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European Uranium miner ETF sees AUM surpass $100 million one year after launch
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(Kitco News) - European investment demand for uranium has reached a significant milestone, and is seeing unprecedented growth as the world continues to transition to cleaner energy.
On Thursday, European-based ETF provider HANetf announced that its Sprott Uranium Miners UCITS ETF (URNM) has seen its assets under management grow to $108.18 million since its launch in May 2022.
URNM tracks the North Shore Sprott Uranium Miners Index and provides exposure to the growth of nuclear power through uranium miners. The ETF also invests in physical uranium via trusts and currently has around 16% direct exposure to the energy metal.
URNM provides European investors with exposure to the uranium market. In North American markets, Sprott also manages a physical uranium ETF, the Sprott Physical Uranium Trust. The ETF holds more than 61 million pounds of the yellow metal, valued at more than $4 billion.
Sprott also has a North American-listed uranium miners ETF, which has an AUM of $1.26 billion.
Investment demand in URNM continues to be driven by a massive rally in uranium prices. The energy metal has gained nearly 30% as of mid-September and in recent weeks, spot prices have pushed above $66 per pound, its highest level since 2011.
The price momentum in uranium is helping to drive up equity prices. Canadian-based producer Cameco, one of the world's biggest suppliers of uranium, is seeing its share price up more than 8% year-to-date.
"The growth of URNM has been exceptional, and we are excited to see it reach $108.18m AUM in just over a year after its launch," said Hector McNeil, Co-Founder and Co-CEO of HANetf, in a statement. "The price surge of uranium, and its outperformance of other commodities as measured by BCOM, is in our view demonstrative of a growing realization that nuclear is an essential and necessary part of the net-zero transition."
Geopolitical uncertainty following the recent coup in Niger has contributed some of the recent momentum to prices; however, analysts note that shifting sentiment in the energy market and the growing need for clean power is pushing uranium into a long-term bull market.
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"Policy support for nuclear energy has started to re-emerge, driven by two concerns: a renewed desire for energy security and the desire for low-carbon energy in a world committed to decarbonization," said Tom Bailey, Head of ETF Research at HANetf, in a comment to Kitco News. "The recent price rise partially reflects this growing policy consensus. Notably, the US' Inflation Reduction Act includes provisions for supporting nuclear energy."
"With demand projections up across the board and supply constrained due to lack of investment in the 2010s, there is an estimated multi-hundred million pound (lbs) uranium deficit through to 2040," Bailey added. "With the exception of China, most countries have seen a decline in their uranium inventories over the past few years. With uncertainty about supply, there is little unwanted inventory hitting the market."
Bailey also noted that the significant supply/demand imbalance is expected to support higher prices long-term.
"But it is also important to note that high uranium prices are not likely to lead to demand destruction. Uranium represents 4-8% of a nuclear plant's ongoing costs, meaning nuclear power plant fuel buyers are price inelastic. For most nuclear power plants, shutting off the reactor due to a lack of supply would incur a higher cost than accepting elevated market prices," he said.
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