Article
Uranium – a naturally occurring radioactive element – is one of the critical ingredients in decarbonizing our energy system and providing energy security. Since 2020, uranium prices have more than doubled due to a concentrated and insecure supply.
April 17, 2024
Generating nuclear power does not cause carbon emissions. Combined with high capacity of nuclear power plants, it makes nuclear power a reliable and stable source of energy.
Nuclear waste remains the major environmental and safety drawback related to nuclear power.
Despite some high-profile incidents in the history of nuclear power, it is still one of the safest sources of energy.
Uranium needs to be enriched to be used in nuclear power reactors.
Kazakhstan is the world’s biggest producer of uranium, but nearly half of enriched uranium exports worldwide comes from Russia.
Constrained and insecure supply meeting elevated clean energy and energy security demand has driven uranium prices to new highs in recent months.
Weekly uranium price (U308 in USD/pound)
Historical performance indications and financial market scenarios are not reliable indicators of future performance.
Source: Bloomberg. Dec 2020–March 2024
Note that 1 imperial pound (lb) is equal to 0.45359237 metric kilograms (kg), or 1 kg = 2.2046 lbs.
Uranium was discovered in 1789 by the German chemist Martin Heinrich Klaproth and was named after the then-recently discovered planet Uranus. It occurs as a naturally radioactive silvery-white metal and is one of the more common chemical elements in the Earth’s crust. Denoted by the symbol U, it has atomic number 92 in the periodic table of elements, meaning its nucleus contains 92 positively charged protons, orbited by 92 negatively charged electrons.1
Uranium has three different naturally occurring isotopes: U234, U235 and U238.2 The most common isotope is U238, which accounts for over 99% of natural uranium. The important nuclear energy carrier U235 used in power generation makes up for around 0.7% of all uranium, while U234 occurs only in very small quantities.3
Picture 1: Nuclear fission process
Sources: Credit Suisse, US Energy Information Administration. Based on: US Energy Information Administration (n.d.). Nuclear Explained. Retrieved on 19.03.2024.
All nuclear power plants currently in operation are based on the principle of fission. In nuclear fission, a neutron is made to collide with a uranium atom, thereby splitting the atom. This releases both radiation and the energy that holds the atom together in the form of heat. The split also causes more neutrons to be released and bump into more uranium atoms, creating a nuclear chain reaction that generates significant amounts of heat. That heat is then used to fire a steam turbine, generating electricity. Most nuclear reactors use fuels containing U235, which is nature’s most fissile isotope.
Nuclear fuel needs a higher concentration of U235 than found in nature. Hence after mining, uranium needs to be “enriched”: the content of U235 needs to be taken up to 3%–5% (for LEU or low-enriched uranium, fuel for most reactor designs), or as high as 20% (HEU or highly enriched uranium, used in e.g. submarine propulsion).4 Uranium is considered weapons-grade when it has been enriched to 90%.5
Enriched uranium has a super-high energy density: one single uranium fuel pellet, the size of a gummy bear, can create the amount of energy of a ton of coal, 149 gallons of oil, or 17,000 cubic feet of natural gas.6
Contrary to traditional fossil-fuel-based electricity generation, nuclear power generation is carbon emissions free and contributes to net zero outcomes7.8 Also, nuclear power plants operate at high round-the-clock capacity factors, making nuclear power a reliable and stable source of baseload power generation. The major environmental and safety drawback related to nuclear power is nuclear waste, especially used nuclear fuel, which can remain radioactive for many years.
There have been headline-grabbing and serious disasters related to nuclear power plants in the past: the 1979 Three Mile Island partial meltdown,9 the 1986 Chernobyl accident10, and the 2011 Fukushima disaster11 caused by a tsunami spring to mind immediately. While these incidents have caused public concern and anxiety around nuclear power, and have led to NIMBY-ism12 in the past, it should be noted that the track record of nuclear power versus other sources of energy13 tells a compelling story about the safety of nuclear energy. Note also that accidents and near-accidents have led to improved safety designs in existing and new reactors.
Table 1: Nuclear energy share in IEA and BNEF scenarios
Sources: World Energy Outlook 2023 Free Dataset - Data product - IEA; Bloomberg New Energy Finance New Energy Outlook 2021: Data Viewer (1.0.3); Credit Suisse. Latest data point: December 2022 (E: Estimates)
In the International Energy Agency’s (IEA) World Energy Outlook 2023, the role of nuclear energy increases in all three scenarios outlined, whereas in Bloomberg New Energy Finance’s (BNEF) so-called red scenario (economic transition to nuclear energy and nuclear-produced hydrogen), the role of nuclear energy becomes even more significant. The growth outlook for nuclear energy was bolstered in 2023 as the 28th United Nations Conference of Parties (COP28) called for accelerated deployment of nuclear technology.14
Our investment teams identify and aim to invest in exciting and attractively valued companies that are on the cutting edge of innovation. Join us and invest in tomorrow’s winners.
While uranium is mined in only a few countries globally, enrichment is even more concentrated: there is only a handful of fuel enrichment companies operating in a limited number of countries. Russia makes up only 5% of global uranium production,15 but the country accounts for almost half of the world’s enrichment capacity,16 mainly supplied from Kazakhstan.
Prior to passing a bill banning Russian nuclear fuel imports in the wake of the Russia-Ukraine war,17 the US imported nearly half of its nuclear fuel from Russia.18 Europe relies on Russia for 40% of its nuclear fuel supply. Sanctions on Russia have increased demand for non-Russian nuclear fuel, which has led to increased demand for uranium to be enriched outside of Russia.19
On top of this, Kazakhstan’s state-owned uranium miner Kazatomprom is experiencing production problems due to shortages in process chemicals,20 and Canadian producer Cameco is also struggling to meet production targets.21
Table 2: Uranium supply–demand balance (million pounds)
Sources: BMO Capital Markets (Research, 09.02.2024, p.3); World Nuclear Association; Credit Suisse. Latest data point: December 2022 (E: Estimates)
Another market tightening factor has been financial buying of uranium, especially by Sprott Physical Uranium Trust22, which bought around 20 million pounds of uranium in 2022, and another 4 million in 2023; the trust currently holds approximately 64 million pounds of physical uranium, or about one-third of annual global demand.
Constrained and insecure supply meeting elevated clean energy and energy security demand has driven prices to new highs in recent months.
Research into nuclear energy is ongoing, especially into nuclear fusion: nuclear energy can also be released in a reaction that combines two atoms to form a larger atom. However, this reaction is much less controllable than a fission reaction.23
Other advancements are being made in reactor design. Especially the so-called SMRs (small modular reactors) look promising due to their lower projected cost and safety attributes.24 The first SMR design was approved by the US Nuclear Regulatory Commission in 2020,25 with construction planned in the coming years.
Find investment products that suit your personal needs. Choose from our extensive range of investment solutions across all major asset classes, and access all product-related information.
Contact us to learn about exciting investment opportunities. We are here to help you achieve your investment goals.
To the extent that these materials contain statements about the future, such statements are forward looking and are subject to a number of risks and uncertainties and are not a guarantee of future results/performance.
The individual companies mentioned on this page are meant for illustration purposes only and is not intended as a solicitation or an offer to buy or sell any interest or any investment.
Every investment involves risk. You may lose part or all of invested capital.
The individuals mentioned above only conduct regulated activities in the jurisdiction(s) where they are properly licensed, where relevant.
1 Britannica (2024). periodic table. link. Accessed on 26.03.2024
2 Atoms with the same number of protons but different numbers of neutrons are called isotopes. U234 has 92 protons and 142 neutrons (and its mass number is 92+142=234), whereas U235 and U238 have 143 and 146 neutrons, respectively.
3 United States Nuclear Regulatory Commission (2023). Natural uranium. Link. Accessed on 21.03.2024
4 United States Nuclear Regulatory Commission (2020). Uranium Enrichment. Link. Accessed on 22.03.2024; International Atomic Energy Agency (2023). What is Uranium?. Link. Published on 16.08.2023. Accessed on 28.03.2024
5 World Nuclear Association (2022). Uranium Enrichment. Link. Accessed on 20.03.2024
6 encore energy (n.d.). Nuclear Energy: The Future. Link. Accessed on 28.03.2024; Note that 149 gallons corresponds to ~3.55 barrels or 564 liters of oil, and 17000 cubic feet of gas is equal to ~481 cubic meters.
7 Credit Suisse (2022). Net Zero Asset Managers Initiative. Link. Published on 22.03.2022. Accessed on 28.03.2024
8 World Nuclear Association (n.d.). How can nuclear combat climate change. Link. Accessed on 28.03.2024
9 Office of NUCLEAR ENERGY (2022). 5 Facts to Know About Three Mile Island. Link. Published on 04.05.2022. Accessed on 27.03.2024
10 World Nuclear Association (2022). Chernobyl Accident 1986. Link. Accessed on 28.03.2024
11 World Nuclear Association (2023). Fukushima Daiichi Accident. Link. Accessed on 26.03.2024
12 Britannica (2024). NIMBY. Link. Accessed on 28.03.2024 NIMBY | Meaning, Examples, & Facts | Britannica
13 Our World in Data (2020). What are the safest and cleanest sources of energy. Retrieved from link on 19.03.2024
14 International Atomic Energy Agency (2023). Nuclear Energy Makes History as Final COP28 Agreement Calls for Faster Deployment. Link. Published on 13.12.2023. Accessed on 26.03.2024
15 World Nuclear Association (2023). Uranium Production Figures, 2013-2022. Link. Accessed on 26.03.2024
16 World Nuclear Association (2022). Uranium Enrichment. Link. Accessed on 22.03.2024
17 CONGRESS.GOV (n.d.). H.R.1042 - Prohibiting Russian Uranium Imports Act. Link. Accessed on 28.03.2024
18 Finnish Institute of International Affairs (2023). Russia and Kazakhstan in the global nuclear sector: From uranium mining to energy diplomacy. Link. Published on 05.10.2023. Accessed on 27.03.2024
19 Bloomberg (2023). The Manhattan Project to Wean the World Off Russian Uranium. Link. Published on 23.08.2023. Accessed on 28.03.2024
20 Kazatomprom (2024). KAP expects adjustments to its 2024 Production. Link. Published on 12.01.2024. Accessed on 27.03.2024
21 World nuclear news (2024). Cameco looks to increase production as net earnings double. Link. Published on 08.02.2024. Accessed on 26.03.2024
22 Sprott (n.d.) Sprott Physical Uranium Trust. Link. Accessed on 28.03.2024
23 BBC (2022). Breakthrough in nuclear fusion energy announced. Link. Published on 13.12.2022. Accessed on 28.03.2024
24 IEA (n.d.) Nuclear Power and Secure Energy Transitions. Link. Accessed on 27.03.2024
25 United States Nuclear Regulatory Commission (2022). Licensing Activities for Small Modular Reactors. Link. Accessed on 27.03.2024
This is a marketing communication.
Source: Credit Suisse, otherwise specified.
Unless noted otherwise, all illustrations in this document were produced by Credit Suisse AG and/or its affiliates with the greatest of care and to the best of its knowledge and belief.
This material constitutes marketing material of Credit Suisse AG and/or its affiliates (hereafter "CS"). This material does not constitute or form part of an offer or invitation to issue or sell, or of a solicitation of an offer to subscribe or buy, any securities or other financial instruments, or enter into any other financial transaction, nor does it constitute an inducement or incitement to participate in any product, offering or investment. This marketing material is not a contractually binding document or an information document required by any legislative provision. Nothing in this material constitutes investment research or investment advice and may not be relied upon. It is not tailored to your individual circumstances, or otherwise constitutes a personal recommendation, and is not sufficient to take an investment decision. The information and views expressed herein are those of CS at the time of writing and are subject to change at any time without notice. They are derived from sources believed to be reliable. CS provides no guarantee with regard to the content and completeness of the information and where legally possible does not accept any liability for losses that might arise from making use of the information. If nothing is indicated to the contrary, all figures are unaudited. The information provided herein is for the exclusive use of the recipient. The information provided in this material may change after the date of this material without notice and CS has no obligation to update the information. This material may contain information that is licensed and/or protected under intellectual property rights of the licensors and property right holders. Nothing in this material shall be construed to impose any liability on the licensors or property right holders. Unauthorised copying of the information of the licensors or property right holders is strictly prohibited. This material may not be forwarded or distributed to any other person and may not be reproduced. Any forwarding, distribution or reproduction is unauthorized and may result in a violation of the U.S. Securities Act of 1933, as amended (the “Securities Act”). In addition, there may be conflicts of interest with regards to the investment. In connection with the provision of services, Credit Suisse AG and/or its affiliates may pay third parties or receive from third parties, as part of their fee or otherwise, a one-time or recurring fee (e.g., issuing commissions, placement commissions or trailer fees). Prospective investors should independently and carefully assess (with their tax, legal and financial advisers) the specific risks described in available materials, and applicable legal, regulatory, credit, tax and accounting consequences prior to making any investment decision.
For persons in Singapore: This document is not a prospectus as defined in the Securities and Futures Act 2001 of Singapore ("SFA") and has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply, and this document should not be construed in any way as a solicitation or an offer to buy or sell any interest or investment referred to in this document.
© UBS 2024. All rights reserved.
Distributor AM: UBS Asset Management Switzerland AG, c/o UBS AG, Bahnhofstrasse 45, 8001 Zürich, Switzerland
Distributor PB: Credit Suisse AG, Singapore Branch, 1 Raffles Link #03-01 One Raffles Link Singapore, 039393 Singapore
