Uranium stocks and ETFs to watch

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 environment.

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 lightbulbs. However, these uses are slightly outdated and not practised as much anymore.

These days, uranium is primarily used within nuclear reactors and power plants in order 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.

Low and non-harmful concentrates of uranium are present in rocks, soil and water worldwide. Unlike other non-renewable energy sources such as coal and natural gas, specialists believe that 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.

The top uranium producing countries are as follows, according to the World Nuclear Association:

Cameco is the world’s largest publicly traded uranium company that has 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 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 word. 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 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 decided to step down.

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.

Energy Resources is an Australian mining company and a subsidiary of Rio Tinto, which owns roughly 70% of the company. It is one of the largest uranium producers in the world and owns part of the Ranger Mine along with its parent company. Although mining stopped in 2012, it is still producing material from stockpiled uranium ore, and the Ranger Mine produced 3.8m of uranium throughout 2019. ERA sells its product to electric utility companies across Asia, North America and Europe. The company has previously come under fire for over 200 environmental incidents that have occurred at the Ranger Mine.

BHP is another leader in the global mining industry. Founded in 1885, it is an Anglo-Australian metals and petroleum producer that has headquarters 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. This mine produced 6% of total global supply in 2019 with estimates of 347,000 tonnes of contained uranium oxide.

Uranium Participation is a Canadian holding company that invests the majority of its assets into uranium, both in the form of uranium oxide in concentrates (U3O8) and uranium hexafluoride (UF6). The company has the investment objective of capital appreciation, with the hope that as the price of uranium increases, so will the value of its holdings. Uranium Participation’s strategy is to invest in uranium holdings rather than entering into short-term derivative contracts​, and it also earns income through lending portions of its uranium holdings to third parties on occasion. The company was founded in 2005 and is based in Toronto.

Yellow Cake is a British uranium company that founded in 2018 and has headquarters in Jersey. It offers direct exposure to the spot uranium price without any associated risks of mining, exploration or processing that comes with an operating company. The company purchases mainly 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 own 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.

The Global X Uranium ETF tracks the Solactive Global Uranium & Nuclear Total Retire Index, which contains a broad range of companies involved in the mining of uranium and the 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 Kazatomprom, Cameco, NexGen Energy, Denison Mines, Uranium Energy Corp and Sibanye Stillwater. In the first quarter of 2021, the Global X Uranium ETF saw returns of 46% and was trading at an all-time high, signalling promising potential for the uranium market.

The North Shore Global Uranium Mining ETF is made up of a basket of companies that are involved in the mining, exploration, development and production of uranium. It also holds companies that hold physical uranium at spot price, as well as uranium royalties or other non-mining assets. The fund is designed to track the North Shore Global Uranium Mining Index, which is a market-cap-weighted index for the uranium industry. Its two biggest holdings are Kazatomprom and Cameco, as well as Yellow Cake and Uranium Participation Corp, representing a mixture of uranium-based shares. In the first quarter of 2021, the North Shore Global Uranium Mining ETF saw returns of almost 42%.