Uranium Market Primed For Growth

The case for uranium today is perhaps the strongest it’s been in a decade. The 2011 Fukushima Daiichi nuclear disaster in Japan resulted in a lengthy setback for uranium, as plans for nuclear power development were tabled globally and uranium’s use became a highly contested issue. Persistent oversupply kept prices down and the sentiment around uranium muted. But a decade later the case for uranium is strengthening as countries prioritize climate change agendas and limiting carbon emissions while seeking to distribute power to millions of new entrants to the middle class. With supply and demand dynamics becoming more favorable and geopolitical risks supportive, we believe uranium may see its fortunes turn over the next decade.

Key Takeaways:

  • Nuclear power emits nearly 70 times less carbon dioxide than coal, making it significantly less intensive carbon source than fossil fuels
  • The world’s largest uranium mine, Cigar Lake, is closed, and the world’s largest uranium producer, Kazatomprom, pledged to extend its 20% production cuts through 2022, shifting the market dynamics to support higher prices
  • The Global X Uranium ETF (URA) offers efficient access for investors to access the uranium industry

Fossil Fuel Reductions Set to Keep Uranium Demand High

Nuclear power, as a low carbon emissions energy option, is the biggest source of uranium demand globally. Nuclear power emits far less carbon dioxide than traditional fossil fuels, with emissions of just 12 grams of CO2 per kW/h – the same as offshore wind energy.1 By comparison, coal emits a staggering 820 CO2 per kW/h.2

Carbon Dioxide emissions

Growing social and political pressure for countries to lower their fossil fuel footprint is one reason why global electricity generation through nuclear is expected to increase by 650 TWh from 2019 to 2040, compared to a growth of just 210 TWh from 2000 to 2019. Only wind and solar are expected to have a higher growth rate in electricity generation than nuclear from 2019-2040 compared to the 2000-2019 period.3 Nuclear power’s share of electric generation is 10% today, but it’s mostly in lower-growth, developed markets like the US and Europe.4

China is expected to be a major source of uranium demand in the future. China’s share of domestic electricity usage from nuclear power increased from 2% to 5% from 2009 to 2019.5 The country is also ahead on its mission to reduce fossil fuel emissions, with a 2060 goal of reaching carbon neutrality, meaning net-zero carbon emissions.6 Of the 53 nuclear reactors currently under construction globally, China leads the way with 16, followed by India with 6.7 Nuclear is something of a trend in Asia, as the broader region accounts for about 60% of the new reactors under construction. Nuclear power plants do not cause air pollution while in operation and can bring massive power supply on line compared to standard wind and solar projects. Nuclear’s output capacity is around 2.5 to 3.5 times more than a typical wind or solar project.8 For populous, fast-growing countries like China and India, that also suffer from devastating pollution, nuclear is a critical energy source.9 Nuclear reactors can also be a more efficient energy source than renewables. According to the US government, a typical nuclear reactor can produce as much power as either 431 utility-scale wind turbines or 3.1 million solar panels.

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Disclosure: The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate ...

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