By Mrinalika Roy and Seher Dareen

July 29 (Reuters) - Long-term uranium contract prices

have hit over 16-year highs on supply uncertainty and higher

demand from utilities scrambling to secure the radioactive fuel

to aggressively expand their capacity to power mushrooming AI

data centers.

Term prices are now around $79 per pound, the highest since

2008, and estimated to rise further in coming months.

"With a stronger market environment, we're currently locking

in ceilings of about $125-130/lb and floors at about $70-75/lb

in market-related contracts," the best prices seen in over a

decade, said uranium miner Cameco ( CCJ ).

Spot prices, which rose nearly 88% last year, and hit a

14-year high in February 2024, were now around $82 per pound.

Uranium is the most widely used fuel for nuclear energy.

With a global clean energy push, nuclear generation could

roughly double by 2050 and so should supply, according to the

International Energy Agency.

But that seems unlikely, per Plenisfer Investments, which

estimates prices must exceed the marginal cost of production,

currently at $90-$100 per pound, by at least 30% to incentivize

producers to invest in new projects.

The market is hence expected to remain in deficit over the

next decade, Plenisfer added.

"The likes of Uranium Energy Corp ( UEC ) or Ur-Energy ( URG )

have limited volumes but know there's high demand for

their available pounds so (are) again increasingly looking for

higher prices or happy to run via spot sales," said Robert

Crayfourd, co-fund manager of uranium-focused Geiger Counter.

Goldman Sachs Research, in a May report, estimated global

data center power demand -- accounting for 1-2% of overall power

use currently-- to grow 160% by 2030.

Nuclear energy companies such as Constellation and Vistra ( VST )

are expected to benefit from a U.S. push for Big Tech to invest

in climate-friendly energy generation to cater to surging AI

needs.

Rising demand from utilities is helping bridge the gap

between term and spot prices, experts said.

"Utilities with plenty of inventory will be more relaxed,

but any caught short will be forced to buy," Crayfourd said.