Is Australia’s energy transition about to go nuclear?
19 February 2025
Australia’s mining and resources sector has long been a cornerstone of the country’s economy – and has held an important place in the global commodities market.
Australia is the world’s largest producer of lithium and one of the top five producers of gold, iron ore, lead, zinc and nickel.[1] It has the world’s fourth largest black coal resource and is the world’s fourth largest mining country.[2]
And on the home front, mining accounted for about 13.6% of Australia’s gross domestic product in 2023.[3]
As a result, the country’s equity market has been shaped by its deep and liquid listed mining and resources sector. The Australian Securities Exchange is strongly weighted towards resource stocks, meaning fluctuations in global demand for raw materials have a direct impact on market performance.
Recently there has been a shift. Amid the global push towards energy transition and meeting net-zero goals, Australia has seen a shift in focus towards minerals critical to energy transition, such as lithium, nickel and rare earths.
But that shift has come alongside more market volatility. The lithium sector – once a high-flyer of the commodities market – has crashed more than 90% from its 2022 peak.[4] One impact of that has been uranium stepping into the spotlight, offering investors exposure to a commodity that enjoys a more stable demand outlook amid rising adoption of nuclear energy.
Nuclear potential
Australia boasts about 33% of the world’s known uranium resources and is the world’s third-largest producer of the metal – used as fuel in nuclear power plants and reactors – after Kazakhstan and Canada.[5]
The price of uranium has soared this year as technology majors like Alphabet, Amazon and Microsoft look to make nuclear power deals to meet rising energy needs for their artificial intelligence and data center projects.[6]
Nuclear-themed stocks have emerged as something of a bright spot for investment. A handful of uranium miners listed on the Australian exchange have had a solid start to 2025. Boss Energy had risen about 34% by the end of January, Paladin Energy had gained some 8%, and Deep Yellow had risen by 12%. Investors also see more room for growth[7] as international markets double down on nuclear energy as an alternative form of clean fuel – a move likely to trigger a further spike in demand for uranium.
Possible policy support will also help Australia’s global positioning. In late December, the center-right Liberal Party made nuclear power a cornerstone of its energy policy ahead of this year’s federal elections.[8] If successful, the plan could transform Australia’s energy policy and its uranium mining industry.
Stoking demand
Investments in the nuclear sector could prove opportune – provided investors are willing to navigate the volatility the sector is bound to face in the months ahead.
Securities-backed financing can be a handy way to gain exposure to nuclear stocks without sacrificing long-term potential gains in existing holdings, allowing investors to remain positioned for future upside.
Additionally, given the inherent volatility in mining stocks, securities-backed financing can serve as a buffer by offering investors the liquidity they may need to diversify their portfolios or reinvest in other asset classes or products. They can also make strategic reinvestments in other parts of the energy transition industry – like clean energy technology or renewables – to stay invested in this essential part of the market but in a diversified manner.
The debate over nuclear power in Australia is expected to rage on in 2025 and beyond. According to the Liberal Party’s energy scheme, seven nuclear power plants are to be built in Australia by 2050, with the first expected to start operations by 2036. But despite uranium’s potential to decarbonize economies, uranium mining remains banned in Western Australia and Queensland, states with vast deposits of the metal.[9]
Only time will tell whether Australia is ready to embrace nuclear power as a fundamental part of its energy transition journey. Nevertheless, the recent momentum in nuclear stocks signals that investors are willing to make long-term bets on the sector. Strategic tools like securities-backed financing can help them capture the right opportunities in a pragmatic way.
[1] https://www.trade.gov/country-commercial-guides/australia-mining
[2] https://www.trade.gov/country-commercial-guides/australia-mining
[3] https://www.trade.gov/country-commercial-guides/australia-mining
[4] https://tradingeconomics.com/commodity/lithium
[5] https://stockhead.com.au/resources/how-australias-nuclear-debate-could-hit-renewables-investors/
[6] https://www.fool.com.au/2025/01/06/4-asx-uranium-stocks-to-buy-now-amid-an-exceptionally-positive-outlook-for-nuclear-energy/
[7] https://www.fool.com.au/2025/01/06/4-asx-uranium-stocks-to-buy-now-amid-an-exceptionally-positive-outlook-for-nuclear-energy/
[8] https://www.mining.com/australias-211-billion-nuclear-plan-to-change-uranium-mining/
[9] https://www.mining.com/australias-211-billion-nuclear-plan-to-change-uranium-mining/
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