(Kitco News) - Uranium prices will surge in the coming year, reaching three-digit figures, according to Scott Melbye, Executive Vice President of Uranium Energy Corp (UEC).
Melbye cited a growing global acceptance of nuclear power and the need for new mine production to meet increasing demand.
"Expect uranium prices to remain high and probably increase much more from where they are today," Melbye told Jeremy Szafron, Kitco News anchor, on the sidelines of the New Orleans Investment Conference. "I won't predict how high the uranium price goes next year, but it has one in front of it. So, it is a three-digit [price tag]."
Uranium prices fluctuated widely this year. Rising to above $100 in February and then dropping below $80 at the start of November.
Melbye highlighted the significance of the U.S. ban on Russian uranium imports, emphasizing the need for a robust domestic fuel cycle. "That was a dependency that was always fraught with risk. We've now addressed that with the ban and revitalizing our domestic fuel cycle," he explained.
The U.S. currently relies on Russia for 25% of its uranium enrichment needs, a dependence that poses geopolitical risks.
Melbye expressed confidence in the continued fueling of U.S. nuclear power plants but acknowledged that utilities heavily reliant on Russian supply will face challenges. He noted that uranium prices had already surpassed $100 per pound earlier this year.
Growing demand and geopolitical shifts drive the uranium market
The executive VP attributed the surge in uranium demand to several factors, including the green energy transition, electrification, and the increasing power demands of data centers and AI applications.
Melbye believes Donald Trump's recent election signals a shift towards American energy dominance, leading to a heavier reliance on natural gas and nuclear power. President Trump's "America First" stance on energy security will play an important role.
"In his first term, Trump was behind the establishment of the Nuclear Fuel Working Group, which concluded that the need for a resilient, robust American nuclear fuel cycle – a uranium industry that we can rely on is not only in our energy interests, but it's also a national security concern. We expect Trump will continue those policies," he said. "He can help in the licensing and permitting new mines and reducing the regulatory red tape so we can produce more energy here at home."
Melbye emphasized the need for new uranium mines in geopolitically stable jurisdictions like Canada, the United States, and Australia. He expressed concerns about relying on production from Kazakhstan, the world's largest producer, which is increasingly dominated by Chinese and Russian interests.
UEC poised for continued growth
UEC, America's leading uranium mining company, has positioned itself for growth by investing over $1 billion in recent years, tripling its resources and quadrupling its licensed capacity. The company plans to ramp up operations in Wyoming and Texas, with the goal of producing 5 to 7 million pounds of uranium annually in the U.S. by the end of the decade.
Looking ahead, Melbye expressed optimism about UEC's future, highlighting the company's growth and strategic position in the uranium market. "The goal for us is to ramp up these operations. Wyoming is in production now and ramping up. Texas will be doing the same next year," he said. He also mentioned the company's plans to advance the Roughrider Project in Saskatchewan, Canada, which is a 7-million-pound-a-year producer.
Melbye believes the uranium market has undergone a significant shift in sentiment, noting, that investors' excitement is due to the growing awareness of the energy crisis and the increasing acceptance of nuclear power as a viable solution.
Despite the recent price surge, Melbye believes there is still room for growth. He also highlighted the fact that UEC's contract book is completely unhedged, allowing investors full exposure to future uranium price increases.
"We have all of our production ahead of us. We have an all-in-cost in the U.S. of $40 a pound in an $80-$100 dollar market. We haven't signed contracts over the last six years that would give us legacy pricing that could be half of the current market price. So investors will get the full exposure to the uranium price going forward," he explained.
This video is brought to you by Uranium Energy Corp and U.S. GoldMining Inc.
