LONDON, Feb 20 (Reuters) - Physical uranium is gaining traction as a traded commodity for investment banks like Goldman Sachs and an investment for hedge funds after prices of the nuclear fuel ingredient soared to 16-year highs.

Below are details of the mechanics of how funds source and store physical uranium:

Funds that invest in physical uranium buy uranium oxide concentrate (U3O8), or yellowcake, which is created by milling and chemically-processing uranium ore, separating uranium from waste rock.

Yellowcake has low radioactivity and needs further processing or enrichment before it can be used as nuclear fuel, but the whole uranium sector is highly regulated as the metal can also be used for weapons.

In the West, there are only three licensed storage facilities where investors can store physical uranium: Cameco in Canada, ConverDyn in the United States and Orano in France.

Financial institutions of all types hold about 113 million pounds of uranium, according to consultancy UxC. This is equivalent to roughly 65% of the current annual global consumption of uranium by nuclear power plants.



Canada-based Sprott launched in 2021 and is the largest with 63.6 million pounds of uranium. Last year it bought 4 million pounds and in January purchased 400,000 pounds.


London-listed Yellow Cake plc launched in 2018 and has 20.2 million pounds. It has an agreement with the world's biggest uranium producer Kazatomprom, giving it the option to purchase up to $100 million of uranium each year.


The Switzerland-based fund offers its Uranium Actively Managed Certificate, which buys physical uranium. It does not publicly disclose its uranium holdings.


Kazatomprom was a seed investor in ANU Energy, a privately-owned physical uranium investment fund launched in 2021 that targets Asia and the Middle East.

The initial investment was $74 million and other major seed investors were Kazakhstan's sovereign wealth fund and the investment wing of the country's central bank. It is planning a public or private placement of up to $500 million, but has not said when.

(Reporting by Eric Onstad; Editing by Emelia Sithole-Matarise)