Uranium and Nuclear Energy

An overview on uranium, one of the most important global energy resources

What is Uranium?

Uranium is a naturally occurring metal found in nature within many rocks, soils, and bodies of water. It is one of the most widely used fuel sources around the world is considered a major commodity. In one of its most common concentrated forms, uranium looks like a yellow powder substance, commonly referred to as “yellow cake” for its appearance. Due to its chemical properties, uranium can generate large amounts of energy with very little material if properly refined. This refinement process is known as the “nuclear fuel cycle” and it is used to convert uranium into nuclear energy.

Uranium Yellow Cake


  • Uranium is the primary element used in nuclear energy, one of the most important global energy sources
  • Since nuclear energy does not produce GHG emissions, it has gained popularity as an alternative energy source
  • Uranium must go through a refining process (mining, conversion, and enrichment) to become suitable for nuclear energy generation

Why is Uranium and Nuclear Energy Important?

Uranium is important since it is used as a fuel source for nuclear energy reactors, which contribute to ~15% of global energy consumption. Nuclear energy does not emit greenhouse gases (also known as GHG emissions), making it an attractive energy source compared to traditional sources such as coal, crude oil, and natural gas.

Given that many countries are looking to reduce their overall GHG emissions, there has been an increase in nuclear reactors in development over the last 5 years.

Who are the Biggest Producers and Consumers of Uranium?

While the largest uranium producers are Kazakhstan and Canada (with notable production from Australia, Niger, and Namibia), the countries that consume the most nuclear power include the United States, France, and China. Some countries, such as France, Slovakia, and Ukraine, rely on nuclear energy as their primary source of energy. In fact, over 70% of France’s total energy consumption comes solely from nuclear energy.

How does Nuclear Energy work? The Nuclear Fuel Cycle

For nuclear energy to be produced, the uranium used in this process needs to be refined, affecting its chemical composition. These stages include:

  • Mining & Treatment
  • Gas Conversion & Enrichment
  • Final Conversion
  • Nuclear Fission

Note: There will be some chemical terms used to describe the different refining processes used on uranium. As this terminology is often included in financial reporting of uranium companies, it has been included in this overview.

Mining and Treatment

Although uranium is all around us in very low concentrations, only rich and dense deposits of uranium can be used to mine the ores needed for nuclear energy. There are various methods used to extract uranium ore, depending on the depth at which the deposit is in the ground. The techniques are comparable to those used for mining other commodities, such as gold and silver.

After mining out the ores, they are crushed down and dissolved through an acid treatment. This treatment helps to separate the uranium from its surrounding rock.

Once the uranium has finished drying, it leaves the mine as the concentrate of a stable oxide known as triuranium octoxide (U₃O₈), which is a solid form of uranium. This concentrate is the powdery yellow substance known as “yellow cake” and it is the form sold on the spot market.

However, the spot market is not as important to sales, compared to other commodities, since uranium is mostly purchased in major long-term contracts. Furthermore, the sale of uranium is heavily regulated due to its nuclear capabilities and it is monitored by governmental bodies such as the U.S. Nuclear Regulatory Committee.

Gas Conversion and Enrichment

After the “yellow cake” is produced, it is then converted into a gas known as uranium hexaflouride (UF₆) that is enriched to produce fuel. Enrichment is done to increase the amount of uranium present in the gas (compared to its natural levels). This makes it easier to use in nuclear reactors. For integrated companies, they will sell enriched UF₆ as part of their Fuel Services.

Final Conversion

To get the enriched uranium ready for nuclear reactors, it is converted back to a powder, called uranium dioxide (UO₂), which is packed into small fuel pellets. These fuel pellets are then placed into fuel rods (also called “fuel assemblies”) which make up the core of a nuclear reactor. In large nuclear reactors, there may be over 18 million pellets and 50 thousand fuel rods used in a reactor!

Nuclear Fission

Once the fuel rods are placed into the core, they are ready to be converted into nuclear energy. To convert the fuel into energy, it is pressurized and the uranium atoms split apart, creating large amounts of energy. This process is known as “nuclear fission” and it generates considerable heat. From this heat, high temperature, pressurized steam is generated, which is used to spin a turbine. Through this process, large amounts of electricity are produced.

After the fuel has been used, it is removed from the reactor and stored. Nuclear fuel can last from 3 to 5 years in the nuclear reactor. It can then be reprocessed to be reused as fuel, or it can be disposed of. The decision depends on the state of the nuclear fuel after it has been used in the reactor.

The process to prepare uranium for nuclear fission is illustrated in the graphic below:

Uranium Nuclear Energy Cycle

What Determines Uranium Prices?

Like many other commodities, uranium prices are driven by its supply & demand in global commodity markets. Demand is largely driven by the number of active nuclear reactors that rely on the element for their operations. Future demand can be estimated by the number of nuclear reactors planned in addition to those currently operating.

Market supply is primarily driven by uranium mines and can be estimated from the production plans (also referred to as company guidance) of uranium miners. Government policy can also act as a stimulant or deterrent for uranium production and prices (e.g., The U.S. government implements a new policy that requires all U.S. nuclear reactors to source 25% of their uranium from mines in America) and is a consideration in many industry analysis frameworks, such as PESTEL Analysis. Some companies may temporarily shut down their mining operations if market prices or social and environmental factors are not favorable. These decisions decrease the amount of uranium in the market and can increase its market price.

As previously mentioned, long-term contracts are the prominent method of selling on the uranium market, encompassing an 85% share of the uranium market.  Both producers and suppliers often prefer to engage in long-term contracts as it provides producers with supply security and it allows uranium suppliers to have more predictability in their earnings. Given that long-term contract prices are dominant in the industry, they are sometimes used as an indicator price in reference to the spot price of uranium.

Additional Resources

Thank you for reading this CFI overview of nuclear energy. If you would like to learn about related concepts, check out CFI’s other resources:

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