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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.

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