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Ever since the Fukushima disaster of 2011, nuclear power has become somewhat of a dirty word in discussions on safe, reliable and clean energy among those looking to invest within the FTSE 100.
However, the truth is that nuclear is in fact one of the most efficient and low carbon emitting energy sources out there, and its reputation is only now recovering as the world faces energy shortages in the short term and climate change in the long term.
In the UK, outgoing Prime Minister Boris Johnson announced a new wide-ranging energy strategy in April that called for up to eight new nuclear power stations to be built, in the hope that nuclear can provide 25% of the UK’s electricity demand by 2050.
So, how can I leverage this potentially huge growth market? Here’s some companies I’ll be investing in:
As the primary feed source in nuclear power facilities, uranium is a pretty essential part of the nuclear energy supply chain. Uranium is found in huge quantities in several key mining regions around the world.
Kazakhstan is the world leader in natural uranium mining, according to Kazatomprom – a mining giant with enterprises through the entire front-end of the nuclear fuel cycle.
However, the world’s biggest uranium miner won’t be found on the FTSE 100 due to it listing only global depository receipts in London.
Instead I will be looking to invest in Footsie stalwarts BHP and Rio Tinto once they update their strategy for uranium.
BHP operates the Olympic Dam in South Australia, which is one of the most significant deposits of uranium on the planet, while Rio had majority owned the Ranger mine in Western Australia until it ceased operations last year.
In recent years both companies have seemed to back away from their uranium businesses, but a renewed global appetite for nuclear energy could tempt them back into the game. Watch this space.
Rolls-Royce in the nuclear business?
Another long-standing FTSE 100 company I’ll be keeping close tabs on is Rolls-Roycedue to its ambition to build a number of new nuclear reactors in the UK.
At the beginning of July, the engineering firm shortlisted six sites for a factory that would build Small Modular Reactors (SMR).
The UK plans to build 16 SMRs to help reach its net-zero target by 2050 and is backing Rolls-Royce to deliver some of these smaller, more efficient nuclear-power sites.
So, with the UK pushing full steam ahead with its nuclear industry, I’ll be allocating capital for the above stocks and more nuclear-leaning investments on the FTSE 100 and beyond.