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Uranium prices soar as policymakers go nuclear

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By Charbel Kadib
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3 minute read

Investors are flocking to uranium as the nuclear power debate resurfaces across the globe, including in Australia.

The global push to reduce carbon emissions has renewed interest in nuclear power as a cleaner alternative to fossil fuels.

In Australia, federal Opposition Leader Peter Dutton has backed nuclear power as part of the Liberal–National Coalition’s plan to achieve the net-zero emissions target by 2050.

“…The latest technology, zero emissions nuclear, has been adopted by almost 50 countries around the world,” Mr Dutton said last month.

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“In Ontario (Canada), which is probably a pretty comparable market to ours, they’ve got 60 to 70 per cent of nuclear feeding into their market to firm up the renewables there. They’re paying half the cost of electricity that we are in our country.”

Resurgent interest in nuclear power, combined with recent supply shortages, has resulted in a surge in uranium prices, which have hit a 12-year high.

According to David Tuckwell, Global X ETFs senior product and investment strategist, Australia – a rich source of uranium – may need to consider lifting its 25-year ban on nuclear power to keep pace with its international peers.

“The war in Ukraine has been a sore spot for the industry as Russia controls roughly 6 per cent of the global supply, as well as more than 40 per cent of the world’s enrichment and refinement facilities,” he said.

“Niger, Africa’s top uranium supplier, is in political strife threatening 4 per cent of the global supply, and Canada’s Cameco, the second largest uranium miner in the world, is having trouble at two of its facilities.

“This temporary supply weakness may only be an indicator of the deficit to come as the major force behind uranium’s rally remains the significant increase in global demand.”

Mr Tuckwell cited projections from the World Nuclear Association, which expects annual uranium demand to reach 130,000 tonnes in 2040 – doubling current levels.

“While the conversation around nuclear in Australia is still in its early stages, the fact that a government analysis has been conducted and talks have restarted shows that Australia is feeling the international sentiment shift and that uranium is definitely back on the radar.”

Speaking to InvestorDaily, AMP Capital chief economist Shane Oliver said he is not surprised investors are increasing their portfolio exposure to uranium.

“I think that technology has come a long way from where it was in the 1960s and ’70s, and that’s why investors probably have to look at it,” he said.

However, Mr Oliver does not expect the nuclear energy case to make inroads in Australia, given entrenched fears about the safety risks.

“In terms of whether it’s going to happen in Australia, I’d be a little bit sceptical. It’s possible, but I think it’s more unlikely than likely,” he said.

“…It’s still seen as risky, it seems to create fear, which makes me think it probably won’t happen in Australia.

“…It polarises the community to such a great degree in Australia, it’s hard to see us getting over that.”

Uranium prices soar as policymakers go nuclear

Investors are flocking to uranium as the nuclear power debate resurfaces across the globe, including in Australia.

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