BENGALURU – Uranium producers’ deliberate cuts to production should finally begin to prop up prices next year as reserves of the rare metal dwindle and nuclear power generators rush to lock-in long-term contracts, according to sector veteran John Borshoff.

Shares in uranium producers briefly rose late last year after the world’s biggest listed producer Cameco Corp and Kazakhstan’s State-run Kazatomprom laid out plans to reduce production to help end a period of low prices dating back to Japan’s Fukushima meltdown in 2011.

But prices of the metal have remained stubbornly glued to around $23 a pound and the rally in share prices has also been short-lived, leaving producers unable to invest in more production and worried about their financial futures.

Analysts and sector players say low prices reflect the substantial reserves held by many uranium producers and long-term contracts taken out by utilities.

Borshoff, who built uranium miner Paladin Energy into one of the sector’s leaders a decade ago, warned all this may begin to change next year as utilities anticipate a surplus of demand over supply in 2022/23.

“That’s when you will see a dramatic change,” he told Reuters in an interview. “The whole issue of fear of lack of supply will start to seep in when they realize they are competing for rare pounds of uranium.”

Paladin has seen its share value collapse from a peak in 2007 before Fukushima crippled Japanese demand for uranium and prompted Germany to abandon nuclear power. Borshoff left the company in 2015 after 22 years and is now managing director at uranium explorer Deep Yellow Ltd.

He says there is complacency at utilities who assume that, even if they squeeze producers to the bone now, they will be able to secure uranium at less than the $73 a pound it cost before Fukushima.

Nuclear utilities are typically indifferent to fluctuations in prices, historically securing contracts when the price of uranium is high, because the metal accounts for just 5 percent of their total expenses.

That always carries risks in an industry that often must put reliability above price.

“Utilities think that if they put a price at $60 a pound, they’ll get product,” Borshoff said. “I‘m saying that when the shortage occurs, they can put it at $100 and they won’t get product.”