UEC's Scott Melbye on What's Holding Uranium Back
Summary
U.S. utilities are only contracting 40-50% of their annual uranium needs, leaving uncovered requirements that grow every year they delay.
The DOE just issued an RFI to buy 4 million pounds/year of U.S.-origin uranium starting in 2030, putting a price floor under domestic producers.
Uranium demand is inelastic because reactors cannot switch fuels, and new-mine lead times run years, so even $200/lb would not unlock quick new supply.
UEC's 12 million lbs/year of licensed in-situ recovery (ISR) capacity sits on 300 million lbs of nearby resources in Wyoming and Texas, far above its current output.
Uranium Royalty's $1.1B Sweetwater Royalties deal turned it into Wyoming's largest public-company landowner, adding five soda ash mines generating ~$75M EBITDA.
Scott Melbye's takeaways
- Top takeaway Scott Melbye argues uranium spot is a 'coiled spring' heading into year-end, with no summer dip and a credible path above $100/lb as utilities compete with state-owned enterprises, hyperscalers, and US defense stockpiles for tight supply.
- He contends that even without further AI or data-center demand, the existing 440 reactors plus 80 under construction will roughly double nuclear generation over 20 years, sustaining what he calls a $1.6 billion deficit.
- He says uncovered utility demand is real and inelastic — nuclear reactors cannot substitute another fuel — and that long lead times for new mines mean a price spike to $200/lb could not be quickly met with new supply.
- He frames rising US utility activity in the long-term market as a bullish behavior change, with offers coming in narrower and lower-quality as incumbent producers fill order books ahead of new entrants.