Uranium production is best understood as an industry played out on a geopolitical chessboard.
Enriched uranium is used to fuel nuclear reactors. The degree of enrichment is not high. Natural uranium (sometimes called yellowcake) has about 0.7% U-235 isotope. This is enriched to 3% to 5% for use in most reactors (called low-enriched uranium or LEU). Some specialized reactors require uranium enriched to 20% U-235 isotope, but those are rare.
Uranium is also used in nuclear weapons, especially fusion thermonuclear bombs. Those are enriched to a minimum of 20% U-235 and more often are enriched to 90% U-235 (highly enriched uranium, HEU) for the most powerful weapons.
Uranium itself is not rare, but its mining and production are controlled by only a few countries working with source countries. The real stranglehold on HEU is the enrichment process itself, which is highly technical and, again, controlled by a handful of countries.
Countries with large or expanding nuclear arsenals (U.S., Russia, China and North Korea) will do what they have to do to obtain HEU. They are not price sensitive, but they are not large drivers of the world price either. The main driver is the demand for LEU for use in nuclear reactors. The two leading builders of nuclear reactors, both for domestic use and for export, are Russia and France. (The U.S. has good nuclear reactor technology and building capacity, but it is highly constrained by regulations as part of the green new scam).
France's yellowcake comes almost exclusively from Niger. Russia has diverse sources including Russia itself, Kazakhstan, Uzbekistan and now Ukraine. China gets uranium from inside China and Namibia and South Africa. India sources uranium from mainly inside India.
A recent coup d'?tat in Niger has thrown France's supply situation into turmoil. There is no evidence yet that Russia planned the coup; it was most likely indigenous. When I traveled in West Africa and Central Africa in the early 1980s, I was accustomed to staying in hotels with artillery shells and machine gun bullet holes in the facades from the last coup.
Still, it is clear that Russia is fanning the flames among the revolutionary forces and helping to keep the coup forces alive. The U.S. and UK conducted a clandestine coup in Ukraine in 2014 that deposed a pro-Russian president. One can almost hear Putin saying to himself, "Two can play."
Meanwhile, France failed in its efforts to organize a multilateral force around the Economic Community of West African States (ECOWAS). France proposed to supply well-trained French Foreign Legion and other special forces to the effort. U.S. efforts to intervene have also failed.
Russia's reaction was to deploy Wagner Group mercenaries to support the coup. What is likely at this point is more chaos and at least a temporary cut-off of exports of uranium from Niger.
My first visit to the Niger capital of Niamey was memorable. It happened in 1981, over forty years ago. Niamey is completely surrounded by the Sahara Desert. It's not near the desert; it's in the desert. When it was built, it was more of an oasis on the Niger River but the Sahara is highly dynamic. It moves, sometimes hundreds of miles in any direction, creating more desert and even leaving green areas behind that become more fertile. Niamey was a place that was swallowed by the Sahara.
I was there as a senior officer of Citibank from the head office in New York checking in on the Niamey branch. (I covered francophone Africa at the time including C?te D'Ivoire, Senegal, and the Congo, formerly Zaire). My hotel room was interesting. The shower was a marked-off area of the bedroom with a drain and a small fringe to keep water from spreading. There was no shower curtain. The shower itself was a hose with a garden-type nozzle. It worked fine.
I looked out the window in the morning and saw something I had only seen in movies and never expected to see in real life - a caravan. It was a real one with camels tied together in a line laden with goods and camel drivers riding a few, and some herders walking alongside. They wore turbans and robes and were headed out into the desert. I'm not sure where they were going. Timbuktu is not far in case you're in the neighborhood.
Finally, I made it to the office and sat across from the Chief Country Officer. Before we got down to business, I told the Chief I had a question.
"I understand what I'm doing here, but what are we doing here? Why on earth does Citibank have an office in such a primitive and deserted place?"
The Chief looked at me like I was the new kid on the block. (I was). He answered my question with one word: "Uranium."
He went on, "We're here to keep an eye on the uranium and keep an eye on the French. We use finance as needed as a tool to maintain economic control."
At that time, it wasn't unusual for the CIA to use bank and energy company officials as sources working under non-official cover. I quickly understood what I had walked into.
I suppose the hotels are nicer today and the caravans are mostly gone. What has not changed is the importance of uranium and the competition among the U.S., Russia and France for access. Now that the French presence has been ejected and the U.S. presence has been stymied, we'll see how things play out.
More chaos and possibly war are next on the agenda. That creates its own uncertainties. What is certain is that Russia will be the winner. The chaos alone will result in a higher price for uranium. If Russia prevails, they will tighten their stranglehold on global supply and leave the French in desperate straits.
The Daily Reckoning