Uranium supply is about to plummet

Two years ago, the uranium industry got crashed following the Japan's tragic Fukushima disaster due to an earthquake. Japan virtually shutdown all its nuclear reactors. Similarly German and other EU countries also announced to shutdown their nuclear reactors gradually over the next few years. The demand for uranium has been plunging, so is its price. The spot price of uranium dropped from $90/lb to currently around $30. Needless to say, the ming companies for uranium got killed and have been struggled to survive. But there is a good chance that this downward trend is about to reverse and those who get in early in the trend will likely make a lot of money.

The thing is, the world still needs nuclear power and cannot afford to not use it. Actually nuclear power is the most efficient and green energy source. Even the founder of the Greenpeace, Patrick Moore, has said, "Nuclear energy is the only non-greenhouse gas-emitting power source that can effectively replace fossil fuels and satisfy global demand." Due to the severe shortage of energy, China and other Asian countries have planned to build more nuclear power stations, 30 more for China alone. Believe or not, even Japan is likely to reverse its policy to restart some of its nuclear reactors. After all, it is a huge cost of importing liquefied natural gas (LNG) for Japan to maintain their power supply. In the US, over 100 nuclear reactors are running and more are to be building. In other words, the demand for uranium is not decreasing but increasing, and significantly more in the years to come. So how about the supply? Not many people know, the uranium supply is going to be hit very hard pretty soon, actually in about a month in Dec. Why so? Well, 20 years ago in 1993, the US and Russia signed an agreement, so-called Megatons to Megawatts program. Under this agreement, the highly enriched uranium contained in ex-Soviet nuclear weapons was downblended and converted into nuclear fuel. So it is a win-win situation: the US got the nuclear fuel it needed and Russian got the hard cash it was longing for. It is said this source of uranium accounted for about half of the fuel needed for the US commercial nuclear power stations. But this agreement is ending in Dec 2013. You see, suddenly there will be a huge crunch of the uranium supply in just a few weeks. So what will happen to the uranium companies in the situation of very poor sentiment but very high demand however with drastically reduced supply? I think it is a no-brainer: it is bullish, very bullish.

I like Cameco Corp. (CCJ),  the largest pure-play miner of uranium and one of the world's largest uranium producers. It accounts for over 16% of the world's supply. CCJ has been struggling in the past two years with the stock price cut half, but the momentum is behind it now to go up. I think it has bottomed and will shoot up soon.