Uranium is a natural, non-renewable resource that is used as an alternative energy source to typical fossil fuels such as coal and natural gas. It is a highly unstable element used in nuclear power plants across the world. Although it is a commodity, uranium cannot be traded directly due to its radioactive nature. Instead, investors can gain exposure to uranium through stocks and exchange-traded funds (ETFs) that represent companies involved in the mining and production of uranium. Join us as we count down some top uranium companies to watch based on market capitalisation, growth potential and investor interest.
Introduction to the uranium market
What is uranium?
Uranium is a radioactive material that can be located and extracted in many countries throughout the world. It is part of the process of powering nuclear fission, which accounts for over 10% of the world’s electricity. Uranium is a relatively clean burning source, as a tiny amount can produce the same amount of power as coal, without the same harmful emissions that coal releases into the environment.
Properties of uranium
Uranium has an extremely high density — the highest atomic mass of any naturally occurring element.
In its refined form, it appears as a silver-white metal.
It is both malleable and ductile.
When finely divided, it can react with cold water and catch fire.
It is a relatively poor conductor of electricity.
Uranium forms compounds that are typically yellow or green in colour.
What is uranium used for?
Historically, uranium compounds were used as a colouring agent for household items, such as glassware, ceramics and glazes, and as mordants for electric conductors such as light bulbs. However, these uses are not practised as much anymore.
Nowadays, uranium is primarily used in nuclear reactors and power plants to generate electricity. It is also used for military purposes, such as powering submarines and nuclear weapons. The nuclear fuel cycle shows how uranium differs in each stage, from when it is mined, milled, and enriched at the start to when the fuel is fabricated, stored, and reprocessed towards the end of the cycle.
Where is uranium found?
Low and non-harmful concentrations of uranium are present in rocks, soil, and water worldwide. Unlike other non-renewable energy sources, such as coal and natural gas, specialists believe there is a much larger global supply of uranium that has yet to be discovered. This means that uranium may be an effective energy source in the long term.
Largest producers of uranium in the world
The top uranium-producing countries are as follows, according to the World Nuclear Association:
Country | Uranium production in 2022 (tonnes) | % of world total |
Kazakhstan | 21,227 | 43% |
Canada | 7,351 | 15% |
Namibia | 5,613 | 11% |
Australia | 4,553 | 9% |
Uzbekistan | 3,300 | 7% |
Russia | 2,508 | 5% |
Niger | 2,020 | 4% |
It is interesting to note that while Australia is the fourth-largest producer of uranium and has the largest amount of uranium resources globally, nuclear power is banned in the country. This may be due to the concerns surrounding the potential risks that nuclear stations and power plants present to the environment and the health of Australian citizens, which was triggered by the 2011 Fukushima disaster.
How has the Fukushima nuclear disaster affected uranium production?
In 2011, Japan’s Fukushima power plant was hit by a severe earthquake and tsunami in the region, causing the most severe nuclear accident since the Chernobyl disaster. This resulted in the meltdown of its reactors and the discharge of radioactive water, forcing residents to evacuate their homes.
Following this disaster, Japan’s nuclear power production dropped from 30% to just 2%. All nuclear plants in the country were either closed down or operations were suspended, and other countries became wary of nuclear power generation, cutting down on their operations. Because of this, the price of uranium has halved since 2011 and is struggling to regain its peak.
Nevertheless, as you can see from the table above, the decline in nuclear production from developed countries such as Japan has paved the way for emerging economies such as Kazakhstan and Namibia to take charge of the uranium market. Although many power plants are not in use anymore, each country that is part of the Paris Agreement must adhere to the rules of producing at least 20-22% of its energy portfolio in nuclear power, which will raise the demand for uranium once again.
Uranium stocks to watch
Cameco (CCJ:US)
Cameco is the world’s largest publicly traded uranium company with headquarters in Saskatoon, Canada. Founded in 1988, it is one of the largest global uranium producers, accounting for around 18% of uranium production. On average, the company has the capacity to produce more than 53m pounds of uranium concentrates annually. The company operates uranium mines in a number of countries, including Canada, the US, Kyrgyzstan, Mongolia and Australia, spanning over 1.7m acres of land. The company vows to safely and reliably produce uranium and nuclear fuel products to generate electricity at worldwide nuclear reactors.
Uranium Energy Corp (UEC:US)
Uranium Energy is an American uranium mining and exploration company. Founded in 2003, the company has headquarters in Texas and focuses its projects mainly throughout the southwestern US, in the states of Texas, Wyoming, Arizona, Colorado and New Mexico. It also has operations in Paraguay, which is one of the highest-grade Ferro-Titanium deposits in the world. Uranium Energy has one of the largest databases of historic uranium exploration in the US. The company is dedicated to providing low-cost fuel for emission-free electricity in order to contribute towards a cleaner environment overall.
Rio Tinto (RIO)
Rio Tinto is an Anglo-Australian mining company with headquarters in London. As well as being one of the largest global producers of uranium, it is also one of the largest companies in the UK by market capitalisation and is considered to be of blue-chip status. The company was founded in 1873. As well as uranium, Rio Tinto explores, mines and refines other precious metals and commodities such as gold, diamonds, copper, aluminium and iron. In 2020, the company’s destruction of the Juukan Gorge sacred caves in Australia caused public backlash, and Rio Tinto’s CEO stood down.
Fission Uranium Corp (TSX:FCU)
Fission Uranium is a Canadian mineral exploration company that focuses on the exploration and development of uranium assets. Its core concentration is developing the high-grade Triple R uranium deposit, which is part of the Patterson Lake South (PLS) project located in the Athabasca Basic. Triple R is the only existing major high-grade deposit in the region found at such a shallow depth. Since Fission Uranium was founded in 2013, the company has made a number of significant discoveries and has won awards for Mining Persons of the Year and Exploration of the Year.
BHP (BHP)
BHP is another leader in the global mining industry. Founded in 1885, it is an Anglo-Australian metals and petroleum producer headquartered in Melbourne. The company has one of the largest market capitalisations in the UK. Aside from uranium, BHP also focuses on the extraction and production of commodities such as iron ore, copper, coal, petroleum and nickel. It owns the Olympic Dam mine in Australia, which is one of the largest uranium deposits in the world.
Yellow Cake (YCA:GB)
Yellow Cake is a British uranium company founded in 2018, with headquarters in Jersey, England. It offers direct exposure to the spot uranium price without the associated risks of mining, exploration or processing that come with an operating company. The company mainly purchases uranium oxide (U3O8). It exploits a range of opportunities, such as commodity streaming, synthetic production and royalties, offering shareholders exposure to the price of physical uranium through its purchase and storage of the commodity. Yellow Cake primarily buys uranium on the spot market from the world’s largest seller, Kazakhstan-based company Kazatomprom.
Uranium ETFs to watch
An effective way to diversify your portfolio can be through ETF trading. Exchange-traded funds track the performance of major global indices to provide investors with exposure to companies involved in uranium production and nuclear generation. Learn about two significant ETFs that we offer on our platform in order to take advantage of this growing investment theme.
Global X Uranium ETF (ATOM)
The Global X Uranium ETF tracks the Solactive Global Uranium & Nuclear Total Return Index, which contains a broad range of companies involved in the mining of uranium and production of nuclear components. This includes the manufacturing of equipment, as well as extraction and refining of the element. Top holdings within the ETF include Cameco, Oklo, NextGen Energy and Nuscale Power.
Betashares Global Uranium ETF (URNM)
The Betashares Global Uranium ETF (URNM) offers investors access to major global companies engaged in uranium mining, exploration, development, and production, along with businesses involved in modern nuclear energy. The fund also includes companies that hold physical uranium or uranium royalties. Among its key holdings are Cameco Corp, NAC Kazatomprom JSC, Sprott Physical Uranium Trust, and Paladin Energy Ltd.
VanEck Uranium and Nuclear ETF (NLR)
The VanEck Uranium and Nuclear ETF aims to closely replicate the price and yield performance of the MVIS® Global Uranium & Nuclear Energy Index, before fees and expenses. This index is designed to track the overall performance of companies engaged in uranium mining or uranium mining projects with strong potential, as well as those involved in the construction, engineering, and maintenance of nuclear power facilities and reactors. It also includes companies producing electricity from nuclear sources and those providing equipment, technology, or services to the nuclear power industry. Key holdings in the ETF include Constellation Energy Corp, Oklo Inc, Public Service Enterprise Group, and Endesa SA.
What influences the price of uranium stocks?
Environment: Nuclear power generation is generally seen as cleaner and more eco-friendly than fossil fuels. Therefore, uranium stocks may make an attractive investment for those that are interested in making more environmentally conscious decisions.
Natural disasters: Natural disasters or accidents involving uranium or nuclear production, such as the Fukushima disaster, will most likely have a negative impact on the price of uranium due to negative market sentiment.
Politics: Each political leader may have a different stance on fossil fuels, nuclear power and the renewable energy market.
Price of other energy sources: If the price of uranium or share prices for uranium-based companies are lower than those of their fossil fuel counterparts, such as coal and natural gas, this may make a more attractive investment, and vice versa.
Government stimulus: Governments across the world often pledge to invest a certain amount of money and resources into nuclear research, raising interest and demand for higher uranium production.
Stay up to date with uranium news
As the world moves away from fossil fuels, there could be a greater dependency on nuclear power and renewable sources to meet the world’s energy demands. You should keep on top of market news to monitor the price of uranium and react appropriately to news events that may have an impact on your open positions.