Specialised ASX uranium shares are having a bumper start to 2021. For example, Paladin Energy Ltd (ASX: PDN), Boss Energy Ltd (ASX: BOE), and Deep Yellow Limited (ASX: DYL) are currently trading around 93%, 79%, and 57% higher, respectively, since the first trading day of the year.
The only exception is Energy Resources of Australia Ltd (ASX: ERA), an ASX-listed company 68% owned by Rio Tinto Limited (ASX: RIO). This company shut down its only uranium operation, the Ranger Uranium Mine, in January this year. Subsequently, its share price has decreased by around 35% in 2021.
So, why are shareholders of operating ASX uranium miners seeing an incredible return on investment (ROI) in 2021? Let's take a look.
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Uranium and green energy
Nuclear power is a zero-emissions generator. According to the website Trading Economics, it's being increasingly considered by governments such as the United States and China for the transition to clean energy.
Other elements are also seeing increasing demand because of the green revolution, including lithium, copper, and platinum group elements. Uranium, however, is a much more controversial option in green energy production than others.
Uranium is currently trading on the commodities market for US$30.90 per pound. While it's only 0.65% higher this year, experts are predicting lower supply and increasing demand will see its price rise further.
The radioactive element entered a rut in the market after the Fukushima nuclear disaster. Its price has still not recovered to the levels seen before the accident.
Arguably, optimism surrounding the increasing acceptance of nuclear energy is one reason ASX uranium shares are doing so well this year.
Uranium production in Australia
Demand is only one side of the uranium equation. The other, of course, is supply. There are only two operating uranium mines in the country presently, the BHP Group Ltd (ASX: BHP) owned Olympic Dam mine and General Atomic's Beverley and Four Mile mine. Both mines are in South Australia.
Yesterday, Boss Energy announced it had all the permits necessary to resume operations at its Honeymoon uranium mine. The news sent ASX uranium shares rocketing. Boss Energy increased 29%, Paladin went up 19%, and Deep Yellow was 7.2% higher.
Even Energy Resources, which has no current operations, increased 2.4% yesterday. The glow of the Honeymoon news radiated onto other nuclear shares. Investors seemingly felt optimistic Australia may ramp up production of uranium into the future and that government is more ready to approve such projects.
ASX uranium shares' recent history
As of writing, ASX uranium shares are having a so-so day. The Paladin share price is 0.53% higher, Energy Resources shares are flat, Boss Energy is down 13.5%, and the Deep Yellow share price is also flat.
But it could be argued that the rise in the value of these shares over 2021 is not a mere blip. Each one is significantly higher than it was 12 months ago. Paladin is up by around 359%, Boss Energy is 172% higher, and Deep Yellow is around 183% greater. Even Energy Resources is up 19% on this time last year.
The market capitalisations of Paladin, Boss Energy, and Deep Yellow are around $1.25 billion, $456 million, and $241 million, respectively.
