How sensitive is nuclear production to critical minerals?

Nuclear energy production has the advantage of being less dependent on weather conditions, but it relies on critical minerals. This study examines this dependency by constructing a model with 38 countries, representing 94 % of global nuclear production. The analysis employs the GVAR model and Granger Causality from November 2000 to December 2023. The results show that higher uranium, nickel, and copper prices negatively impact international nuclear energy production, illustrating spillover effects. Variance decomposition reveals the influence of oil and stock markets on nuclear energy, with oil markets playing a particularly significant role in the U.S. and Europe. A series of robustness tests confirmed these findings by: i) excluding the COVID-19 period, ii) incorporating oil price volatility into the model, iii) changing the data frequency from monthly to annual, iv) using an alternative proxy for nuclear energy, and v) applying time-varying bilateral trade. The findings support policies that encourage free international trade and trade agreements to enhance the production and exchange of critical minerals.