Uranium: fuel for thought

Nuclear energy is becoming popular once more

• Nuclear is seen as part of a suite of ‘clean’ energy sources
• As power demand from AI soars, small reactors are being developed
• Energy security also plays an important role

For much of the past decade, uranium was largely forgotten by investors. Following the Fukushima nuclear disaster in 2011, many countries scaled back their nuclear ambitions, uranium prices fell sharply and investment in new mines slowed. Interest in the sector faded for much of the next decade. 

Today, the picture looks very different. Governments around the world are embracing nuclear power once again – not only to meet ambitious climate targets, but also to strengthen energy security, support the rapid expansion of AI and data centres, and reduce reliance on increasingly uncertain global fossil fuel supplies. 

The uranium investment story has evolved significantly over the past decade – it is no longer simply a bet on nuclear power. Instead, uranium now sits at the intersection of four powerful global themes: decarbonisation, rising electricity demand from AI, energy security, and years of underinvestment in new mine supply. As a result, uranium has quietly become one of the world’s most strategically important commodities. 

What exactly is uranium? 

Uranium is a naturally occurring radioactive metal that has existed since before the Earth itself was formed. Created in ancient supernova explosions billions of years ago, it is found naturally in rocks and soil across every continent. Its unique property is that certain uranium atoms can be split in a controlled process called nuclear fission. When this happens, enormous amounts of energy are released as heat, which is then used to generate electricity.

Uranium has an exceptionally high energy density. A single uranium fuel pellet, roughly the size of the tip of your finger, can generate as much electricity as around one tonne of coal or several hundred litres of oil. That remarkable energy density is one of the reasons nuclear power continues to play such an important role in the world’s energy mix. 

Today, around 9-10% of global electricity is generated from nuclear power, with more than 440 reactors operating worldwide and dozens more under construction – many of which are in Asia. 

Where does uranium come from? 

Although uranium is often thought of as a rare metal, it is more abundant in the Earth’s crust than silver. The difficulty lies not in finding uranium, but in discovering deposits that are concentrated enough to be mined economically. Interestingly, uranium is increasingly being extracted using a technique known as ‘in-situ recovery’. Rather than digging large open-pit mines, operators circulate a solution underground to dissolve the uranium before pumping it to the surface. 

Today, more than half of global uranium production comes from this lower impact mining method. The world’s largest uranium resources are found in Kazakhstan, Australia, Canada, Namibia, Niger, Uzbekistan, and Russia. Kazakhstan is by far the largest producer, accounting for around 40% of global mine supply. Canada is renowned for exceptionally high-grade deposits in Saskatchewan’s Athabasca Basin. 

Australia possesses the world’s largest known uranium resources but produces considerably less than its geological potential. Although uranium exports generated around A$1.2 bn in 2023–24, Australia’s uranium industry operates under one of the world’s most-stringent regulatory regimes. All exports are subject to bilateral nuclear cooperation agreements and International Atomic Energy Agency (IAEA) safeguards to ensure Australian uranium is used exclusively for peaceful purposes. 

In addition, federal and state environmental approvals, land access requirements, commercial considerations, and historically weak uranium prices have all contributed to a slower pace of mine development. 

What are uranium's main uses? 

During the Cold War, much of the world’s uranium production was destined for nuclear weapons programmes. Today, the story is very different. The overwhelming majority of uranium is used as fuel for civilian nuclear reactors that generate electricity. Beyond power generation, uranium also plays an important role in: 

• powering naval submarines and aircraft carriers
• producing medical isotopes used in cancer diagnosis and treatment
• scientific research reactors
• industrial applications, such as desalination and process heat 

Alongside conventional nuclear power stations, governments and industry are also investing in Small Modular Reactors (SMRs). These smaller reactors are designed to be manufactured in factories and assembled on-site, with the aim of reducing construction times and costs. Although commercial deployment is still at an early stage, SMRs could broaden the use of nuclear power over the coming decades and provide an additional source of long-term uranium demand. 

The structural trends boosting demand

The renewed interest in uranium is being driven by four powerful structural trends:

• The transition to cleaner energy  
• Soaring electricity demand from AI
• The rising importance of energy security
• Tight power supplies globally 

The global transition to cleaner energy 

As countries work towards reducing carbon emissions, nuclear power has re-emerged as one of the few proven technologies capable of producing reliable, large-scale, low-carbon electricity around the clock. Unlike wind or solar, nuclear reactors operate continuously regardless of weather conditions, providing stable electricity that modern economies require. 

AI is transforming electricity demand 

The rapid growth of AI has created an unexpected tailwind for nuclear power - training advanced AI models and operating hyperscale data centres require enormous amounts of electricity, often 24 hours a day. While AI does not directly increase uranium demand, it is contributing to higher electricity consumption, prompting governments and technology companies to consider a wider mix of reliable generation sources, including nuclear. Companies including Microsoft, Google, Amazon, and Meta have all announced investments, partnerships, or long-term agreements supporting nuclear energy, viewing it as a dependable source of low-carbon electricity that can complement renewable energy while providing continuous power for energy-intensive computing. 

Energy security has become a global priority 

One of the biggest changes has been geopolitical. Russia’s invasion of Ukraine exposed Europe’s dependence on imported energy, while more recent tensions in the Middle East and concerns about shipping through the Strait of Hormuz have reminded governments how vulnerable global oil and gas supply chains remain. Unlike fossil fuels, uranium is sourced from countries other than the Gulf states. More importantly, nuclear utilities can purchase and safely store several years’ worth of uranium fuel in advance. A reactor typically operates for 18 to 24 months before refuelling, making nuclear power far less exposed to short-term shipping disruptions than oil or natural gas. This growing emphasis on energy security is increasingly being viewed as an additional pillar supporting long-term uranium demand. 

Supply is struggling to keep pace 

Unlike many commodities, uranium supply cannot increase quickly when prices rise. Developing a new uranium mine often takes well over a decade, requiring years of exploration, environmental assessments, permitting, and construction. 

Once a nuclear reactor begins operating, it requires fuel for decades. This combination of relatively predictable demand and slow supply growth creates a market unlike almost any other commodity. 

Can investors invest in uranium? 

Unlike gold, investors cannot easily buy and store physical uranium. However, Investors can gain exposure to uranium in several ways. The most common approach is through uranium mining companies, whose revenues and profits depend on uranium prices, production levels, and the successful operation of their mines. 

Mining shares can offer greater upside if uranium prices rise, but they also carry company-specific risks such as production delays, cost overruns, permitting issues, and geopolitical uncertainty. 

There are five uranium mining-focused exchange-traded funds (ETFs) in Europe which provide diversified exposure across mining companies and, in some cases, the wider nuclear fuel cycle. These funds provide broader exposure, while reducing reliance on the performance of any single company. Each approach offers different levels of risk, diversification, performance returns, and sensitivity to uranium prices. 

An alternative is investing in physical uranium funds or exchange traded commodities (ETCs), which hold uranium directly rather than investing in mining companies. These vehicles aim to track movements in the uranium price more closely, without the operational risks associated with mining businesses. However, they do not benefit from production growth or operational improvements in the way that mining companies can. 

A final thought for investors 

Security of supply is often more important than obtaining the lowest possible price. This reflects uranium’s unique role within the global energy system. Fuel accounts for only a relatively small proportion of the total cost of generating nuclear electricity, meaning utilities are generally more concerned with securing reliable long-term supply than making marginal savings on price. 

Of course, uranium prices remain cyclical, government policy can change, and commodity markets are rarely straightforward. Could uranium be a story about the future of electricity, technological innovation, and global energy security? 

Whether uranium proves to be an attractive investment will ultimately depend on future supply, demand, and policy decisions. However, few commodities sit at the centre of as many long-term structural themes as uranium today. Despite the favourable long-term backdrop, uranium remains a cyclical commodity. Prices can be affected by government policy, reactor construction delays, mine disruptions, and changes in public attitudes towards nuclear power following major accidents. 

This article is intended as an educational overview of uranium and its role in the global energy system. It is not investment advice, and we do not currently have a uranium-focused investment product on our recommended list.

 For investors who wish to gain exposure to the sector, uranium mining companies can offer attractive long-term potential, particularly if uranium prices continue to strengthen. Mining shares often provide leveraged exposure to the uranium price, meaning their profits and share prices may rise – or fall – by a greater proportion than the underlying commodity. 

Unlike commodities such as gold or oil, uranium is not traded on a highly liquid exchange. Most uranium is bought and sold through long-term contracts between producers and nuclear utilities, making the market less transparent and often slower to respond to changes in supply and demand. As with any specialist commodity investment, uranium should be considered within the context of a diversified portfolio and an investor’s individual objectives, time horizon, and tolerance for risk