at Lance, one of the largest uranium development projects
in the US.
Australia-based Boss Energy will similarly restart its mine
located in South Australia. The mine, which was placed into care and
maintenance in 2013, will start production in late 2023.
