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👋🏼,

Let’s be honest - uranium isn’t exactly the Beyoncé of commodities. I didn’t really think too much about it until a year or so ago when I started reading @fergs excellent newsletter and writings on this under-the-radar investment area.

It’s not shiny like gold, it doesn’t scream luxury like diamonds, and it definitely doesn’t have the Hollywood glam of oil gushers. 

Nope, uranium is just a lumpy, grayish metal buried in rocks, quietly doing its thing. But this unsexy underdog is secretly a powerhouse.

Literally.

It fuels nuclear energy, packs more punch than a ton of coal, and might just be the most important element you’ve never thought about. So, yeah, it’s possibly time to give uranium its moment in the spotlight. 

I’ll cover:

• First up, I’ll explain what Uranium does and why it’s important
• Why is it back in the spotlight?
• Why is uranium controversial? 
• Uranium - state of the market
• Big players in the Uranium market
• So, why is uranium getting pricier?
• How to invest in Uranium, from individual stocks to ETFs

What’s the deal with uranium and why is it important?

What’s the deal with uranium and why is it important?

OK, so you might know it as the stuff that powers nuclear energy, but did you know each tiny uranium pellet packs the same punch as 481 cubic meters of natural gas, 564 liters of gasoline, or a ton of coal? This blew my mind, tbh. 

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Nuclear energy supplies about 10% of the world’s electricity, thanks to 440 reactors humming along worldwide. And this is just the start: 60 more reactors are under construction, with another 110 planned and 300 proposed. 

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Translation? The demand for uranium is only going up.

From Rock to Reactor…

Turning uranium into fuel isn’t straightforward. 

It starts with mining uranium ore, which is processed into "yellowcake" (a fancy name for uranium oxide). Then comes a conversion into uranium hexafluoride, enrichment to boost its energy-producing isotope (uranium-235), and finally, shaping it into the fuel pellets that power nuclear reactors.

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Why is Nuclear Energy Back in the Spotlight?

For one, it’s clean. Unlike coal or gas, nuclear plants don’t emit carbon dioxide or other greenhouse gases. They’re also incredibly reliable, pumping out electricity 24/7 to keep the lights on, the hospitals running, and those traffic lights blinking. On top of that, nuclear energy is one of the safest ways to generate power, with fewer deaths per unit of electricity produced than almost any other energy source.

Many people think the uranium market is gearing up for a significant boost heading into 2025, driven by rising global energy demand and increasing support for nuclear power. Tracy Shuchart, CEO of Hilltower Resource Advisors, predicts a strong year ahead, bolstered by the pro-energy stance of the incoming Trump administration. She highlights that uranium prices, currently consolidating around $80–$85 per pound, could exceed $100 in 2025, creating a lucrative environment for uranium explorers and producers.

Scott Melbye, EVP of Uranium Energy Corp, shares a similar outlook, emphasizing the importance of domestic uranium production in light of geopolitical shifts, such as potential U.S. bans on Russian imports. Melbye also points to factors like electrification, AI-driven data centers, and the broader green energy transition as key drivers of uranium demand. These trends, coupled with reduced regulatory barriers under Trump's "America First" policies, suggest a brighter future for nuclear energy in the U.S.

Despite recent price volatility, with uranium dipping below $80 in November after surpassing $100 earlier this year, the market sentiment has shifted. Industry insiders believe the growing recognition of nuclear power as a critical component of the energy mix could position 2025 as a standout year for the uranium sector. With energy security and sustainability taking center stage, the path forward looks promising for nuclear energy and the companies supporting it.

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Why is uranium controversial? 

My goal with this guide isn’t to delve into the ethics or controversies surrounding uranium mining, but rather to highlight it purely as an investment opportunity. 

That said, it’s impossible to ignore the challenges that have shaped public perception of this industry. Uranium mining has a complicated legacy, tied to significant environmental and health concerns, particularly in its early, unregulated days. Abandoned mines and contaminated sites continue to pollute ecosystems with radioactive materials, leaving long-lasting scars on affected communities.

Health risks have also played a major role in this controversy. Studies link uranium mining to illnesses like kidney disease and autoimmunity, particularly for those living near mines. Indigenous communities have faced an outsized impact - such as the Navajo Nation, where uranium mining left nearly a third of the population with traces of uranium in their bodies. These issues aren’t just relics of the past; they’re still a factor in debates around uranium mining today.

Even with modern advancements, concerns linger about long-term radioactive waste and its potential to contaminate water sources for generations. While proponents argue that stricter regulations and new technologies can address these issues, skepticism remains strong, especially given the industry’s history. For investors, this skepticism can present both risks and opportunities, as public perception and regulatory challenges continue to shape the market landscape.

Uranium - state of the market

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In September 2024, the global average price per pound of uranium stood at roughly 64.63 U.S. dollars. Uranium prices peaked in June 2007, when it reached 136.22 U.S. dollars per pound. 

The average annual price of uranium in 2023 was 48.99 U.S. dollars per pound.

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Who Controls the Uranium Market?

The uranium industry is dominated by a few big players:

• Kazatomprom (Kazakh government-owned)
• Cameco
• Uranium One (Russian government-owned)
• Orano (French government-owned)
• CGN (Chinese government-owned)

These five companies produce a whopping 77% of the world’s uranium.

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So, Why Is Uranium Getting Pricier?

For years, uranium prices have been too low to cover production costs. Mines shut down, new projects stalled, and the market got tighter. Now, demand is heating up, and several factors are driving up prices:

1. New nuclear plants in countries like China, India, and the Middle East.
2. Depleted uranium stockpiles.
3. The rise of Small Modular Reactors (SMRs) - compact, safer, and cheaper versions of traditional reactors.
4. Geopolitical tensions, like the war in Ukraine, disrupting supply chains.
5. The U.S. is pushing for more domestic production to cut reliance on imports.

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How to Invest in Uranium

Individual Uranium Stocks

If you’re okay with picking individual companies, uranium stocks are a direct way to dive into the sector. Basically, you’re investing in companies that mine or explore for uranium, the fuel that powers nuclear energy.

Here are a few names to know:

• Cameco Corp. (TSX: CCO): This is one of the big players - think of it as the uranium equivalent of a household name. Cameco has a strong track record and major clients locked into long-term deals.
• NexGen Energy Ltd. (TSE: NSE): This company is developing one of the most promising uranium deposits in Canada. It’s still in the exploration phase, but investors see big potential.
• Uranium Energy Corp. (NYSE: UEC): Based in the U.S., this company focuses on a mining process called "in-situ recovery," which is cheaper and more environmentally friendly.
• F3 Uranium (TSX.V: FUU): A smaller company that’s still exploring for uranium, but it operates in Canada’s Athabasca Basin, which is known for super high-grade uranium deposits.
• Skyharbour Resources (TSX.V: SYH): Another small-cap explorer with a handful of uranium projects in Canada.

Uranium ETFs (Exchange-Traded Funds)

Not sure about picking one company? ETFs might be a better entry point.

Here are a few uranium ETFs worth checking out:

• Global X Uranium ETF (NYSEARCA: URA): This is a popular option that includes uranium miners and companies involved in nuclear energy.
• VanEck Uranium + Nuclear Energy ETF (ARCA: NLR): Offers exposure to both uranium producers and companies in the nuclear power sector, giving you a broader energy angle.
• Sprott Uranium Miners ETF (NYSEARCA: URNM): This one’s all about uranium miners, so it’s more focused on the raw material side of things.
• Global X Uranium Index ETF (TSX: HURA): A Canadian ETF for uranium investors who prefer staying closer to home.

Physical Uranium Trusts

If you want a simple way to bet on uranium prices without owning mining stocks, physical uranium trusts are an interesting option. These trusts literally buy and store uranium, so their value rises or falls based on the price of the material itself. It’s a low-maintenance way to track uranium prices without worrying about company performance or market volatility.

Here are two to consider:

• Sprott Physical Uranium Trust (TSE: U.U): This trust stockpiles uranium in secure facilities. When uranium prices go up, so does the value of the trust.
• Yellow Cake plc (LON: YCA): A UK-based trust that holds uranium oxide. It’s like owning uranium, but without the logistical nightmare of storing radioactive materials.

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Hope this deep dive was helpful!

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Jason

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DISCLAIMER: None of this is financial advice. Finbrain is strictly for educational purposes.

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