Nuclear energy ETFs faced a challenging week, with the sector collectively losing 1.11%. The Sprott Uranium Miners UCITS ETF Accumulating (ETR:U3O8) and the Global X Uranium UCITS ETF USD (LON:URNG) were particularly hard hit, declining by 1.81% and 1.39% respectively. This downturn can be attributed to Kazatomprom, the world’s leading uranium producer, as it recently announced plans to reduce its 2025 production targets by 18% amid declining uranium prices over the past months. They have dropped by nearly 13% since the beginning of the year.
Kazatomprom’s Production Cut and Market Impact
Despite posting strong financial results for Q2 2024, Kazatomprom's (LON:KAPq) decision to cut its production goals sent ripples through the market. The company’s CEO, Meirzhan Yussupov, cited uncertainties in the supply of sulphuric acid—a critical component in uranium production—as the main reason behind this reduction. Such a move has understandably caused concerns among investors, leading to a sell-off in uranium-related ETFs.
The Silver Lining: China’s Nuclear Expansion
While the short-term outlook for nuclear energy ETFs may seem bleak, there is a positive development on the horizon. China has announced its commitment to reducing carbon emissions by greenlighting 11 new nuclear reactors. The China National Nuclear Corporation (CNNC) revealed that these new facilities are expected to cut 19.6 million tons of carbon dioxide emissions annually. This expansion in nuclear infrastructure could potentially boost demand for uranium in the coming years, offering a silver lining for investors.