Uranium ETFs made it to the best performing ESG ETFs list

Uranium outlook is looking good

The word Uranium may spook most people off because of its association with nuclear bombs. But poor "U" is not so bad. It is used in nuclear power reactors to generate electricity and is considered as a clean and sustainable power source. Today there are about 445 nuclear power reactors operating in 32 countries plus Taiwan, with a combined capacity of about 400 GWe. In 2020 these provided 2553 TWh, about 10% of the world's electricity.

The price of Uranium is having a nice run so far this year due to rejuvenated investors interest. The price has risen from this year's low of $27.7/lb in March to $35.64/lb on September 1st and its closing in on its 6-year high.

The main short-term catalysts that are driving uranium prices are:

• Recent buying spree from Sprott Physical Uranium Trust who bought 2.2 million pounds of physical Uranium since they launched their "At-The-Market" Equity Program in August 17.
• Kazatomprom announcing it may buy additional Uranium in the spot market during the second half of this year to meet demands. The company is the world's largest producer of uranium and is responsible for 23% of global primary uranium production in 2020.
• Morgan Stanley recent spot price target for Uranium at $US48.50/lb in 2024 while long-term contract prices could be significantly higher.

Longer-term catalyst of uranium prices include:

• Trillion-dollar U.S. Infrastructure with expected spending on new advanced nuclear plants as well as current nuclear facilities.
• Increasing global nuclear power capacity, with about 50 reactors under construction. (World Nuclear Association)
• About 100 power reactors with a total gross capacity of about 110,000 MWe are on order or planned, and over 300 more are proposed. Most reactors currently planned are in Asia, with fast-growing economies and rapidly rising electricity demand. (World Nuclear Association)

How does Uranium fit in the ESG spectrum?

Nuclear energy satisfies the "E" of ESG.

• It outperforms many other low carbon forms of energy because nuclear power plants produce carbon-free electricity and leaves behind low quantities of toxic waste.
• Nuclear plants have also smaller land footprint than wind and solar farms.
• The industry is highly regulated for safety concerns and employs highly educated and trained individuals in their operations.

Getting on board the Uranium ETF bandwagon

With the recent price boom, investors are probably wondering about how to get on board. Well, owning physical Uranium is not the typical go-to way to do that due to the metal’s radioactive characteristics.

Luckily, investors could get exposure through Uranium mining stocks or ETFs. Stock pickers may want to start by looking at the world’s largest uranium-mining companies. These include uranium producers like Kazatomprom, Cameco, Rio Tinto and BHP. These companies operate in the three largest uranium-mining jurisdictions Kazakhstan, Canada and Australia.

For investors who want a more diversified approach to Uranium stocks, exchange-traded funds (ETFs) are generally the way to go. However, there are only a few options out there and are considering part of the ESG ETFs Space:

• North Shore Global Uranium Mining ETF(URNM)
• Global X Uranium ETF (URA) 
• Horizons Global Uranium Index ETF (HURA)
• VanEck Vectors Uranium+Nuclear Energy ETF(NLR)

URA, URNM and HURA were the top performers in our last week's top 10 performing ESG ETFs list and they continue to shine this week with over 8% gains each.

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