Making sense of the market in uranium

Making sense of the market in uranium

Uranium is traded like no other commodity on the market.

Uranium has long been sought as the power source for nuclear energy plants. But the market for uranium is muddled by the other major use for the material, as the power source for nuclear weapons development.

A few hundred pounds of uranium can power a nuclear reactor, or it can be used to create weapons that can devastate entire cities, according to Business Insider. But according to a new book, Being Nuclear: Africans and the Global Uranium Trade, the market for the nuclear material is unlike any other commodity market, due to the unique capabilities of uranium.

In Niger, for example, the country holds about a fifth of the world’s uranium reserves, yet the country’s people have hardly benefitted from the growing uranium mining and export sector. Instead, the tight-knit uranium market has primarily benefitted the French nuclear industry which operates the mines in the former French colony.

Uranium is set apart from other commodities by several factors. First, mining is tightly regulated by the International Atomic Energy Agency, to insure that countries mining the material do not violate the Non-Proliferation Treaty that seeks to limit the spread of nuclear weapons.

Domestic nuclear regulations in individual countries also impact the export market. Most countries have multiple layers of government and private entities involved in the import, processing, transport and use of uranium.

Unlike other commodities, there is no single price set by market forces for uranium. Instead, two uranium analysis firms set a “spot price” and work together on a longer-term price, based on an approximation of an ideal price that no one can really specify.

Negotiators in Niger’s uranium market say they use the spot price as a starting point in their uranium deal-making. Given the small number of deals and the challenges around pricing, the market in the material is especially opaque, and the price can shift arbitrarily.

After one overnight 15 percent jump in the spot price, none of the experts at a uranium market conference could explain the reason for the increase.

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