Clean Air Energy

The only significant commercial use for uranium is to fuel nuclear power plants for the generation of electricity. Most buyers are large utility companies that operate nuclear generating stations, but there are also a small number of brokers and traders in the market. The sellers are uranium producers and a few other entities that hold inventories of uranium in various forms.

The uranium production industry is international in scope with a small number of companies operating in relatively few countries. In 2012, 8 companies provided approximately 83% of the estimated world uranium mine production of 152 million pounds U3O8.

Demand for uranium is directly linked to the level of electricity generated by nuclear power plants. There are over 430 commercial nuclear power reactors operating with more than 60 new reactors under construction today.

Uranium consumption has increased from 75 million pounds U3O8 in 1980 to an estimated 165 million pounds in 2012. Cameco expects global uranium consumption to continue increasing up to about 220 million pounds per year by 2022, reflecting an average annual growth rate of about 3%.

Unlike other metals such as copper or nickel, uranium is not traded on an organized commodity exchange such as the London Metal Exchange. Instead it is traded mostly through long-term contracts negotiated directly between a buyer and a seller. Utilities buy the majority of their uranium and fuel services products under long-term contracts with suppliers, and meet the rest of their needs on the spot market. Spot market and long-term uranium prices are estimated based on market intelligence and published monthly by information services such as Ux Consulting Company, LLC and TradeTech.

Spot market

A spot market contract usually consists of just one delivery within 12-18 months and is typically priced at or near the published spot market price at the time of contract award. Spot market delivery quantities vary from 50,000 to a few hundred thousand pounds U3O8. Only a small portion of the world's uranium requirements are procured in the spot market.

Long-term market

The overwhelming majority of all uranium is sold under long-term, multi-year contracts with deliveries starting one to three years after contract award. Long-term contract terms range from two to 10 years or more.

To diversify market risks, both producers and utility customers maintain a mix of contract terms and pricing mechanisms in their contract portfolios. Buyers are often willing to pay a premium in long-term contracts, compared to spot prices, because they can achieve secure supply at prices that are more predictable.


According to Cameco estimates, global uranium consumption in 2012 was about 165 million pounds, while mine production was about 152 million pounds. The gap between production and demand is filled through secondary supply. Secondary supply is essentially inventories of various types and includes inventories held by utilities and other fuel cycle companies, inventories held by governments, used reactor fuel that has been reprocessed, recycled materials from military nuclear programs and uranium in depleted uranium stockpiles.

Secondary supply is particularly important in uranium markets. Since 1985, world uranium production has been less than world utility uranium consumption. The resulting shortfall has been covered by a number of secondary sources which are being steadily drawn down. For example, highly enriched uranium (HEU) derived from the dismantling of Russian nuclear weapons has become a significant source of supply equivalent to a large mine, but will end in 2013. A limited amount of uranium from the US weapons program has been introduced into the market.


Demand for uranium is directly linked to the level of electricity generated by nuclear power plants. Reactor capacity is growing, and at the same time the reactors are being run more productively, with higher capacity factors, and reactor power levels.

Nuclear utilities have dramatically improved the operating performance of their reactors. One measure of performance is the capacity factor. Across the entire US fleet of reactors, the average capacity factor in operation in 1980 was 56.3%; in 1990, 66%; and in 2011, 89%.


  • Nuclear Energy Institute

Improved reactor performance translates into greater uranium consumption and to more demand for nuclear services in general.

One ton of natural uranium can produce more than 40 million kilowatt-hours of electricity. This is equivalent to burning 16,000 tons of coal or 80,000 barrels of oil.