The uranium mining industry faced significant challenges after the Fukushima nuclear incident in Japan in 2011, and it has yet to fully recover.
However, the world is grappling with other urgent issues, including climate change and lifting billions out of poverty globally. Nuclear energy can provide solutions for both, and after a reasonable interval post-Fukushima, it is regaining popularity.
All the leading candidates for the US Presidential election next year support nuclear energy, with Robert Kennedy Junior as the exception. Donald Trump supports it, and incumbent Joe Biden cannot compromise his environmental stance by transitioning from nuclear to more carbon-intensive energy sources like oil. Ron De Santis asserted in February that nuclear is the cleanest power source “of all.”
In China, the construction of nuclear power stations is underway on a large scale. The French have notably avoided many challenges of the recent European energy crisis due to their substantial investment in nuclear, and plans for additional plants are in progress globally.
Subsequently, the spot price of uranium recently surpassed US$65 per pound, reaching its highest since Fukushima. Consequently, the demand for uranium, along with uranium miners, is making a comeback.
It is estimated that by 2030, the world’s nuclear reactors will need 79,400 tonnes of uranium, an increase from 62,500 tonnes in 2021. By 2040, this figure is expected to rise to 112,300 tonnes.
However, the situation is nuanced. Much like the oil industry, major producers in Kazakhstan and Canada typically reduce production to establish a price floor when prices fall. When prices increase, production resumes. Thus, while the long-term trend seems positive, predicting any dramatic developments may be premature.
What appears more plausible is a steady, gradual growth. Given this, it’s understandable that many mining companies invested in uranium also diversify their portfolios with other assets.
This diversification is evident across the market spectrum, from major players like Rio Tinto and BHP, both having substantial uranium operations, to smaller entities. For instance, Power Metal Resources (AIM: POW), one of the more promising London-listed uranium juniors, holds extensive land in Canada for uranium prospecting and maintains diverse global assets in gold, nickel, and other base metals.
For Power Metals, which has recently undergone a management change, the emphasis has largely shifted towards uranium in the fertile Athabasca Basin in Canada. Prominent investors in Canadian uranium, such as Rick Rule, have shown interest, and the narrative appears to be gaining momentum.
However, for those solely seeking exposure to uranium, two additional options are available to UK investors. One is Geiger Counter Ltd, a long-established uranium-centric fund managed by New City Investment Managers.
Another is Yellow Cake PLC (AIM: YCA), which directly purchases and retains uranium stocks, alongside making various investments in the uranium mining sector.
For those in pursuit of investing specifically in uranium miners, the search will need to extend further.
Cameco, based in Canada, stands as the largest and most reputable, succeeded by Denison, with numerous emerging juniors dispersed throughout the Athabasca and globally, notably in Australia. Namibia is also a key player, and significant deposits are found in the southwestern US.
Making uranium ventures successful isn’t always straightforward, but the past two decades have witnessed billion-dollar transactions in London, and there is no indication that such occurrences won’t reemerge.
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