The growth of uranium as a compelling energy growth story is directly reflected by the numbers of heavyweight investors that are taking the plunge in the sector, with uranium ETF investment growing 20-fold in just the past three years. Whilst groups like Sprott led the investment charge initially, many other investment funds are now seeing the attraction of investment in the nuclear sector, driven by the strength in demand and supply fundamentals.
Importantly too, uranium sector fundamentals are the least exposed to China’s economic cycle and secular and cyclical challenges. There have been unprecedented number of announcements for nuclear power plant restarts, life extensions and new builds, which in turn means that utilities are accelerating their purchases under long-term agreements, which are on track to exceed last year’s 10-year high. Increasing contracting from utilities, as opposed to financial entities, has been the primary driver for the rise in the uranium price year to date.
The International Energy Agency (IEA) estimates suggest that global nuclear capacity needs to double by 2050 from 2020 levels, if the world is to meet its current net zero targets. Demand is being driven by the US, Europe, Asia and Africa, with new reactors being built, older facilities having their lifespans extended, and China is continuing to build out its nuclear fleet.