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Currencies & Commodities

Uranium: not many investment plays

9 Nov 2021 6 month(s) ago

Uranium is likely to come back into fashion with the development of small nuclear reactors, but where are the investment options?

The global push for clean energy is gaining pace. It is likely to include nuclear power, which creates extremely low emissions. That means uranium may come back into fashion.

Uranium futures took off in July, probably because of the soaring prices of LNG and other fossil fuels. Perceptions seem to be shifting:

The creation of small, modular nuclear reactors is changing perceptions about the risks and benefits, with the Chinese especially being active.

The China National Nuclear Corporation (CNNC) in August launched construction of the first onshore small nuclear reactor in the world to gain a first mover advantage in the modular reactors market. In the country’s 14th Five-Year Plan period, nuclear power capacity is expected to reach 100 gigawatts (GW) including 70 GW in operation and 30 GW under construction.

The place to invest in uranium in the Australian market is the Olympic Dam mine in South Australia, owned by BHP. There was also the Ranger mine in the Northern Territory, owned by ERA, but processing of uranium ore must cease this year, with the area to be rehabilitated by 2026.

Olympic Dam is only one asset in the world’s biggest miner’s portfolio, so that does not give investors a way to invest direct in the commodity. Tellingly, stock analysts concentrate mainly on BHP's irone ore assets; uranium is not often mentioned.

What else is available? Opportunities to gain exposure to the commodity have been limited to two uranium funds, one trading on the Toronto Stock Exchange and a second listed on the AIM stock exchange in London.

There is another new entrant, according to Euroz Hartleys:

“ANU Energy, being established in Kazakhstan will be a uranium fund providing direct access for emerging market investors to commodity funds, sovereign wealth funds and state-owned enterprises.

Kazatomprom, the world’s largest producer of uranium) has announced investment in a physical uranium fund;The fund will hold physical uranium as a listen trust investment. Initial purchases will be financed through a founder’s round (48.5% Kazatomprom, 48.5% National Bank of Kazakhstan and fund manager at 3%) of US$50m; A second stage capital raising of up to US$500m from institutional and/or private investors is planned, with the proceeds to be used for additional uranium purchases.”

Interesting, but Kazakhstan is not likely to be the first choice for Australian investors. 

 

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