understand why and how to invest in ore

Despite still being off the radar of most investors, uranium is becoming a big highlight due to its importance in the generation of clean energy around the world, in addition to the construction of cutting-edge technologies. After the high in ore in 2011, which reached US$ 132 a pound, it is now traded for around US$ 40 a pound.

Less than a month ago, the ore was traded at US$ 30 on the Stock Exchange. The value is far below the peak that uranium has already reached and the search for the ore has started to soar. Analysts heard by UOL believe that uranium will appreciate even more in the coming years. They explained what is behind the uranium appreciation on global exchanges, and whether it is worth betting on the ore. See what they said below.

Energy demand is one of the factors of high demand

“To understand the variation in the value of uranium, we have to go back in history. We had that accident in Fukushima, in March 2011. Since then, the price of uranium has fallen by more or less 78%. However, in China there is an energy crisis due to a cold snap. The price of coal, the country’s main source of energy, keeps rising,” says Gabriel Ross, variable income advisor at Messem Investimentos.

It remains for uranium as an alternative energy source. According to Ross, a kilo of ore is 2.2 million times more efficient in producing energy than a kilo of coal.

“Uranium is also 740,000 times more powerful than natural gas, the largest energy matrix in European countries and Russia. The social and economic benefits are much greater,” he says.

For Ross, there is a process of breaking myths in relation to the ore, which was frowned upon after the accident in Fukushima.

“Uranium is a safe source of energy. If it is not one of the safest, it is one of the cleanest. Since Fukushima a negative view was created [do minério], but this has to be demystified,” says Ross.

He says that, in France, 75% of the energy matrix comes from nuclear energy. “Today, China is the great catalyst“, he says. The Asian giant has 38 nuclear power plants in operation e 19 more under construction.

China leads search for ore

According to Eduardo Scheffer, partner and product specialist at B.Side Investimentos, the Chinese government is “committed” to investing more in the ore.

“In addition, several European countries, as well as the USA and Argentina, have already signaled interest in developing new plants to generate electricity,” he says.

“With this context on the international scene, we had the creation of the fund Sprott Physical Uranium Trust (NEW), that started buying physical uranium and started trading on the Toronto Stock Exchange in July of this year. The lack of liquidity in both the physical and derivatives market was so great that this buying movement of the NEW soared the price of the commodity,” he says.

New investors started to educate themselves about the ore

The search for investments linked to ore anticipated aa structural change in metal supply and demand. This took the uranium market price from $30 a pound to $40 a pound in less than a month. Therefore, for many, the mineral is considered the “new oil”.

Despite this, experts have a caveat: there is still a lot of ore stocks, so the price rise he can still take some time to happen. It will depend on how much demand for nuclear energy will grow in the coming years. For now, the market is buying uranium that is in stock, rather than mining it.

How to invest in uranium?

For Brazilian investors, there are few options on how to invest in uranium. On the Brazilian Stock Exchange there is no way to make direct investments, but it is possible to invest through ETFs, funds that track some index. THE Vitreo, for example, it has an investment fund dedicated to ore for interested investors, Vitreo Uranium.

The fund has shares of global companies linked to the extraction and exploration of uranium, such as Cameco Corp, NO Kazatomprom e NexGen Energy, for example.

“The risk of investing in shares linked to uranium is extremely high. That’s why we recommend allocating only a small portion of your equity”, says Rodrigo Knudsen, gestor of Vitreo.

Investing in ore in the long term can be advantageous

Analysts are optimistic about the uranium market.

“Today, the economy is much more robust. The energy scenario need much more of cleaner energy. It is a trend all over the world, and this is impacting the price of uranium”, says Ross, from Messem Investimentos.

“Climate change is putting into question the capacity of traditional renewable sources (hydraulic, solar and wind) to provide energy reliably. In Brazil, we are going through the biggest water crisis in the last 90 years, causing a significant increase in the cost of electricity. electricity and the risk of energy rationing,” he says Scheffer.

For the expert, nuclear energy comes to fill this bottleneck.

“In addition to not emitting greenhouse gases, it is perennial, Where that is, it does not depend on climatic factors. Thus, with the improvement of nuclear technology and new safety protocols, a considerable increase in this energy matrix in the future is inevitable to meet global energy needs,” he says.

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