Uranium is a radioactive material that is found and extracted in many countries worldwide. It’s considered a relatively clean energy source because a small amount of uranium can produce the same amount of energy as coal while emitting fewer harmful pollutants into the environment.
Read on to find out more about uranium, how investing in uranium works, and what benefits and risks are associated with investing in this radioactive material.
What is uranium and what is it used for?
Uranium is a chemical element used as fuel in nuclear power plants. The fission of uranium releases energy that is used to generate electricity. Currently, around 10% of the world’s electricity is generated using uranium.
Likewise, uranium is also used for military purposes, such as for the construction of nuclear weapons.
Uranium also has military applications, including the construction of nuclear weapons. A small portion of it is used to produce medical isotopes and for naval propulsion because of its efficiency compared to other fuels.
Uranium is not well-known among the general public due to its radiation and toxicity, which potentially cause cancer. Additionally, its role in accelerating the energy transition is controversial.
Generating electricity from uranium
Electricity generation from uranium involves nuclear fission. This process splits the nucleus of a uranium atom into smaller nuclei, releasing a significant amount of heat. This heat is used to turn water into steam, which drives turbines to produce electricity.
In nuclear power plants, uranium is concentrated as nuclear fuel in a reactor. The reactor contains the fuel and a cooling medium, typically water. Uranium undergoes fission, transferring heat to the water, which becomes steam and powers the turbines.
Although it is cheaper operationally to generate electricity with uranium, it is not really cheaper in general terms because building a nuclear terminal requires very large investments and government support.
While generating electricity with uranium is operationally cost-effective, building a nuclear power plant requires substantial investment and government support. Additionally, there are concerns about nuclear waste disposal and the potential costs of a nuclear accident.
World uranium production
Around two-thirds of world uranium production from mines comes from Kazakhstan, Canada, and Australia. Over 60% of uranium is produced using in situ leaching, a method that involves injecting acid and an oxidant into groundwater to dissolve uranium ore. The dissolved uranium is then pumped to the surface for further processing.
Which countries are the main producers of uranium?
Here are the main producers of uranium:
Likewise, the countries with the largest resources in the world are the following:
Uranium price trend
Uranium, like other commodities, has a history of significant price volatility. This is evident in its price evolution, measured in USD. Looking at the historical price chart for uranium per pound in dollars, we can observe both substantial price surges and steep declines:
One of the most notable peaks occurred in 2007, similar to the oil price spike in 2008. In 2011, a slight increase in production was disrupted by the Fukushima incident.
Types of uranium
There are three natural isotopes of uranium:
- Uranium-238 (U-238) is the most common isotope of uranium, which represents around 99.3% of natural uranium. It is a fissionable material, which means it can be used to generate nuclear energy.
- Uranium-235 (U-235) is the second most common isotope of uranium, representing only 0.7% of natural uranium. It is a fissile material, which means it can be used to generate nuclear energy but requires an enrichment process to increase its concentration.
- Uranium-234 (U-234) is an isotope of uranium present in very small amounts in natural uranium, which is formed through the radioactive decay of uranium-238. It has no significant applications in nuclear energy, but its presence can be used to track and control the movement and concentration of uranium in the environment.
It is important to note that uranium-235 and uranium-238 have very similar physical and chemical properties.
Why invest in uranium?
If you’re interested in the nuclear sector and seek an asset with low correlation to other investments, uranium can be a viable option. Investing in the uranium supply chain can help mitigate the volatility associated with the raw material.
Risks of investing in uranium
Investing in uranium comes with certain risks, including:
- High volatility. Investing in commodities can be particularly volatile since most are closely linked to economic cycles.
- Legislative and political risks. Government policies regarding the use of nuclear power plants for electricity generation can impact uranium investments.
- Disaster risk. Public concerns about radioactive contamination, exacerbated by major incidents like Chernobyl and Fukushima, pose a risk to uranium investments.
How to invest in uranium on the stock exchange?
Investing in uranium through shares
Directly investing in physical uranium isn’t possible due to its radioactive nature. However, you can indirectly invest through publicly traded companies, such as:
|Company||Gross M.||Operating M.||Net M.|
To invest in these stocks, use one of the best commission-free brokers to keep your costs low.
Investing in uranium through ETFs
An alternative to shares is to invest in uranium via funds. Here are some examples:
|Global X Uranium UCITS ETF USD Accumulating||URNU||0.65||-6.08||IE000NDWFGA5|
|Global X Uranium UCITS ETF USD Distributing||URND||0.65||–||IE000MS9DTS9|
|HANetf Sprott Uranium Miners UCITS ETF Acc||U3O8||0.85||-6.46||IE0005YK6564|
|VanEck Uranium and Nuclear Technologies UCITS ETF A||NUKL||0.55||–||IE000M7V94E1|
To invest in ETFs, have a look at the best ETF brokers.
Global X Uranium UCITS ETF USD
This ETF tracks the Solactive Global Uranium & Nuclear Components index, which includes companies involved in uranium exploration, mining, and refining. It was created on April 20, 2020, and has significant exposure to Canada, the USA, and South Korea.
HANetf Sprott Uranium Miners UCITS ETF Acc
This ETF follows the North Shore Sprott Uranium Miners index, which comprises global companies engaged in uranium production, mining, and refining. It was established on May 3, 2020, and has a substantial weighting in Canada, Australia, and the USA.
VanEck Uranium and Nuclear Technologies UCITS ETF A
This ETF tracks the MarketVector Global Uranium and Nuclear Energy Infrastructure index, offering a broader exposure to companies worldwide involved in uranium mining and nuclear energy infrastructure. It was created on February 3, 2023, and operates with a USD base currency.
Read more about investing in commodities
- Investing in metals
- Investing in oil
- Investing in precious metals
- Investing in silver
- Investing in water
In conclusion, uranium occupies a unique place in the energy landscape, serving as both a powerful source of electricity generation and a subject of ongoing debate due to its inherent risks and environmental concerns.
While investing in physical uranium is impractical due to its radioactivity, investors can access this sector indirectly through specialised exchange-traded funds or companies involved in uranium exploration and mining.
Who buys and uses uranium?
Uranium is primarily purchased by governments for use in nuclear power plants and military applications. The medical industry also procures some uranium. The United States, China, and France are among the largest buyers of uranium.
How long will uranium reserves last?
Uranium reserves are estimated to last for approximately 100 years, and finding new deposits is challenging and unlikely.
What is the price of 1kg of uranium?
The price of uranium varies based on its type, extraction complexity, and transportation costs. On average, 1 kilogram of uranium is valued at around $130.