Cameco stirs up interest in bombed out uranium sector

The faint stirrings of interest in the uranium sector are preliminary to be detected in the wake of the Japanese earthquake and tsunami, which set the scene for the most horrible atomic disaster since Chernobyl.

The tragic event prompted a rethink of nuclear policy worldwide, by means of Germany at the vanguard and sent the price of the fuel plummeting, bring the valuations of the companies mining uranium down with it.

Against this backdrop the world’s largest producer, Cameco Corp (TSE:CCO, NYSE:CCJ), is looking to close what seems to be a smart piece of business it have gone hostile with its US$530 million bid for Hathor Exploration (CVE:HAT), which own the Roughrider deposit in Canada’s Athabasca Basin.

More pain for uranium sector as price dips

Already battered by headwinds, as well as strong opposition from environmentalists, WA's fledgling uranium sector is set for additional grief amid expectation the nuclear fuel's low price will fall another 6 per cent inside the next few months analysts at consultancy Resource Capital Research say the forecast crash in uranium oxide spot price over the coming three to six months is despite what show to be sound long-term fundamentals for the industry.

However, the continued fallout beginning Japan's nuclear crisis and Germany's subsequent decision to close its 17 reactors by 2022 is probable to add downward pressure on the U{-3}O{-8} spot price, which, at $US48.85 ($46.16) per pound, is rear at levels seen immediately after the March tsunami trigger the Fukushima plant explosion the spot price was $US67.75/lb before the Fukushima crisis.

"The fund-implied price, an indicator of market value expectations looking out three to six months, points to a spot price of $US45.95/lb, reflecting expectations of possible new supply to enter the market and uncertainty over the point of potential Japanese and German utility surplus dispositions," RCR said in its uranium sector review the uranium sector have also been weighed down by broader macro-economic factors, such as concern concerning the state of the US and European economies.

Demand to drive uranium

THE forces driving the global growth of nuclear energy are the similar now as they were earlier than the Japanese disaster. That was the word sent out in recent times to shareholders by Toro Energy (TOE). The letter continued: “Energy demand and the need for internal energy refuge from a low-carbon, base-load supply will mean continual growth in the industry.”

Your correspondent last week asked one of Australia’s uranium veterans in relation to the outlook. This man was working on uranium projects here in the 1970s onwards and, while he’s stimulated on to other ventures, he takes a close attention in the uranium sector. And he visits China regularly.

On one such current visit he asked a senior official whether China would preserve its planned nuclear reactor construction program. Not only did the official authenticate this, but did so in a way that left our man with the impression that Beijing has even extra ambitious nuclear energy plans up its sleeve. As we have pointed out, China has no choice; it desperately needs far extra base-load power and, while ambitious, its wind energy building program will still be at the kindness of the breezes.