Meta, Constellation power deal may help uranium miners: analysts

Facebook owner Meta’s 20-year deal with Constellation Energy (Nasdaq: CEG) to buy output from its Clinton nuclear plant in central Illinois bolsters the long-term case for uranium producers, analysts said.

Starting in June 2027, Meta is to receive about 1.12 gigawatts from Constellation, which represents the entire output from Clinton’s reactor, the companies said late Tuesday in separate statements. Future modifications will boost Clinton’s output by 30 megawatts, they also said. The plant’s current capacity is enough to power about 1 million homes.

Meta’s decision to sign with Constellation “is indicative of not only the need for power, but the desire of these hyperscalers to get that power from renewable sources,” GLJ Research founder and CEO Gordon Johnson said Wednesday in a telephone interview from New York. “The demand for nuclear is real, evidenced by Meta, the lack of supply is real, and the shortage of supply is going to get worse as these data centres start to ramp up and need power.”

Tech companies such as Meta need vast amounts of energy to operate their data centres and artificial intelligence applications. Nuclear energy is especially prized because it’s available around the clock and doesn’t emit planet-warming air pollution, Red Cloud Securities analysts said Wednesday in a note.

Hyperscaler support

The announcement represents “another supportive move from the hyperscalers for nuclear generation in the US,” BMO Capital Markets mining analysts Helen Amos and George Heppel wrote in a note.

Meta is buying the energy as part of a commitment to source all of its electricity from clean and renewable power.

After announcing last year that it would seek proposals for up to 4 gigawatts of US nuclear capacity, the company said Tuesday it’s in final discussions with a shortlist of potential projects to meet its target.

Demand, price trends

Tech companies’ drive to build additional data centres intersects with a few inter-industry trends. For one, demand for uranium is projected to triple by 2040, underscoring the urgent need to develop mines. Uranium demand already outstrips production by 50 million to 60 million lb. a year, according to World Nuclear Association data.

“There is a new industrial revolution going on right now,” Johnson said. “There’s an explosion in energy demand associated with data centres that people think are going to be needed to power AI. You need real solutions, and the only real solution in renewables is nuclear. If you’re a nuclear bull, the set-up couldn’t be better.”

Another trend is spot uranium prices, which for now remain relatively low by historical standards. Spot uranium has dropped about 20% in the past year to $71.90 per lb. as of Wednesday afternoon, well below the all-time high of $136 per lb. in 2007, but still higher than it was in the decade after the Fukushima disaster. Lower prices for the nuclear metal discourage investment and make mining less profitable.

Building domestic supply

To be sure, several uranium mine projects in the US are already in the works.

Australia’s Laramide Resources (TSX: LAM) said this week that its Crownpoint-Churchrock and La Jara Mesa uranium projects have been granted FAST-41 Covered project status by the US Permitting Council. This clears the way for faster permitting and increased government support.

Last month, the United States Department of the Interior approved Anfield Energy’s (TSXV: AEC; US-OTC: ANLDF) Velvet-Wood uranium and vanadium mine in Utah, making it the first project to be greenlit under a compressed 14-day environmental review timeline.

Now that the final environmental assessment has been completed by the Bureau of Land Management, Anfield Energy has the necessary approval to restart the old Velvet mine and develop the nearby Wood deposit, the Department of the Interior said May 23.

But while the US works to secure domestic supplies of uranium, the reality is it depends on imports for most of its uranium needs, according to the US Energy Information Administration (EIA). Of the uranium oxide the US purchases, 57% comes from Kazakhstan, Uzbekistan, Australia and Russia, and 27% comes from Canada, EIA data shows.

Nuclear leveling up

In the meantime, several nuclear reactor operators are trying to boost capacity.

With the guarantee that Clinton can run for two more decades, Constellation said it’s evaluating strategies to extend the plant’s existing early site permit or seek a new construction permit from the Nuclear Regulatory Commission to pursue development of an advanced nuclear reactor or small modular reactor at the site.

Known as the Clinton Clean Energy Center, the facility was initially slated for closure in 2017 after years of financial losses. Illinois lawmakers prevented the retirement by setting up a Zero Emission Credit program that supports the plant through mid-2027.

“Securing clean, reliable energy is necessary to continue advancing our AI ambitions,” Urvi Parekh, Meta’s head of global energy, said in the statement. “We are proud to help keep the Clinton plant operating for years to come and demonstrate that this plant is an important piece to strengthening American leadership in energy.”

Quick advance

As it seeks additional power, Meta said it’s prioritizing sites “where nuclear development can be advanced quickly with high degrees of certainty on execution and timeline.”

Existing nuclear plants “will not be able to stay online indefinitely without partners and investments that help extend existing operating licenses and increase generation capacity,” the tech company added.

Long-term support is needed for many nuclear plants in the US to ensure electricity grids remain reliable while energy needs grow, it said.

“Keeping an existing plant operating will have the same positive effect as adding new clean energy to the grid, and avoid the disruption that has occurred when other nuclear units have retired prematurely.”