Cameco & Uranium Energy Poised for Nuclear Renaissance

In fact, British Prime Minister David Cameron and French President Nicolas Sarkozy last month signed a joint declaration of cooperation on nuclear power. France already gets 75% of its power from nuclear plants.

And while other countries like Germany have decided to purge themselves of nuclear power, their boycott will have only a limited effect.

The IAEA says that an accelerated phase-out of nuclear power in Germany, a government review of the planned expansion in Japan, and temporary delays elsewhere in the world will result in only a 7%-8% drop in projected demand growth for 2030.

Meanwhile, global usage of nuclear energy will rise 35%-100% by then.

That's good news for the long-term prices of both uranium and uranium mining stocks.

Cameco Corp. (NYSE: CCJ) and Uranium Energy Corp. (AMEX: UEC)

"Fukushima or no Fukushima, the world energy situation remains unchanged," Cameco CEO Tim Gitzel told the Canadian Press. "Huge quantities of huge, reliable and affordable electricity will be needed to meet future demand."

Since the 1980s, global electricity consumption has tripled and is expected to more than double again over the next two decades. Nearly two billion out of the world's seven billion inhabitants don't currently have access to electricity, Gitzel said.

"More reactors means more demand for uranium," he said.

Cameco intends to double its uranium production by 2018. And earlier this month the company agreed to buy AREVA SA's 27.94% stake in the Millennium project - a uranium mine in Canada's Athabasca Basin. That will increase Cameco's interest in the mine to 69.9%.

Cameco stock traded in the low-$40s prior to Fukushima and the mid-$50s when uranium prices peaked in 2007. So at its current level of about $23 a share, it looks like a bargain.

Another uranium miner trading at a steep discount is Uranium Energy Corp. Like Cameco, UEC is still 50% below its pre-Fukushima level even after an impressive surge to start the year.

UEC is the first company to start a new uranium mine in the United States in nearly six years. The Corpus Christi-based UEC aims to reach an initial production rate of 1 million pounds per year. Its processing plant in South Texas has the capacity to process up to three times that amount, which could nearly double what U.S. production is today.

Incidentally, U.S. regulators just approved the first new nuclear power station in more than 30 years - just as 15%-20% of the U.S. oil supply chain is being threatened by political disruptions in Iran.

Nuclear plants already produce about 20% of U.S. energy. In terms of uranium consumed by utilities, that translates into 55 million pounds of uranium per year. Currently, however, uranium mining in the U.S. only provides about 3.5 million-4 million pounds per year.

Both UEC and the Saskatoon-based Cameco will be prime beneficiaries of a nuclear revival. They're also major holdings in the Global X Uranium ETF. 

Jason Simpkins is managing editor of Money Morning.

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