Uranium ETFs: Promising Picks as Nuclear Energy Resurges
The sentiment among uranium is one of optimism, with expectations of a further recovery in uranium prices in 2023. This positive outlook is driven by the resurgence of nuclear energy, as several developed countries are extending the lifespan of existing nuclear power plants and investing in new constructions. In the face of the ongoing energy crisis and the need for reliable, low-carbon power sources, nuclear energy is gaining popularity once again.
Changing Landscape of Nuclear Energy
Countries such as Japan, France, South Korea, India, the UK, the United States, and Germany have recently announced plans to expand their nuclear power programs. Japan, in particular, has been a major catalyst for the increased demand for uranium. The restart of its 40 existing reactors would raise the structural demand for uranium, according to Rick Rule, CEO of Sprott US Holdings, as quoted on an article published on mining.com.
Supply and Demand Dynamics
The demand for uranium is expected to increase significantly in the coming years, while the supply remains tight. Currently, approximately 190 million pounds of uranium are consumed annually, while only around 130 million pounds are extracted from the ground, creating a supply deficit.
This supply-demand imbalance is contributing to the upward pressure on uranium prices. Bank of America’s Global Research projects uranium spot prices to rise by 34% by the end of 2025, as quoted on etf.com.
The G7 is seeking to throw Russia, a key producer, out of the nuclear energy supply chain. In May, a bill to ban imports of Russian uranium moved further through the U.S. House of Representatives. The Prohibiting Russian Uranium Imports Act is not law, but if enacted this fall, it would technically stop all buying of Russian uranium within 90 days, the etf.com article pointed out.
Addressing Energy Poverty and Ensuring Sustainability
Beyond the market dynamics, the resurgence of nuclear energy carries broader implications for addressing global energy poverty and ensuring a sustainable future. The mining.com article indicated that Rick Rule pointed out that billions of people experience energy poverty, emphasizing the need for increased energy production from all sources.
ETFs in Focus
VanEck Uranium+Nuclear Energy ETF (NLR)
The underlying MVIS Global Uranium & Nuclear Energy Index tracks the overall performance of companies involved in uranium mining or uranium mining projects; the construction, engineering and maintenance of nuclear power facilities and nuclear reactors; the production of electricity from nuclear sources; providing equipment, technology and/or services to the nuclear power industry. The fund charges 61 bps in fees (see all Alternative Energy ETFs here).
Global X Uranium ETF (URA)
The underlying Solactive Global Uranium & Nuclear Components Total Return Index seeks to tracks the price movements in shares of companies which are active in the uranium industry. The fund charges 69 bps in fees.
Sprott Junior Uranium Miners ETF (URNJ)
The underlying Nasdaq Sprott Junior Uranium Miners Index track the performance of companies that derive at least 50% of their revenue and assets from mining, exploration, development, and production of uranium; earning uranium royalties; and supplying uranium. The fund charges 80 bps in fees.
Sprott Uranium Miners ETF (URNM)
The underlying North Shore Global Uranium Mining Index seeks to track the performance of companies that are involved in the mining, exploration, development, and production of uranium, as well as companies that hold physical uranium or other non-mining assets. The fund charges 85 bps in fees.
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)
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VanEck Uranium+Nuclear Energy ETF (NLR): ETF Research Reports
Global X Uranium ETF (URA): ETF Research Reports
Sprott Uranium Miners ETF (URNM): ETF Research Reports
Sprott Junior Uranium Miners ETF (URNJ): ETF Research Reports
