Retail investors power into uranium

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Retail investors are buying into uranium-linked funds, amid fears about the coup in Niger, a key producer, hitting supplies and wider expectations of a global increase in demand.

Energy companies are taking a renewed interest in nuclear power because of the impact of Russia’s invasion of Ukraine on gas supplies and the pressures to cut fossil fuel use and reduce carbon emissions.

Shares in Yellow Cake, a London-listed vehicle that holds physical uranium and is favoured by retail investors, are up 8 per cent in a month and 22 per cent since the start of 2023.

The Geiger Counter ETF, which invests in companies that extract and process uranium, is flat on the year but is trading 20 per cent above lows seen earlier in the summer and is up 8 per cent in the past month.

The moves come amid increases in the metals markets, where the uranium spot price hit a 16-month high of $58.50 per pound this week according to the Uranium Exchange Company.

“There are real uranium fans, you can see it on Twitter . . . it’s all happening now,” said Rob Crayfourd at CQS New City Investment Managers, who manages Geiger Counter. The fund is widely held by UK retail investors through wealth managers and platforms such as Hargreaves Lansdown and Interactive Investor.

“The uranium market is a bit like trying to turn an oil tanker,” he said. “It’s slow to add supply due to permit timelines but also the demand picture is very slow in the way it shifts, but now we’re seeing a big shift.”

Liberum, the investment bank, this week initiated its coverage of the uranium sector and of Yellow Cake, which is 30 per cent owned by retail investors and platforms.

“There’s a bullish twist emerging in Uranium’s global market backdrop,” analysts said in a note. “It’s coming from . . . the now-critical necessity for global powergen systems to cut carbon emissions [and] emerging geopolitical desire to be power independent.”

The bank listed Yellow Cake as a “buy”, stating that “for investors, this provides a simple low-cost, low-risk exposure to a commodity whose fundamentals are robust”, adding that they believe uranium’s spot price will rise further to $70 per pound “over the medium term”.

Investors are betting that governments will make further investments in nuclear power and extend the life of ageing reactors as energy security remains a concern following the Russian invasion of Ukraine and the carbon-free energy produced by nuclear fission will help countries reach net zero targets.

Meanwhile, the coup in Niger risks disrupting the supply of uranium, which is managed locally by the majority-state owned French company Orano. Niger has approximately 5 per cent of the world’s reserves, according to the International Atomic Energy Agency. 

The market is already tight: global demand for the heavy metal outstripped yearly supply from 2018 to 2022. Shares in Cameco, the Canadian company which is the world’s largest publicly held uranium miner, are at an all-time high of C$48.63 per share, up 122 per cent from August 2021.

Sweden’s environment minister last week announced plans to reverse its moratorium on uranium mining, imposed in 2018, opening some of Europe’s largest uranium reserves in response to the heightened risk of a supply crunch, though it is unclear how quickly it can reach the market.

“Demand [for uranium] continues to increase, driven by considerable growth in both India and China,” Yellow Cake’s chief executive Andre Liebenberg said in its results for the year ending March 2023. 

The company issued £62mn of new shares in February to add to its stockpile, which will be some 20mn pounds of the material by September, worth over £1bn.