With the ongoing conflict between Russia and Ukraine, there was already heavy speculation that the United States would ban imports of Russian uranium. That became a reality when U.S. President Joe Biden made the ban official, opening opportunities for a pair of uranium mining exchange traded funds (ETFs).
The ban signaled the beginning of a 90-day countdown until limits on shipments of Russian uranium go into effect. Additionally, the ban also opened the doors for billions to spend on shoring up the supply in the U.S. to fill the void.
“Biden’s signature also unlocks some $2.7 billion in spending, previously approved by Congress, to build up domestic uranium supplies for U.S. nuclear plants,” Bloomberg reported. “That money was contingent on the federal government imposing limits on Russian uranium imports.”
The ban does allow for the Department of Energy (DOE) to issue waivers in the event of supply concerns for the next four years. U.S. nuclear power plants use about 24% of the uranium supplied by Russia, which would’ve ruled out a complete and absolute ban effective immediately.
“The delay in banning Russian uranium was, in part, driven by the US’s reliance on Russian imports and fears that the country’s 93 nuclear reactors could be disrupted by a lack of fuel,” The Guardian reported. “While the U.S. is the largest market for nuclear fuels, its current domestic enrichment capacity can supply just 30% of the fuel required by its dozens of reactors, a U.S. House report on the newly passed legislation said.”
Demand For Mining Could Rise
With the U.S. looking within its borders to make up for the deficit in supply, this could boost demand for mining domestically. The majority of holdings in the Sprott Uranium Miners ETF (URNM ) and the Sprott Junior Uranium Miners ETF (URNJ ) include companies domiciled in the U.S., which could capture this increased demand.
URNM tracks the North Shore Global Uranium Mining Index. It invests in global firms that mine, develop, and produce the metal as well as firms that hold the physical metal or royalties from it.
For even greater growth exposure, small-cap companies can offer amplified moves to bullish markets. So rather than create a small uranium mining portfolio of individual stocks, an easier way is to get broad exposure via URNJ. It 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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