The World is Going NuclearThe World is Going Nuclear
Looking ahead, there is likely to be a huge increase in demand. Nuclear power plants are most likely the wave of the future: China has plans for up to 40 plants; Japan, South Korea and France have all announced plans for new plants, and even in the U.S., President Bush commented that more nuclear plants may have to be built, as part of his energy plan.
Interestingly, opposition to new facilities may be more subdued going forward. Many environmentalists have publicly recognized that nuclear power is the cleanest of available sources.
The result is a huge gap over the next 10-15 years between expected requirements and production from existing sources (plus anticipated secondary sources). The World Nuclear Association, in fact, estimates that by 2020, supply (from existing facilities and secondary sources) will be only half the expected demand (40,000 tonnes versus 70,000 - 80,000 tonnes of demand).
This enormous gap arises from an over-reliance on inventories and secondary sources in the last decade, and the long lead times to permit new mines and bring them into production. To meet this new demand, there will have to be higher prices and new supplies; many of the properties being explored now will have to come into production.
Top Uranium Investments
So this is a great time to be building long-term positions in key uranium investments. We are focusing on four main areas
• Major producers that will benefit from higher prices; Cameco (CCJ, NY, 41.98) is the world leader; management would have to try very hard indeed not to benefit from higher uranium prices.
• World service leaders that will benefit from increased demand and market activity. Areva (CEI, France, Euro340) is a major recycler and leader in nuclear plant construction and management; it has lots of projects in the pipeline (including some in China) and a strong balance sheet. To be privatized by the French government, it currently trades on a “when-issued” basis.
• Top exploration companies that have the goods and are likely to bring properties into production. Strathmore Minerals (STM, Toronto, 1.85), with technically strong management, lots of properties, and a strong balance sheet, is arguably the best and out choice.