Demand for nuclear power as an alternative means of energy is pushing uranium prices to record levels not seen in over 15 years. Uranium reached above $80 earlier in the week and its growth prospects continue to look bright.
Confidence in nuclear power is returning, but it took over 12 years after the last major nuclear accident in Fukushima, Japan. As the world transitions more to alternative energy sources, nuclear power is once again on the table as a viable energy source.
“Prices have rallied sharply this year, hitting levels not seen since Japan’s Fukushima accident caused governments across the world to cut back on nuclear power,” reported Bloomberg.
More nuclear projects are reopening or new ones are emerging as uranium demand increases. In turn, this should prop up demand for mining projects.
“Utility contracting continues to pick up,” Colin Hamilton, managing director for commodities research at BMO, wrote in a note. “There is very little uncommitted production available to meet uncovered utility requirements.”
Capitalize on Uranium's Growth
Geopolitical forces are also in play, which should serve as an additional catalyst for growth in uranium mining. As reported by Bloomberg, after Russia’s invasion of Ukraine, “things couldn’t be more different, with countries looking to nuclear power as a source of low-carbon power that can diversify their mix from intermittent renewable energy and imported fossil fuels.”
Supply disruptions following the invasion are forcing nations to once again look to nuclear energy as a usable energy alternative. The increased interest in nuclear energy is already seeing suppliers move to meet uranium demand.
“You’ve got an industry that’s scrambling to meet the supply requirement that’s forming and the market today is already out of balance,” said John Ciampaglia, CEO of Sprott Asset Management. “Around 2030, there’s a very large supply deficit that that could play out and that’s why the price of uranium is obviously starting to move.”
Given this growth potency that exists in the demand for uranium and its mining activities, consider the Sprott Uranium Miners ETF (URNM ). With its 0.83% expense ratio, the fund tracks the North Shore Global Uranium Mining Index. This index follows the performance of companies that devote at least 50% of their assets to the industry. This may include mining, exploration, development, and production, or holding physical uranium, or owning royalties. It could also include engaging in other ancillary activities that support the mining industry.
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