Global X Uranium ETF

Global X Uranium ETF (ASX: ATOM) offers investors access to a broad range of companies involved in uranium mining and the production of nuclear components, including those in extraction, refining, exploration, or manufacturing of equipment for the uranium and nuclear industries.

ATOM seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Global Uranium & Nuclear Components Total Return Index. 

ATOM offers investors access to a broad range of companies involved in uranium mining and the production of nuclear components, including those in extraction, refining, exploration, or manufacturing of equipment for the uranium and nuclear industries. ATOM seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Global Uranium & Nuclear Components Total Return Index.

• A single uranium pellet, slightly larger than a pencil eraser, contains the energy equivalent of a ton of coal, three barrels of oil, or 17,000 cubic feet of natural gas¹.
• Nuclear power remains one of the few sources of electricity that combines large-scale power output and low greenhouse gas emissions, with costs comparable to those of traditional fossil fuel power stations².
• Since 1980, weapons-grade uranium from decommissioned nuclear weapons stockpiles in the United States and the former Soviet Union has been blended down to be repurposed as reactor fuel as part of nuclear disarmament agreements³.

¹ GE Hitachi Nuclear Energy. (n.d.) Nuclear power basics. General Electric. Accessed on April 19, 2022.

²  World Nuclear Association. (2021, September). Economics of nuclear power.

³ World Nuclear Association. (2021, September). Economics of nuclear power.

Uranium is a heavy, dense, and radioactive metal, making it a potent source of energy. Found in most rocks in concentrations of two to four parts per million, it appears commonly in the Earth’s crust in many parts of the world, including Australia, Kazakhstan, and Canada. Uranium extraction generally involves recovery from the ground using open-pit mining, underground mining, or in-situ leach (ISL) methods, then requires processing before it can be used.

Similar to coal or natural gas power plants, nuclear reactors generate electricity by producing immense heat. This is done by splitting uranium atoms in the process of nuclear fission, as opposed to burning fossil fuels. Nuclear fission produces thousands of times more energy than that released through burning similar amounts of fossil fuels, so it is a very efficient method of generating utility-scale power. In addition to the power density advantage of uranium, nuclear power also ranks among the cleanest methods of producing electricity, as measured by greenhouse gas emissions – making it a vital source of power security in the clean energy transition.

Nuclear power contributes approximately 10.4% of the world’s total energy supply and serves as a major source of energy in developed markets, such as the European Union (25%) and the United States (19%), accounting for approximately one-third of the world’s low-carbon electricity¹²³. Nuclear power capacity is set to dramatically increase in the coming decades, with projections anticipating a 17% rise from current levels by 2035, and another 71.5% by 2050⁴.

• China has the world’s largest uranium market, and its government has pledged US$440 billion into nuclear reactors over the next 15 years.
• Bangladesh and Turkey have development plans for nuclear reactors well underway.
• In 2022, France also announced it is aiming to build six new reactors and another eight could follow shortly thereafter

Uranium supply and demand dynamics add to the commodity’s investment appeal. Uranium supply consists of new production from mining and existing inventories, largely from decommissioned nuclear weapons. Supply from mining production met approximately 67% of 2021 demand, with the remainder being met with existing stockpiles. However, these secondary stores are depleting and are projected to provide just 11% of the total supply in 2030 – meaning there will be a notable deficit in the uranium market over the short to medium term⁵. The demand side of the equation also looks very promising. UxC, one of the world’s leading sources for data on uranium, anticipates uranium demand will grow 21.7% by 2035⁶. The focus on keeping operating margins high and costs lean should mitigate large spikes in supply, as miners slowly increase production based on contracted utility demand.

¹ Krikorian, S. (2020, January 1). Preliminary nuclear power facts and figures for 2019. International Atomic Energy Agency.

² World Nuclear Association. (2022, March). Nuclear power in the European Union.

³ International Atomic Energy Agency. (2021). Nuclear power reactors in the world: 2021 edition. Reference Data Series No, 2, Vienna.

⁴ GE Hitachi Nuclear Energy. (n.d.) Nuclear power basics. General Electric. Accessed on April 19, 2022.

⁵ World Nuclear Association. (2021, September). Supply of uranium.

⁶ UxC. (2021, August). Uranium production cost study. UxC Special Report.

Despite the upside potential of uranium and nuclear power, there are some risks to keep in mind. In the past, nuclear technologies have caused a number of political, environmental and social issues. The 1986 Chornobyl and 2011 Fukushima nuclear disasters live on in memory for many around the world and brought the safety of nuclear into question. Technological advancements have increased the scalability and safety of nuclear power, however, negative perceptions around nuclear and its use in weaponry linger – particularly in the face of geopolitical tensions.

In 2017, the United Nations Treaty on the Prohibition of Nuclear Weapons (TPNW) was enacted to ban nuclear weapon activities, with the ultimate goal to completely eliminate them¹. As a result of the treaty, the nuclear weapon industry saw investment inflows drop by US$63 billion in 2021 compared to 2019, according to a study by the International Campaign to Abolish Nuclear Weapons (ICAN) and PAX².

Additionally, Uranium mining can have adverse effects on the environment and people’s health, according to the US National Institutes of Health (NIH)³. The NIH highlights three categories of concern.

• Mine site and miner health and safety. Noting, uranium miners more likely to succumb to “multifactorial health hazards” including lung and other forms of cancer⁴.
• Health and safety of people in the immediate vicinity who might be affected by the spread of radioactivity.
• Global health and environmental effects of increasing background radiation and water contamination.
  
  

When investing in uranium it is important to weigh up these potential concerns and whether this type of investment aligns with one’s risk profile.

¹ United Nations (2022). Treaty on the prohibition of nuclear weapons – UNODA. [online] Un.org. Available at: https://www.un.org/disarmament/wmd/nuclear/tpnw/.

² ICAN. (n.d.). $63 billion drop in investments: New report shows the impact of the nuclear weapons ban treaty on nuclear weapons business. [online] Available at: https://www.icanw.org/63_billion_usd_drop_in_nuclear_weapons_investments

³ Dewar, D., Harvey, L. and Vakil, C. (2013). Uranium mining and health. Canadian Family Physician, [online] 59(5), pp.469–471. Available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3653646/

⁴ Rathod, A.M., Verpaele, S., Kelvin, M., Sullivan, K.V. and Leybourne, M.I. (2022). Uranium: an overview of physicochemical properties, exposure assessment methodologies, and health effects of environmental and occupational exposure. Environmental Geochemistry and Health. doi:10.1007/s10653-022-01293-x.

• To express a medium to long-term view on demand for uranium as the key commodity for the increasing adoption of nuclear power.
• As a tool to help mitigate high idiosyncratic risks of holding individual uranium miner stocks.

• ATOM tracks the Solactive Global Uranium & Nuclear Components Total Return Index.
• Companies which qualify for the index are categorised as ‘pure play’ (a significant part of the company’s current or future revenue must be generated from operations in the uranium industry) or ‘non-pure play’ (business operations and revenue are related to the uranium industry).
• Constituents must pass a verification process which checks publicly disclosed information to ensure there is revenue source transparency.
• Controversial weapon screen removes companies involved with nuclear weaponry such as nuclear weapons and depleted uranium, to mitigate unsystematic risks.
• The index is weighted by ranking eligible companies on the lower of either their free-float market capitalisation or their average daily trading value multiplied by 2000.
• Individual pure-play companies can have a maximum weighting of 22.5%.
• The total index allocation to pure-play companies with an individual weight of 5% or more is capped at 47.5%. All subsequent pure-play companies are capped at 4.75% or below.
• Individual non-pure play companies can have a maximum weighting of 2%, with a maximum of 15 companies to be included in the index.
• Rebalancing occurs quarterly on the last business day of January, April, July, and October.

Click here to view our latest Performance Details.

Global X Management (AUS) Limited is the issuer of units in Global X Uranium ETF. The financial instrument is not sponsored, promoted, sold or supported in any other manner by Solactive AG, nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the Solactive Global Uranium & Nuclear Components Total Return Index (the “Index”) and/or Index trademark or the Index price at any time or in any other respect. The Index is calculated and published by Solactive AG. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards the Sponsor, Solactive AG has no obligation to point out errors in the Index to third parties including, but not limited to, investors and/or financial intermediaries of the financial instrument.

Neither publication of the Index by Solactive AG, nor the licensing of the Index or Index trade mark for the purpose of use in connection with the financial instrument, constitutes a recommendation by Solactive AG to invest capital in said financial instrument nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in this financial instrument. This document is issued by Global X Management (AUS) Limited (“Global X”) (Australian Financial Services Licence Number 466778) and Global X is soley responsible for its issue. This document may not be reproduced, distributed or published by any recipient for any purpose. Under no circumstances is this document to be used or considered as an offer to sell, or a solicitation of an offer to buy, any securities, investments or other financial instruments. Offers of interests in any retail product will only be made in, or accompanied by, a Product Disclosure Statement (PDS) which is available at www.globalxetfs.com.au  In respect of each retail product, Global X has prepared a target market determination (TMD) which describes the type of customers who the relevant retail product is likely to be appropriate for. The TMD also specifies distribution conditions and restrictions that will help ensure the relevant product is likely to reach customers in the target market. Each TMD is available at www.globalxetfs.com.au

The information provided in this document is general in nature only and does not take into account your personal objectives, financial situations or needs. Before acting on any information in this document, you should consider the appropriateness of the information having regard to your objectives, financial situation or needs and consider seeking independent financial, legal, tax and other relevant advice having regard to your particular circumstances. Any investment decision should only be made after obtaining and considering the relevant PDS and TMD.

This document has been prepared by Global X from sources which Global X believes to be correct. However, none of Global X, the group of companies which Mirae Asset Global Investments Co., Ltd is the parent or their related entities, nor any of their respective directors, employees or agents make any representation or warranty as to, or assume any responsibility for the accuracy or completeness of, or any errors or omissions in, any information or statement of opinion contained in this document or in any accompanying, previous or subsequent material or presentation. To the maximum extent permitted by law, Global X and each of those persons disclaim all any responsibility or liability for any loss or damage which may be suffered by any person relying upon any information contained in, or any omissions from, this document.

Investments in any product issued by Global X are subject to investment risk, including possible delays in repayment and loss of income and principal invested. None of Global X, the group of companies of which Mirae Asset Global Investments Co., Ltd is the parent, or their related entities, nor any respective directors, employees or agents guarantees the performance of any products issued by Global X or the repayment of capital or any particular rate of return therefrom.

The value or return of an investment will fluctuate and an investor may lose some or all of their investment. Past performance is not a reliable indicator of future performance.