Uranium (chemical symbol U) is a naturally occurring, silvery-white metallic chemical element that is used to power nuclear reactors to create electricity (1). A uranium atom has 92 protons and 92 electrons, giving it the highest atomic weight of all naturally occurring elements.

Discovered in 1789 by German chemist Martin Klaproth

 in the mineral pitchblende, uranium was initially used as a colorant for ceramic glazes and for tinting in early photography (2). Its radioactive properties were not recognized until 1896, and its potential for use as an energy source was not manifested until the mid-20th century.

French physicist Antoine H. Becquerel discovered Uranium’s radioactive properties 1896 (3). This was the first instance that radioactivity had been studied, opening a new field of science. Marie Curie coined the term radioactivity shortly after Becquerel’s discovery, and with Pierre Curie, continued the research to discover other radioactive elements, such as polonium and radium, and their properties.

Once it was found to be radioactive, uranium uses then began to be discovered as well. Its main use? 

After this monumental discovery, uranium began to be used to power commercial nuclear reactors and is now powering about 440 nuclear power stations that produce electricity for people around the world (4).

Currently, about 10% of the world’s electricity is generated from uranium in nuclear reactors. This amounts to over 2500 terawatts each year, as much as from all sources of electricity worldwide in 1960. There were 93 operating nuclear reactors and 

55 nuclear power plants in the United States as of 2021

, representing 20% of the electricity supply (5).

This ability to power nuclear reactors is what makes uranium so important as a means of producing energy, something the world sorely needs more of.

Uranium consists of 99% uranium-238 and 1% uranium-235. Uranium-235 is the only naturally occurring fissionable fuel (a fuel that can sustain a chain reaction). Uranium fuel used in nuclear reactors is enriched with uranium-235. The chain reaction is carefully controlled using neutron-absorbing materials. The heat generated by the fuel is used to create steam to turn turbines and generate electrical power.

However, uranium also has military applications. This sliver element is used in submarines as a way to create a self-sustaining vessel that can reach the deepest depths of the ocean and make long voyages around the world, something that wouldn't quite be possible if it was powered by 

 or gasoline. Because they are powered by nuclear energy and do not burn fossil fuels, there is no need for submarines to make port in order to refuel, they are completely self sustaining.

Once uranium becomes depleted, or uranium that has much less uranium-235 than natural uranium, it becomes much less radioactive than in its natural state. The decrease in radioactivity creates new uses for the depleted version of uranium. Due to its dense nature, it can be used as ballast for ships and counterweights for aircraft, as well as being used in ammunition and different types of armor.

Uranium ore is extracted from the earth using one of several mining techniques (included open mines and underground mines). The uranium ore is then either crushed or chemicals area applied to extract the uranium from the uranium ore and create uranium concentrate. 

Concentrated uranium, called “yellowcake” is then concerted into a gas, uranium hexafluoride (6). The gas is then enriched and converted into nuclear fuel which is then used to make nuclear fuel rods.

Kazakhstan produces by far the most uranium in the world, providing 45% of the world’s supply in 2021. Other producers in include Australia, China, Uzbekistan and Namibia (7). Australia currently has the largest known uranium resources – accounting for about one third of all known uranium on Earth (8).

 is part of the answer in the transition away from fossil fuels. That’s why uranium was resurgent in 2021, rising by more than 30% to a level not seen since 2012. And in March 2022, uranium prices surged to their highest level since the nuclear disaster in Japan’s Fukushima plant in 2011 (9).

However, it is worth remembering that uranium is not traded on a formal exchange like many other commodities, but rather buyers and sellers negotiate privately. The New York Mercantile Exchange (NYMEX) recently began offering a uranium futures contract.

In looking at the fundamentals, the World Nuclear Association released The Nuclear Fuel Report: Global Scenarios for Demand and Supply Availability 2021–2040 in September 2021. The report forecast uranium demand from the world’s nuclear reactors was expected to rise to 79,400 metric tons of elemental uranium in 2030 and 112,300 tons in 2040. In 2021, global uranium demand from nuclear reactors was estimated at 62,500 tons (10).

On the supply side, however, global uranium production plunged to 47,731 tons in 2020 from 63,207 metric tons in 2016 due to a prolonged price depression – thanks to Fukushima – which discouraged exploration activities. Additionally, the Covid-19 pandemic in 2020 also restricted uranium production.

The global supply/demand picture points to even higher prices ahead. For example, the past several years of minimal contracting leaves utilities with significant uncovered fuel requirements beginning in 2023. Since it takes up to two years to transform uranium ore into fuel pellets, utilities should spend 2022 aggressively seeking to secure their uncovered fuel requirements for 2023 and beyond.

There is also the investment side to the uranium story. An exchange traded fund (launched in July 2021) that invests in physical uranium began stockpiling so much of the metal that there were fears it could corner the market and choke off supplies to power stations (11).

Nuclear power has been widely accepted by many as a necessary element of the global decarbonization process, making it an important part of the global energy mix for the foreseeable future. While disposing of uranium used in energy generation is a bit tricky, with radioactivity that lingers for a long time, it is still a cleaner energy solution than burning fossil fuels.

As the critical component to nuclear power, uranium has become a very valuable commodity, which investors can invest in through uranium stocks and uranium ETFs.

As uranium becomes more valuable in the push to take advantage of a wider variety of energy solutions, these stocks and ETFs also become more valuable.

You can participate in this market either through purchasing uranium mining stocks or funds with exposure to uranium and nuclear power, which track the uranium spot price. Funds with exposure to uranium may hold either uranium miners or physical uranium.

If you are interested in adding uranium exposure to your portfolio, try searching:

“Nuclear Fuel Facts: Uranium,” Office of Nuclear Energy, https://www.energy.gov/ne/nuclear-fuel-facts-uranium

“Martin Klaproth,” Famous Scientists: The Art of Genius, https://www.famousscientists.org/martin-klaproth/

Henri Becquerel Biographical, The Nobel Prize, https://www.nobelprize.org/prizes/physics/1903/becquerel/biographical/

“Nuclear Power in the World Today,” https://world-nuclear.org/information-library/current-and-future-generation/nuclear-power-in-the-world-today.aspx

“Nuclear Explained: US Nuclear Industry,” US Energy Information Administration, 18 April 2022, https://www.eia.gov/energyexplained/nuclear/us-nuclear-industry.php

“Nuclear explained The nuclear fuel cycle” US Energy Information Administration, https://www.eia.gov/energyexplained/nuclear/the-nuclear-fuel-cycle.php

“World Uranium Mining Production,” July 2022, https://world-nuclear.org/information-library/nuclear-fuel-cycle/mining-of-uranium/world-uranium-mining-production.aspx

“Australia’s Uranium,” World Nuclear Association, June 2022, https://world-nuclear.org/information-library/country-profiles/countries-a-f/australia.aspx

Saefong, Myra, “Uranium Prices Are Through the Roof as the War Shifts Thinking on Nuclear Power,” Barrons, 17 March 2022, https://www.barrons.com/articles/uranium-prices-spike-as-war-shifts-thinking-on-nuclear-power-51647505802

“Nuclear fuel report sees positive long-term future,” World Nuclear News, 8 September 2021, https://www.world-nuclear-news.org/Articles/Nuclear-fuel-report-sees-positive-long-term-future.

Boyde, Emma, “Uranium ETF launches follow frenetic fund activity in the sector,” Financial Times, 5 May 2022, https://www.ft.com/content/73b256db-3b82-42fa-83ae-555cebd07ba0

Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.

Mutual Funds and Exchange Traded Funds (ETF’s) are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

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How to Invest in Uranium

Uranium powers nuclear reactors, which generate about 10% of the world's electricity

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