Jefferies Lifts Long-Term Uranium Price Forecast to $95 on Rising Costs

Jefferies has substantially raised its long-term price forecast for uranium to $95 per pound, a significant increase from its previous projection of $70. The investment bank argues that higher production costs and project execution risks necessitate a higher price to finance the new supply required to meet future demand.

Higher Costs Underpin New Forecast

The core of Jefferies' revised outlook is the assessment that current market pricing is inadequate to bring new mining projects online. According to a note from analyst Mitch Ryan, the new forecast "reflects the economics required to finance replacement supply."

The analysis highlights a sharp rise in operational expenses for existing miners. Jefferies' note states that unit costs for major producers have surged by 83% to 184% over the past five years, creating a higher floor for the incentive price needed for new developments.

Shifting Supply and Demand Dynamics

On the demand side, the nuclear fuel continues to benefit from strong policy backing, which Jefferies describes as "geopolitical support for Nuclear investment and growth." The bank projects that China will be a primary driver, accounting for 74% of global reactor capacity growth as its requirements are set to more than double.

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Jefferies projects that primary uranium production will reach 243.4 million pounds in 2033 before easing. Concurrently, secondary sources of supply are expected to fall sharply. The firm identified renewed access to Russian enrichment services as the principal downside risk to its forecast.

Investment Implications

For investors, Jefferies recommends a "portfolio strategy that decouples individual execution risk" while maintaining exposure to the sector's fundamentals. The bank noted that developers responsible for about 20% of new supply between 2026 and 2035 have yet to secure major offtake contracts.

In its sector positioning, the firm stated a preference for Paladin and NexGen. This combination is intended to balance exposure to current production with the "longer-dated development leverage" offered by projects yet to come online.