The best way to power the return of super uranium

After being in a bear market for a decade, uranium made an impressive comeback as Russia’s war on Ukraine exacerbated the global energy crisis and prompted Europe to seek to replace Russian oil and gas. uranium prices It has more than doubled in the past two years from $30 a pound in January 2021 to $64, thanks in large part to the fact that nuclear power is now seen as indispensable in the Global campaign to decarbonize. Currently, uranium futures are trading at around $52 a pound, which is a unique setup that doesn’t necessarily rise and fall along with other commodities.

We will see increased investment in alternative energy and I believe that nuclear energy is one of the best forms of green energy with zero emissions, and nuclear energy currently accounts for only 10 percent of the world’s energy productionNina Mishra, director of ETF research with Zacks Investment Research in Chicago, told the Globe and Mail.

Countries feeling the worst of the energy crisis have been restarting stalled nuclear plants or extending the life of existing ones. For example, France promised Restarting all its nuclear reactors To avoid an energy crisis during the winter while Germany is seriously considering a radical shift in phasing out nuclear power. Germany decided to stop using atomic energy in 2011, with the last remaining plants closed this year.

Meanwhile, China revealed an ambition Plans to build 150 nuclear reactors At a staggering $440 billion cost over the next 15 years as the country looks to become carbon neutral by 2060.

This number of reactors is more than what the entire planet has built in the past 35 years, which is a third of the current A global fleet of 440 reactors. China is the largest emitter of greenhouse gases, but says its nuclear program will play a crucial role in replacing its 2,990 coal-fired generators along with wind and solar power. In fact, Beijing says its nuclear plans could prevent about 1.5 billion tons of annual carbon emissions, more than the annual emissions of the United Kingdom, Germany, France and Spain combined.

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And of course, it’s not just about carbon emissions. It is no longer so. For China, nuclear power is about cost-efficiency.

About 70% of the cost of Chinese reactors is covered by loans from state-backed banks, which means significantly lower costs. In fact, Francois Morin, director of China at World Nuclear AssociationHe says China can generate nuclear power at just $42 per megawatt-hour thanks to the 1.4% low interest rate on infrastructure project loans, making it much cheaper than coal and natural gas in many places.

At the higher end of the spectrum, in advanced economies, a 10% interest rate means nuclear costs $97 per megawatt-hour, more than double the Chinese tab but still cheaper than natural gas now trading around $210 per megawatt-hour. megawatts per hour. megawatt-hours. The World Nuclear Association estimates that China can build nuclear plants at about $2,500 to $3,000 per kilowatt, about a third of the cost of the most recent nuclear projects in the United States and France.

Another bullish catalyst for uranium: strong market fundamentals. Annual consumption currently exceeds production while surplus uranium stocks are depleted.

Source: Financial Times

Play Uranium Rally

Macquarie Bank Considered long-term bullish for uranium, it raised its yellowcake price forecast by 17 percent to $55/lb for fiscal year 2024 and by 21 percent to $60/lb for the following year based on increased contracting activity, a renewed focus on the security of Uranium. Energy and the expected shortfall in the supply of nuclear fuel.

Macquarie loves Paladin Energy (OTCQX: PALAF) and Boss Energy (OTCQX: BQSSF) because they have all the necessary permits and are operating at major uranium sites (Australia) with clear paths to a very optimistic market. Both companies develop, explore and operate uranium mines in Australia.

ETF investors have limited options to play the expected nuclear renaissance due to uranium’s protracted unfavorable position since the 2011 Fukushima disaster in Japan, as well as its niche role in commodities.

Investors have two options for US ETFs: Global X Uranium ETFs (NYSEARCA: URA) and Sprott Uranium Miners ETF (OTCPK: URNM). URA has $1.76 billion in assets under management (AUM) with an expense ratio of 0.69% while URNM has $1 billion in assets and an expense ratio of 0.85%.

The horizons ETF Global Uranium (TSX: HURA) is an exchange-traded fund launched and managed by Horizons ETFs Management (Canada) Inc. The fund invests mainly in stocks of uranium mining companies, with Cameco Corp. (NYSE: CCJ), Yellow Cake BLC. (OTCQX: YLLXF) and Kazatomprom National Atomic Corporation It represents more than 61% of its holdings.

The main difference between the two US ETFs from HURA is their physical uranium holdings through it uranium physical sprout box units. Sprott units make up 8.7 percent of the URA portfolio.

Investors can also check uranium physical sprout box (OTCPK: SRUF), which are traded on the Toronto Stock Exchange in US and Canadian dollars. The fund, which began trading just over a year ago, is the largest publicly listed physical uranium fund currently in operation. SRUF has $3 billion in assets and an expense ratio of 0.96%.

By Alex Kimani for Oilprice.com

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