Sprott: Uranium: The Next Power Play

This is a business model very few can replicate. Uranium is a heavily regulated commodity, it is incredibly hard to buy and security requirements for storing it are very high. This means there are just a handful of companies which are legally able to purchase and store physical uranium. Sprott is the largest player in this space and the only publicly listed. Parent, Sprott Asset Management has spent decades building its reputation with investors and governments as a responsible holder of physical commodities.

Sprott is the only way for investment managers to get direct and liquid exposure to the underlying commodity. The only alternatives are buying; miners, producers, or service providers, all of which come with substantial operating complications and risk. The underlying market for physical uranium is not overly liquid, there are very few producers and buyers. SPUT has a $7.4B market cap, allowing large institutions a liquid means to gain exposure.

The bull case for uranium has arguably never been stronger. Recent revolutions in computing are demanding power ona scale never seen before. Uranium is inique in that is is both green, which society is demanding from major corporations, and on-demand which curcial for data center operations. This is where uranium sets itself apart from almost any other renewable power sources which are characteristically intermittent. Demand for renewable power is expected to increase markedly over the coming decades and uranium is set to play a crucial role in this transition. For investors, this means decades of visible demand growth and likely price appreciation.

Rising Utility Contracting

Increased long-term uranium contracting by utilities as inventory levels decline, prompting aggressive purchases to secure future fuel needs. With global reactor demand rising and supply concerns growing, utilities are expected to shift away from short-term spot market reliance in favor of multi-year agreements, tightening the uranium market further.

Western Enrichment Reshoring

U.S. and EU initiatives to reduce reliance on Russian nuclear fuel could drive uranium demand, as Western governments push for domestic production and alternative supply chains. This transition will require significant investment in conversion and enrichment infrastructure, creating new demand for uranium feedstock and further strengthening the case for long-term price appreciation.

AI & Data Center Expansion

Energy-intensive AI applications and cloud computing require stable baseload power, favoring nuclear energy as data center energy consumption soars. As hyper-scale companies like Google, Amazon, and Microsoft seek long-term power purchase agreements, nuclear energy is increasingly viewed as the only scalable, carbon-free solution to support their rapid growth, further driving demand for uranium.

New Reactor Construction & Restarts

Japan, China, and South Korea are expanding nuclear fleets and extending existing reactor lifespans, ensuring long-term uranium demand. With ambitious plans to scale nuclear power, China alone is expected to surpass the U.S. as the largest nuclear energy producer by 2030, reinforcing the need for a secure and steady uranium supply.

Small Modular Reactors (SMRs)

Countries are investing in next-gen nuclear technology to accelerate deployment, with SMRs positioned as a flexible, cost-effective alternative to traditional reactors. With multiple pilot projects in development and regulatory approvals underway, SMRs are expected to revolutionize the nuclear landscape by enabling faster deployment, expanding nuclear accessibility, and further driving uranium consumption.

Net Zero Policies & Institutional Adoption

More countries are embedding nuclear into decarbonization plans, increasing investment flows into uranium as part of ESG-focused portfolios. As governments recognize nuclear as a crucial part of achieving carbon neutrality, institutional investors are steadily increasing allocations to uranium assets, fueling long-term capital inflows into funds like SPUT.

Government policies and regulatory approvals play a significant role in uranium’s future. While global sentiment has shifted positively, any unexpected changes in nuclear policies (e.g., Germany's phase-out) could negatively impact demand.

The uranium supply chain is vulnerable to geopolitical risks. Kazakhstan, which supplies 39% of global uranium, has seen operational disruptions, and Russia’s nuclear fuel dominance is facing increasing Western sanctions.

While SPUT provides exposure to uranium, it does not generate cash flow like mining companies. The fund’s reliance on spot prices means that short-term market fluctuations can impact NAV, and liquidity events could create volatility.