How to Invest in Uranium
If you’re into trading commodities or energy stocks, you’ve likely heard about Uranium in recent years. So what is Uranium? It’s a naturally occurring, silvery metal that holds quite the radioactive charge. Uranium is mined in two specific ways: open pit mines and in-situ leaching. There has to be a number of precautions taken when mining Uranium. Over-exposure to humans can cause cancer or other diseases due to the high amount of radiation. Inhaling dust from Uranium mining is a particularly damaging method of exposure.
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How to Invest in Uranium
A vast percentage, about 60%, of the world’s Uranium is produced in Kazakhstan. Other resource rich countries like Russia, Namibia, Australia, Niger, and China also produce a large amount. But the highest grade Uranium is found in the Athabasca Basin in Saskatchewan, Canada. Many foreign mining companies have projects there, as well as a number of Canadian ones.
Is Uranium critical to the future of our world? Let’s say it is complicated! As you probably know, Uranium and nuclear energy still has some stigmas surrounding it. From events like Chernobyl to the Fukushima meltdown in Japan, nuclear power plants and reactors are still thought of as dangers because of the potential ramifications. Still, as we’ll discuss, nuclear energy has a lot of positives in terms of moving towards a future of clean energy. Let’s get to it!
Is Nuclear Energy Superior?
Yes! In fact, nuclear energy is widely considered as the cleanest of the clean energy sources. Surprisingly, nuclear energy gives off no carbon emissions and is extremely environmentally friendly. There is a debate that nuclear energy is actually not considered a renewable energy. While renewables like solar or wind energies replenish themselves naturally, nuclear energy requires radioactive fuel which is manmade.
A nuclear power plant has the capacity to generate hundreds of times the energy of wind farms or solar parks. It does require some technology and some human monitoring and intervention, but if they are properly maintained, then these power plants are tremendous sources of clean energy. In fact, there’s a reason why many of the world’s powers are heavily investing into nuclear plants. It is believed to be the fastest way of providing sustainable energy to the world’s poorest countries.
Is it superior though? So electricity itself is essentially the same no matter how you produce it. So it’s the effort and cost of creating this electricity that makes one method better than the other. Nuclear plants can create a lot of energy in a short period of time. It also takes some investment and manpower to operate and maintain. That also goes for solar, wind, and hydro energy facilities. Another benefit of nuclear energy is that the power plants take up far less land for the amount of output they can provide.
Disadvantages of Nuclear Energy
There are always going to be disadvantages to using Uranium and nuclear energy. The first is that people are always going to perceive nuclear energy as dangerous. And it is, in a way. A nuclear meltdown can be catastrophic for the surrounding areas. It can eradicate life in a hurry, and make the region uninhabitable for years, if not decades. The cost of building these plants is a high initial investment, and can take up to ten years or more to build.
Uranium itself has its dangers from mining to producing to storage. What about its abundance? Uranium isn’t a scarce mineral but it does have about a 230 year supply according to some estimates. This is based on current use rates so if we increase our reliance on nuclear energy, we could run out a lot sooner. Uranium is not renewable, meaning it is a finite resource. Every bit we uncover means we have an ever dwindling supply.
Radioactive waste and runoff is another crucial part of this. What good is clean energy if the waste from the plants is also damaging the environment? We need to find a sustainable way of dealing with the aftereffects of implementing nuclear energy. It sounds bad right? Well, technology can always improve and creative solutions can be found. None of these should be reasons to not use nuclear energy!
How to Invest in Uranium
So if you’re bullish on clean energies, how can we begin to invest in Uranium? Well stocks in Uranium companies are the most obvious way. There is a long list of Uranium mining companies that trade in both the United States and Canada. You can trade Uranium futures on the New York Mercantile Exchange, although the market isn’t anywhere as robust as futures contracts for oil or gold. They are traded in lot sizes of 250 lbs, and are currently trading at around $47.00 per contract.
So let’s talk about Uranium stocks! Like with most precious metals, a majority of the publicly traded companies are miners and producers. There isn’t much in terms of royalties or streaming Uranium like there is with gold. These companies aren’t necessarily highly profitable or cash-flow heavy either. This means that unlike other energy stocks, you might not be seeing a dividend payment for being a shareholder. In exchange you’ll likely see higher gains over the next few years compared to stocks in the gold or oil sectors. Let’s take a look at some of the best Uranium stocks to invest in for 2022!
Cameco Corp (NYSE:CCJ)
Cameco is widely seen as one of the largest Uranium producers in the world. It is actually a Canadian company based in Saskatchewan, that operates primarily out of the Athabasca basin. Its stock is dual-listed on the NYSE and the Toronto Stock Exchange. Cameco has the infrastructure to supply over 30 million pounds of Uranium on an annual basis. It also holds several hundred million pounds of Uranium in reserves as both a supply and as an investment as the price continues to rise. Its land holdings and exploration region spans over 2.1 million acres. The stock does pay a 0.41% annualized dividend yield, which isn’t much, but it’s something!
Denison Mines (TSE:DML) (NYSEAMERICAN:DNN)
Denison Mines is a Toronto-based Uranium miner that owns 300,000 hectares of exploration land in the Athabasca basin. The stock is also dual-listed on the Toronto Stock Exchange and the NYSEAmerican exchange. It also holds over 2.5 million pounds of Uranium in storage as an investment. Denison is a much smaller company than Cameco, but its wide area of exploration and numerous Uranium-mining projects make it a must add to your Uranium watchlist.
Uranium Energy Corp (NYSEAMERICAN:UEC)
Uranium Energy Corp is an American mining company based out of Corpus Christi, Texas. It is a mining company that utilizes the in-situ leaching process. It has seven Uranium mining projects in operation and has one of the largest supplies of Uranium in storage. Uranium Energy Corp is diversified, as it owns a major stake in Uranium Royalty Corp, the only major Uranium streaming and royalty company in the industry. A majority of its projects are located in the United States as well as Latin American markets like Paraguay.
Global X Uranium ETF (NYSEARCA:URA)
This ETF provides a wonderful global approach to Uranium. It includes mining companies from countries like Kazakhstan, Canada, Australia, and Japan. This ETF has an expense ratio of 0.69% and total assets under management of $1.4 billion. It holds 50 different stocks and pays a 30-day SEC yield distribution of 1.03% on a semi-annual basis.
Sprott Uranium Miners ETF (NYSEARCA:URNM)
A similar portfolio of global Uranium miners, this Sprott ETF holds 37 different companies from markets like Canada, Kazakhstan, Australia, and the United Kingdom. This ETF has a management fee of 0.85% and net assets under management of about $828 million. It pays an annual distribution that has fluctuated wildly due to the volatile price of Uranium.
Frequently Asked Questions
As far as investments go, Uranium is a bullish play on clean energy, specifically, nuclear energy. Is it a good investment? It certainly seems like it right now. Most major governments are making investments in the nuclear energy industry. As the world shifts to lower carbon outputs and clean energy sources, look for nuclear to get pushed as a more efficient source. It doesn’t come without its risks of course. A meltdown can be catastrophic and Uranium itself isn’t the safest material to handle. Still, the pros outweigh the cons here, and investing in Uranium stocks now could yield significant gains over the next couple of decades!
$URA is the most popular uranium etf. There are a couple of Uranium-based ETFs that you can invest in if you can’t decide on which stocks to buy. ETFs are a great way to invest in an entire sector and hold a basket of Uranium miners.