ESA reviews COVID impacts on supply and demand

"In 2020, in response to the Covid-19 pandemic, nuclear installation operators and national regulatory authorities in the EU implemented exceptional measures to maintain essential operations, whilst prioritising nuclear safety," ESA notes in the report.

"The Coronavirus pandemic has significantly influenced the uranium market as several companies announced in the second quarter of 2020 measures leading to an important decrease of uranium production and related services. Spot U3O8 prices have risen substantially with further upward expectations. The conversion market that experienced price increases in the past two years due to supply reductions and inventory drawdowns is likely to experience the same situation," it said.

Suppliers' inventories are decreasing as an impact of the pandemic, it notes. It recommends, amongst other things, that utilities maintain "sufficient inventories" of nuclear materials (including fabricated fuel), to cover future requirements, and to use market opportunities to increase them. To forestall risks of shortages in the nuclear fuel supply chain, utilities should maintain "appropriate" inventory levels, it advises.

At least two alternative suppliers for each stage of the fuel cycle are needed for "ideal" security of supply, it notes. Operators dependent on single design of fuel assemblies and components are advised to "step up engagement with industry and cooperation with ESA and other players to bring about alternative solutions"; and in the meantime utilities that are "vulnerable at the fuel fabrication stage" should keep strategic inventories of source materials, or even of assembled fuel, and an appropriate number of reloads per reactor, depending on their exposure to security of supply risks, it notes.

Quantitative analysis shows that EU utilities are well covered until 2025 under existing contracts, in terms of both natural uranium and enrichment services, the report notes, although the "full reliance on a single design for VVER fuel remains a matter of concern". The agency said it observed "global stagnancy" in uranium prices in 2020, which are closer to average production costs compared to previous years. It said it remains "concerned" by the oversupply of uranium in the market, which has the effect of depressing prices and delaying investments. "Such circumstances could prevail until late in the decade, hampering necessary strategic investments," it added.

The EU represents around one-quarter of the global demand for natural uranium, ESA said. At the end of 2020, 122 commercial nuclear power reactors were operating in 13 EU Member States and the UK and managed by 18 nuclear utilities. Some 1908 tU of fresh fuel was loaded into commercial reactors during the year.

New working methods

The agency, which was set up to ensure members of the European Atomic Energy Community can receive a regular and equitable supply of ores and nuclear fuel, celebrated 60 years of continued operation in 2020 by demonstrating its resilience, ability to adapt and determination to modernise itself. Limitations imposed by the pandemic provided an "enforced opportunity to accelerate the adoption of new technologies" to cut down on "red tape", Director General Agnieszka Kaźmierczak said.

The transition to remote working for was accompanied by the introduction of new working methods, and expedited investment into a new IT system, Noemi, that will continue to securely host data from contracts on the supply of nuclear materials and related services, as well as enhancing monitoring of the nuclear energy market and production of reports from aggregated data. In the medium term, Noemi will make possible an electronic exchange of documents and data with the agency’s counterparts.

The agency has also this year issued new rules setting out how it is to balance demand against supply of ores, source materials and special fissile materials. The new rules, which are now in force,  will provide more process transparency and clarity for the Member States, operators and suppliers and contribute to better administrative practices and increase the efficiency of the ESA's work, it said. Its rules were last revised in 1975.