While the demand for nuclear energy continues to pique the interest of certain nations around the globe as an alternative energy resource, supply woes for uranium are pushing the metal to 16-year highs.
This certainly bodes well for bullish investors, and also opens up opportunities for miners as demand continues to ramp up. The third trading week of 2024 saw uranium prices continue to push higher as Kazataprom, the world’s largest producer and seller of natural uranium, warned of a shortfall in supply.
“Uranium prices jumped to a sixteen-year high on Monday (January 15) after one of the world’s largest producers last week said it is unlikely to deliver its 2024 production guidance, amplifying supply tightness,” a Wall Street Journal report noted.
As mentioned, Kazataomprom questioned whether it could meet its output goals over the next few years. This certainly underscores uranium’s increased demand as it appears more countries have become receptive to the idea of using nuclear energy again. The metal radioactively decays, so its usage is paramount in creating nuclear energy. Thus, limited supply in tandem with increased demand should elevate prices.
“Kazakhstan’s state uranium company Kazatomprom warned on Friday (January 12) that it is likely to fall short of its output targets over the next two years, citing shortages of sulfuric acid and delays in completing construction works at newly developed deposits,” the report added.
2 Uranium Mining Options
Prospective investors may want to add uranium exposure to achieve a diversified growth tilt to their portfolios. In that case, uranium miners offer an alternate method of exposure. Sprott has two ETFs that cater to the stability of large-cap companies or the growth slant offered by small-caps.
For large-cap exposure, there’s the Sprott Uranium Miners ETF (URNM ) that tracks the North Shore Global Uranium Mining Index. It invests in global firms that mine, develop, and produce the metal as well as those firms that hold the physical metal or royalties from it. The aforementioned Kazatomprom is the fund’s largest holding, comprising just below 15% of the fund as of January 16.
As mentioned, for even higher growth potential, investors can opt for small-cap companies or for a more all-inclusive option, the Sprott Junior Uranium Miners ETF (URNJ ). The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Nasdaq Sprott Junior Uranium Miners Index, which tracks mid-, small- and micro-cap companies in the metal’s mining business.
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