As reported by the Financial Times, the price of raw uranium, known as yellowcake, rose to $50 a pound last month, its highest level since 2012. The move has attracted new investors into the market for the first time since before the financial crisis, when buying by investors drove the price from $20 a pound to a record high of $136 a pound in June 2007. “We’ve been patiently waiting for something to happen for a long time,” said Ben Cleary, of Tribeca Investment Partners in Singapore, whose fund is up 345 percent, net, this year. “Clearly there’s speculative money coming back into the sector; there were massive price moves in September.” Canadian asset manager Sprott has catalysed the price rise with significant buying of uranium, but investors say the broader energy transition is highlighting the key role of nuclear — a low-carbon source of baseload power. Sprott’s Physical Uranium Trust is one of the few that buys and stores physical uranium. Most funds have added exposure through mining equities, which have rallied 58 percent this year, according to the Global X Uranium ETF.
The rapid rise in natural gas and coal prices to fresh highs this month has exacerbated an energy crisis in Europe and China, and has “placed uranium back in the spotlight,” said Rob Crayfourd at CQS New City Investment Managers. “The political fallout of this energy crisis will be a greater willingness in the west to extend the life of the existing reactor fleet,” he said. “It has focused governments on the benefits of secure supply of energy from the nuclear fleet. We expect that to lend support [to prices].”
Also profiting is Sean Benson, founder of London-based Tees River. His uranium fund, which buys equity stakes in uranium mines, is up 115 percent this year. Benson argues in an investor letter, seen by the FT, that a deficit of supply relative to demand and a “very supportive” climate-change agenda mean that “the current uranium cycle is better than the last on every fundamental metric.” His Critical Resources Fund, which invests about one-third of assets in uranium, is up 44 percent this year.
