Photo by Paolo KOCH/Gamma-Rapho via Getty Images)
- A push to go green and abandon fossil fuels has got the world interested in uranium again.
- A demand surge has seen uranium prices jump to levels not seen since Japan's Fukushima nuclear disaster in 2011.
- Experts have warned of a uranium supply crunch that could see costs rising further in the coming years.
Global nations' push to go green and reduce reliance on fossil fuels has now sent them chasing a commodity that had been uncool for quite a while: uranium.
Demand for the heavy metal has surged as countries from China to India and Russia pursue more nuclear programs to balance the needs of meeting their increasing energy needs and reducing carbon emissions. That has boosted the price of uranium to highs unseen since the aftermath of the Fukushima nuclear disaster in 2011.
The commodity's price has jumped almost 40% year-to-date to about $66.25 per pound. It may climb as high as $80 by year-end, Reuters reported, citing analysts. In comparison, gold has advanced just about 5% so far in 2023.
"The market has been slowly building higher prices as mining costs rise and nuclear generators look to build stocks to guard against increasingly risky supply-side issues," an SP Angel mining analyst told Reuters.
"We see prices rising year-on-year for next 10-20 years or till the world finds another source for large scale un-interruptible base load power with a low carbon footprint," he added.
Another energy expert told the Financial Times that uranium could see a supply crunch that could exceed pre-Fukushima levels.
Uranium is a key component in nations' move towards nuclear power – a type of carbon-free power that could be used to tackle global warming.
Alongside spot prices, the stocks of uranium miners and ETFs investing in them are also rallying.
According to ETF Strategy, the Sprott Uranium Miners UCITS ETF has jumped past $100 million in assets. It's also posted year-to-date returns of 29.8% as of September 12.
"Uranium ETFs have grown 20x in past 3yrs and I think they could grow 2-3x in next two years as world comes around to reality that any hopes of net zero will require a whole lotta nuclear. Green investing for realists," Eric Balchunas, senior ETF analyst at Bloomberg, said in recent post on X.