Uranium’s Bright Future

A metal that seems to have been forgotten after the Cold War is making a return. Introducing: Uranium. However, this time it has an all-new look. This is the Third bull market for Uranium since the Cold War, as demand continues to exceed the supply in the world. This is not only important to uranium mining companies but also to economies overall.

Rise of Nuclear

With more and more countries setting up nuclear energy initiatives thanks to more effective waste management technology, the rate at which power plants are being built is significantly increasing. Nuclear energy is considered to be renewable, thus it has become more popular as countries start to transition away from fossil fuels.

Diversifying Demand and Market Trends

Not only that, but Western markets are moving away from Russian energy exports and buying uranium from other international markets, thus diversifying demand. With the cost of electricity rising due to the war, the prices of Uranium are far more acceptable now. This demand is currently at approx. 200 million pounds, which is 40 million pounds greater than the current demand. Furthermore, analysts are expecting an average supply deficit of 35 million in the next decade.

Many uranium companies are now increasing the scale of their mining operations. For instance, Cameco’s River McArthur Project in Saskatchewan Canada plans to increase its uranium production to 22 million pounds this year. This growth potential has allowed the sector to yield tremendous returns, with prices growing towards 93 dollars a pound.

Investment Opportunities and Strategies

However, to meet the market’s base demand, much more production is necessary. Opening a new uranium mine can take 15 years to come on line from discovery to online production, and given the scarcity of such sites, meeting the demand has become even more difficult. In the words of Leigh Goering, a renowned natural resource investor “the fundamentals of the market are ratcheting tighter”.

There are several ways you can take advantage of this sector’s growth. There are companies such as Denison Mines Corp.(DNN), NextGen Energy(NXE) and Uranium Royalty(UROY). However,. Given the risk in the sector, these companies can grow and fall at any time, especially if they experience issues in the tedious and expensive production process. Thus, the best way to minimize risk in this area would be to invest in ETFs such as Sprott Uranium miners ETF(URNM) and Global X Uranium ETF(URA). All investments are made at one’s own risk.