How exploding uranium demand could benefit Canada and Saskatchewan

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The world needs more uranium to meet the growing demand for nuclear power, according to a recent report, and that could provide Saskatchewan with a key opportunity to expand an industry that is already one of the world’s largest.

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With more than 30 countries committed to tripling nuclear power generation capacity by 2050, more uranium projects and processing capacity must be developed to meet demand beyond that time frame, the Organization for Economic Co-operation and Development’s Nuclear Energy Agency (NEA) and the International Atomic Energy Agency (IAEA) said in their most recent Red Book, a biennial report on the global uranium industry.

In 2023, 438 nuclear reactors were running globally, generating 994 gigawatts of electricity powered by 59,000 tonnes of uranium. Generation capacity is expected to grow between 574 gigawatts and 900 gigawatts by 2050, which means uranium production will have to significantly ramp up since the world will need between 90,000 tonnes and 142,000 tonnes of uranium by then.

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“Given the long lead times for project development, identifying and advancing new projects in the near to medium term is crucial to avoid potential supply disruptions,” the report released last week said.

“Efforts must begin immediately to ensure adequate uranium supplies are available in the medium term,” the agencies added in a news release.

That could spell opportunity for Saskatchewan, which is the world’s second-largest uranium producer. It is home to two active uranium mines and supplies 20 per cent of the uranium globally. It produced 7,380 tonnes in 2023, the report said. Only Kazakhstan produced more, at 21,279 tonnes, while Australia produced 4,555 tonnes.

Saskatchewan’s Minister of Energy and Resources Colleen Young said uranium production in the province has been ramping up in recent years, with the industry generating $2.6 billion in sales in 2024, a 62.5 per cent increase from 2023, when revenues were $1.6 billion.

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Uranium prices have also steadily climbed over the past five years, rising to US$80 a pound on the long-term market and US$64 on the spot market as of the end of March, from US$32 and US$23, respectively, in March 2020.

“We are set to continue increasing production,” Young said.

Two major projects are in active development, including NexGen Energy Ltd.’s Rook I Project, along with Paladin Energy Ltd.’s PLS Project. NexGen is expected to receive a licence to extract 30 million pounds of uranium per year, while the PLS Project is expected to generate 90 million pounds over 10 years.

The projects could double domestic production by 2035, according to RBC Capital Markets. The PLS Project is due to come online in 2029, while Rook I is set to get final regulatory approval in 2026.

Saskatoon-based Cameco Corp., the world’s largest uranium miner and operator of two active mines in the province, said the projected supply gap globally is a positive sign for new miners, along with those looking to expand current operations and ramp up production. It also said its “top-tier” mining facilities can be expanded if needed.

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Chief executive Tim Gitzel previously said the company was looking at expanding the life of its facilities at Cigar Lake to help meet future demand.

“I’ve been in this game, the nuclear business, for over 40 years, and I don’t think I’ve ever seen the long-term fundamentals as good as they are today, like around the world,” he said in a year-end interview in December, adding the price of uranium could continue increasing as more countries deploy nuclear power.

But in its statement, Cameco echoed the Red Book report and said the process of developing new mines can be lengthy and capital intensive.

“We believe there needs to be investment in our industry, supported by effective government policies, and aligned with the willingness on the part of utilities to enter long-term uranium supply contracts,” it said.

The industry faces other headwinds to expansion, including uncertainty over the potential impact of United States tariffs on Canadian uranium.

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Andrew Wong, an analyst at RBC Dominion Securities, said tariffs have not yet been imposed on Canadian uranium, but the levies still threaten to impact the industry. For example, he said the industry could suffer from higher inflation brought on by tariffs.

“Uncertainty remains given the situation is unresolved,” he said in a note. 

Still, Wong said there is optimism over the state of the industry due to the strength of industry heavyweight Cameco and the development of NexGen’s Rook I project.

“We continue to be positive on Cameco and NexGen,” he said.

Young said the province appreciates how vital uranium is for countries around the world for both energy security and the medical industry.

She said Saskatchewan is working to support the uranium industry through policies such as its critical minerals strategy, which was introduced in 2023 and aims to grow the province’s share of national critical mineral exploration spending to 15 per cent by 2030. In 2023, $1.9 billion was spent on exploration across Canada, according to Natural Resources Canada.

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The province’s strategy also includes specific incentives to help spur growth, such as the Saskatchewan Mineral Exploration Tax Credit, which provides non-refundable tax credits to companies that invest in mineral exploration in the province.

Some of the world’s highest-grade uranium comes from the Athabasca Basin, which has helped draw more companies to Saskatchewan, Young said.

She also said the province’s predictable regulatory environment has been another positive for companies looking to explore and develop new projects.

“We have the best regulatory regime and the best ministry to work with in this area,” Young said.

Editors Note: This story was amended to correct an error regarding the number of active uranium mines in Saskatchewan. 

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