Uranium demand is soaring - Here’s what it means for investors

Uranium and nuclear energy are undergoing a "Renaissance" as global electricity demand grows rapidly, driven by the expansion of data centres, electric transportation, and industrial electrification for a power-hungry, AI-driven world.

That was the key theme of VanEck’s recent webinar featuring Russel Chesler , Head of Investments and Capital Markets at VanEck Australia, and Travis Miller, Senior Equity Analyst for Utilities and Energy Infrastructure at Morningstar in the US.

In the US alone, McKinsey projects that data centre power consumption will more than quadruple by 2030. Their share of total US electricity demand could jump from 4% today to 12% by decade’s end.

Goldman Sachs estimates that, if data centres were a country, they’d soon consume more power than Japan, Germany or the UK. That’s before accounting for electric vehicles, industrial electrification, and rising cooling needs in a warming climate.

For utilities, that creates a very different type of demand.

“This is a generational change in electricity demand,” Miller said. “Not only is it an increase, it’s…24/7, around-the-clock industrial demand that can’t be served by intermittent sources like wind or solar alone.”

Why nuclear fits the bill

As the world looks to decarbonise, nuclear energy offers the advantage of consistent, low-emission power, similar to wind and far below coal or gas.

Unlike renewables, nuclear plants can run at 90% capacity, meaning they can operate near full tilt most of the time.

“Nuclear is not only low carbon, it’s also land-efficient,” Chesler said. “A 1,000-megawatt nuclear plant requires around 1.3 square miles of land versus 31 times more for solar and 173 times more for wind.”

That’s particularly relevant for the next wave of industrial and tech development.

“Renewable energy just doesn’t fit in the land footprint that’s necessary to serve some of these data centres,” Miller noted. “When Amazon or Google are talking about one- or two-gigawatt data centres, those can’t be served by wind farms. They need concentrated generation.”

Small modular reactors: nuclear’s new frontier

Small modular reactors, or SMRs, are emerging as the most promising nuclear innovation in decades with simpler designs, fewer components and lower risk of equipment failure.

“They use less fuel and can be deployed in more diverse locations, making them well-suited to grid stability and localised power demand,” Chesler explains.

Canada recently committed CAD $3 billion to SMR development, while in the private sector, Google has partnered with NextEra to restart an Iowa nuclear plant under a 25-year agreement to power AI operations. Amazon and Meta have also signed a pledge with the World Nuclear Association to triple global nuclear energy capacity by 2050.

From Miller’s perspective, SMRs could help overcome the biggest hurdles for nuclear - cost and capital.

“Finding capital for a utility-scale nuclear plant is very hard,” he said. “They can cost $20–25 billion and take a decade or more to build. SMRs potentially solve both the time and capital issue.”

Policy tailwinds 

In the US, nuclear development appears to be crossing political lines.

“It’s not just Republican states,” Miller added. “Illinois, one of the most Democratic states in the country, is also the largest nuclear state in the US. Every politician likes the economic development and skilled jobs that come with these projects.”

Beyond the US, momentum is broadening.

• Japan is extending its existing reactors after years of phase-out plans.
• Switzerland has lifted its ban on new plants.
• India plans to build 50 SMRs, and China is on track to become the world’s second-largest nuclear producer.
• France already sources about 70% of its electricity from nuclear power.

Supply squeeze and investment opportunities

With demand rising and supply constrained, uranium prices have rallied sharply. Research from the Nuclear Energy Agency and Goldman Sachs shows that global uranium demand is projected to outstrip supply through 2045.

Existing mines are set to decline post-2030, while new projects remain insufficient to fill the gap, creating a compelling supply-demand imbalance for investors.

Chesler notes that most investors still have minimal exposure to uranium in their portfolios. “There’s no standard index classification for uranium,” he said. “It typically sits within the energy sector, but you need to dig deeper to find it.”

To address this, VanEck has launched the VanEck Uranium and Energy Innovation ETF (ASX: URAN), providing exposure to leading uranium miners and nuclear technology companies globally. The ETF, offered at a management fee of 0.59%, tracks firms that derive significant revenue exposure from uranium mining and nuclear energy infrastructure.

Holdings include global leaders like Cameco (NYSE: CCJ), Paladin Energy (ASX: PDN), Uranium Energy Corp (NYSEAMERICAN: UEC) and technology players such as Silex Systems (ASX: SLX) and Centrus Energy (NYSEAMERICAN: LEU). Canada, the US and Japan make up over 80% of the portfolio’s geographic exposure.

The decade ahead

Looking forward, Miller believes capital and policy will determine how fast nuclear scales.

“Utilities and developers need new ways to raise money for these expensive projects, whether through public markets or partnerships with tech companies as off-takers,” he said. “And continued government support is essential to cut red tape and provide regulatory certainty.”

Chesler summed up: “The uranium sector is becoming a vital part of the world’s power needs….demand for reliable, low-carbon energy is only heading one way.”