Because uranium has reached its highest price since 2014

Metal is at the center of a bet on rising prices, based above all on the energy transition, the economic situation and the stalemate in mining activities

Cooling towers of a nuclear power plant in the Czech Republic (Wikimedia Commons) There is a metal, used as a fuel for fission processes in nuclear reactors, whose price has risen by about 30% since the beginning of the year: it is uranium, which has ended up at the center of a financial bet on price growth of raw materials for energy, accompanied by the post-lockdown global economic rebound and the widespread search for alternative sources to fossils. The raw material, known as yellowcake ("yellow cake"), due to the color it takes on in the refining phase, which concentrates the uranium oxides, is traded on the New York energy futures exchange (Nymex) for about 40.4 dollars. per pound (0.45 kilograms), the highest price since 2014, while at the beginning of the year it was around 30.

At the heart of this upward trend is the strategy of an investment fund managed by Sprott, a Canadian asset manager firm. Active since July 19, the Sprott Physical Uranium Trust has already purchased over 2,700 tons of physical uranium to date, worth approximately $ 240 million, according to Bloomberg reports. In addition to the reserves of a fund it has acquired, Sprott currently holds 10,880 tons of this metal, worth about a billion, the Financial Times calculates. In addition, the fund has made no secret of its strategy, regularly posting its purchases on Twitter, which have recently arrived in batches of 385 tons at a time.

Sprott Physical Uranium Trust is back at it with 850,000 pounds of physical uranium added today! #SPUT #UraniumStacking #Uranium # U3O8 #Nuclear #lowcarbon $ U.UN $ U.U

For more information & disclosures, please visit https://t.co/PcaG53VfN5 pic.twitter.com/Ec3DW6SuSV

- Sprott Asset Management (@Sprott) September 7, 2021



The global supply of uranium expected for 2021 is 56,600 tons and according to what observers estimate, Sprott's attitude could put pressure on the market and above all on the energy companies. The long-term contracts meet the needs for 98% of the uranium needed at the moment in the United States, where nuclear power supplies 19% of the electricity, however much of it will expire and by 2025 will cover only 55%. therefore they will have to be renegotiated. On the other side of the Pacific, China will play an important role in the growth of global needs in the coming years, as Beijing will largely focus on nuclear energy to cut climate-altering emissions, as probably other countries.

Uranium demand is expected to increase from the current 73,400 tons to 93,400 tons in 2030, according to the World Nuclear Energy Association, however this is not associated, at least for the moment, with an increase in production. horizon, while investors expect it to become a key resource in the energy transition, which will have to progressively reduce the use of fossil fuels. Added to this is the lack of new mines and the extraction policy of Kazatomprom, the largest uranium mining company in the world, which has decided to keep its output limited until 2023. As if that were not enough, the pandemic has cut off supplies from part of some major operating sites in Canada and Kazakhstan.

Canadian Cameco for example had to temporarily suspend production in the winter of 2020, however the company's shares have risen by 70% since the beginning of the year on the stock exchange. Toronto and 228.85% for Paladin, a mining company listed in Australia, another major producing country. Among the major financial investors, the British company Yellowcake holds 7,200 tons of uranium.


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