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Stock Strategist

Uranium Gets a Catalyst

Cameco is a winner in Japan's decision to restart its reactors.

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Welcome news arrived Friday for moribund uranium markets and miner  Cameco (CCJ)/(CCO), as the governor of Kagoshima approved what will be the first restarts of Japan's dormant reactor fleet: Sendai units 1 and 2. This follows the municipal government's Oct. 28 approval and sets the stage for restarts next year.

We expect roughly half of Japan's 48 functional reactors will eventually re-enter service, as economic imperatives overcome health and environmental concerns. Along with a wave of new builds in China and other emerging markets, uranium demand growth over the next decade should be the strongest since Chernobyl. Set against a continued drawdown of finite uranium inventories and underinvestment in mines due to low prices, we expect uranium prices to perform strongly though the end of the decade.

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Daniel Rohr does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.