Could reaching global emissions-free goals rely on nuclear energy and uranium? ⚛️  Many uranium stocks have lifted in 2024, and since August 2021 uranium commodity pricing has soared more than 250% to US$106 today, a year-over-year (YOY) increase of 116.77%. 

Over the past few years, global uranium supply was negatively impacted by the Covid pandemic, Russia’s invasion of Ukraine, and political turmoil within the world’s largest supplier, Kazakhstan. Now in 2024, some uranium stocks on the US share markets, including Uranium Energy Corps (UEC) and Energy Fuels Canada (UUUU), have shot up. So why does uranium seem so important to today’s global economy?

What is uranium?

Uranium is one of Earth’s most dense heavy metals, at 19.1g per every centimetre squared. It’s 37 times more abundant than silver and 700 times more than gold. Uranium is naturally radioactive, and is used to power electricity in some countries, and globally in industries like healthcare for X-rays, MRIs, CAT scans and radiation to treat cancer.

‘...uranium is more widely used (than plutonium) since it is less radioactive and even safe to touch in its active state’. Ramish Cheema, Yahoo Finance

Why is uranium considered ‘green energy’?

We all need uranium, especially the US. 🇺🇸 Between 2019 and 2050 global electricity demand is expected to double. This means growing demand for power generation, and projected gaps in global supply of uranium to meet the increased demands of nuclear-generated electricity. The US consumes more uranium than any other nation - nearly double that of China - and has 93 nuclear reactors of the world’s total 436. China is racing to build 21 nuclear reactors to add to their 55, and India is building 8, with a further 100 or more planned or being built throughout the world.

How does uranium power electricity? ⚡Nuclear reactors split atoms in a chain reaction process called nuclear fission that produces heat used to generate electricity. Because of uranium's density - where 1g of uranium ‘fissile material’ can produce 1 megawatt of electricity able to power 750 homes - it requires tonnes less of it to generate electricity compared to oil, coal, natural gas and water - and requires less land than wind turbine farms. 

‘For context, an egg-sized amount of uranium fuel can generate as much electric power as 88 tonnes of coal.’ Marcus Lu, Visual Capitalist

While nuclear fission creates some radioactive waste products - some of which need to be buried deep underground for decades - the method of fusing atoms together, nuclear fusion, does not. Nuclear fusion fuses atoms together, which proponents believe could create ‘a net energy positive fusion reaction’ to generate clean energy.

Supporters of nuclear electricity production use these examples, along with accessibility and abundance of uranium, as well as transportation and operational costs, to conclude that nuclear power is ‘cleaner than other renewable energy sources’. That is, they say, there is less strain on the planet by generating electricity through nuclear reactors. 

Which countries produce the most uranium? 

Around two-thirds of the world’s mined uranium is produced in Kazakhstan, Canada and Australia. Kazakhstan produces around 43% of global supply in 2022, and their state-owned company Kazatomprom produced around 25% of the world’s uranium in 2021. Half the total global supply comes from just 10 mines - the largest being McArthur River in Canada. And the mine that produces the highest grade of uranium is also located in Canada, at Cigar Lake.

Hedge funds have been ‘ratcheting’ up uranium stockpiles

Hedge fund managers have watched uranium’s commodity pricing grow and appear to be backing a possible nuclear-powered future. Since October last year some have been ‘ratcheting up their exposure to uranium stocks, as they bet on significant price gains’, according to Bloomberg.

‘Terra Capital’s Matthew Langsford, Segra Capital’s Arthur Hyde, Argonaut Capital Partners’ Barry Norris and Anaconda Invest’s Renaud Saleur are among managers building bets on uranium companies such as Cameco Corp., Energy Fuels Inc., Ur-Energy Inc. and NexGen Energy Ltd.’ Sheyl Lee, Bloomberg

Uranium stocks on the US share markets

A handful of uranium stocks have surged ahead on the US markets. 📈 Five uranium stocks listed on the US share markets that hold a market cap of between US$1 billion and US$160 billion are among them:

• BHP Group Limited (BHP - ADR) is an Australia-based company, and one of the largest mining companies in the world, operating predominantly in Australia, Europe, China, Japan, India, South Korea, North and South America. They are actively lobbying the Australian government to lift the country’s nuclear reactor ban. They have a market cap of US$156.604 billion. Their stock has decreased 9.43% year-to-date (YTD) but has held steady over the past 6 months at 1.22% up. 
• Cameco Corporation (CCJ) is a Canada-based uranium company that produces uranium fuel and components for nuclear reactors. They have a market cap of US$20.819 billion, has gained 13.89% YTD, and over the past 6 months the stock has climbed 37.13%
• Denison Mines (DNN) is a Canada-based uranium exploration and development company that holds a market cap of US$1.749 billion. Their stock is currently valued at US$2.0183 per share, and has increased 16.01% YTD, and has more than doubled 57.68% over the past 6 months, and gained 21.63% since 31 July 2023
• Energy Fuels Canada (UUUU) is a critical minerals company focused on uranium extraction with a market cap of US$1.248 billion. Their YTD stock value has lifted 11.49%, and is up 37.13% over 6 months  
• NexGen Energy (NXE) is a Canadian uranium mine developer that holds a market cap of US$4.069 billion. Since the start of 2024 their YTD stock has risen 12.52%, and over 6 months has lifted 57.43% 
• Sibanye Stillwater (SBSW - ADR) is a South African mining company that is shifting focus to lithium over of uranium as the company is doubtful about uranium’s future in the renewable energy mix. Their market cap is US$3.418 billion and since 2 Jan this year, their stock has fallen 11.14% YTD, and declined 37.48% over the last 6 months
• Uranium Energy Corp (UEC) is a uranium mining company that explores and sells uranium from mines in the US, Canada, and Paraguay, holding a market cap of US$2.957 billion. YTD their stock is up 19.50% and lifted 109.07% over 6 months

But even some small market cap uranium-backing companies have seen their stock prices lift YTD and over the past 6 months:

• Centrus Energy Corp (LEU) is a supplier of enriched uranium for nuclear fuel. They have a comparatively small market cap of US$807.92 million. YTD their stock has declined 4.27% but has seen 6-month growth of 37.60%
• Ur-Energy (URG) is engaged in uranium mining in the US and holds a small market cap of  US$488.09 million. However, their YTD stock has grown 20.39% and has climbed 74.29% in 6 months 

Uranium Royalty Corp (UROY) is a Canada-based uranium-focused royalty and streaming company principally engaged in acquiring and assembling a portfolio of royalties and investing in companies with direct exposure to uranium. They have a significantly smaller market cap than other uranium producing companies ofUS$384.993 but their stock has lifted 29.19% YTD and 50.44% since 31 July 2023

Uranium ETFs on US share markets

There are three uranium ETFs on the US share markets, all listed on the Nasdaq, which are:

• Global X Uranium ETF (URA) tracks movement of uranium stocks and has total assets of US$2.44 billion; the ETF is up 8.45% YTD and is up 34.58% since 31 July last year
• Sprott Uranium Miners ETF (URNM) holds total assets of US$1.68 billion and up 10.92% YTD and gained 57.24% over 6 months
• Sprott Junior Uranium Miners ETF (URNJ) listed on the Nasdaq less than one year ago in February 2023 and has total assets of US$198 million. The ETF stock is up 20.91% YTD and has lifted 64.04% over 6 months

During the global pandemic the Sprott Physical Uranium Trust bought around 25% of the world's total supply of yellowcake uranium. 

ASX largest market cap uranium stocks

Australia has 12 uranium stocks with a market cap of between US$100 million and US$1 billion, and just three valued above US$1 billion. These are Paladin Energy (PDN.AX) with a market cap of US$3.655 billion, Boss Energy (BOE.AXE), holding a market cap of US$2.231 billion and Deep Yellow (DYL.AX) with market cap of US$1.082 billion.

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