CCJ: Uranium prices rise and Reddit interest is growing. What happened?

Shares of uranium mining companies surged Monday as retail traders from Reddit's WallStreetBets forum focused their energies on the rallying radioactive metal, including companies tied to uranium in U.S., U.K. and Australia.

The WallStreetBets activity follows a sharp price rise for the physical metal used largely to fuel nuclear power plants. New York-traded uranium futures have surged roughly 40% in the past month to $42.40 a pound, their highest level in about seven years.

Why uranium?

Uranium is the fuel most widely used by nuclear plants for nuclear fission. Uranium is considered a nonrenewable energy source, even though it is a common metal found in rocks worldwide.

Meanwhile, traditional uranium demand remains robust, and growing interest in nuclear in the long term will need more supplies, and the current price environment does not allow for covering future requirements considering the high capital expenditures and long lead times to develop new uranium projects.

Investors are also betting that demand for the metal will rise amid a global shift toward less carbon-intensive sources of energy. Governments including the U.S. and China have pushed for a role for nuclear power in global efforts to mitigate climate change, helping to broaden the appeal of uranium among investors, said Mr. Liebenberg.

Nuclear power in the world today

The first commercial nuclear power stations started operation in the 1950s. Around 10% of the world's electricity is generated by about 445 nuclear power reactors. About 50 more reactors are under construction, equivalent to approximately 15% of existing capacity.

There is a clear need for new generating capacity around the world, both to replace old fossil fuel units, especially coal-fired ones, which emit a lot of carbon dioxide, and to meet increased demand for electricity in many countries. In 2018, 64% of electricity was generated from the burning of fossil fuels. Despite the strong support for, and growth in, intermittent renewable electricity sources in recent years, the fossil fuel contribution to power generation has remained virtually unchanged in the last 10 years or so (66.5% in 2005).