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Cameco Welcomes Nuclear Commitment in Japan Draft Policy

Cameco Cigar Lake Uranium Mine
Structures stand at the site of the Cameco Corp. Cigar Lake uranium mine in northern Saskatchewan, Canada in this 2010 file photo. Photographer: Geoff Howe/Bloomberg

Feb. 26 (Bloomberg) -- Cameco Corp., Canada’s largest uranium producer, welcomed a commitment by Japan to nuclear power almost three years after the meltdown of three reactors at the Fukushima Dai-Ichi nuclear power plant.

As Prime Minister Shinzo Abe seeks the restart of the nation’s 48 reactors, all of which are idled for safety checks, the government yesterday presented its draft energy policy showing nuclear as an important component in the nation’s future energy mix. Cameco rose the most in more than three years in Toronto and other uranium stocks soared. Paladin Energy Ltd. surged 21 percent in Sydney trading today, its biggest one-day gain in more than nine years.

“To put it out now in black and white is very encouraging,” Cameco Chief Executive Officer Tim Gitzel said yesterday in an interview. “The process is unfolding as we thought it would, it’s just taking longer” than expected.

Uranium prices have slumped 47 percent since the March 2011 earthquake and tsunami that crippled Tokyo Electric Power Co.’s nuclear power plant. The disaster led to Japan suspending its fleet of reactors. Some of those plants will come back online this summer, Takayuki Sumita, director-general for oil, gas and mineral resources at Japan’s ministry of economy, trade and industry, told a Singapore conference yesterday.

Reactor Restarts

Japan’s Nuclear Regulation Authority may within two to three weeks narrow the list of the six nuclear stations undergoing safety checks to a final selection stage, Chairman Shunichi Tanaka said Feb. 19. The NRA is the arbiter of whether plants are judged fit to restart. Possible candidates and the timing of the process weren’t specified.

The Topix-17 index of electric power and gas utilities rose 0.3 percent at the 3 p.m. close in Tokyo. The benchmark Nikkei 225 Stock Average declined 0.5.

The restart of Japanese reactors is a “fundamental requirement” for a rebound in global uranium prices, said David A. Talbot, a Toronto-based analyst at Dundee Capital Markets. He said yesterday in a note that Japan’s draft energy plan will be approved by the end of March.

Cameco rose 8.2 percent to C$25.42 in Toronto yesterday. Denison Mines Corp., a Canadian uranium explorer, gained 9.2 percent. Ur-Energy Inc., a U.S. uranium miner, jumped 17 percent.

In Sydney, the shares of Paladin, an Australian producer of uranium, gained 9.5 Australian cents to 54 Australian cents at the close, the best performer on the S&P/ASX 200 Index. Energy Resources of Australia Ltd. rose 8.5 percent. Toro Energy Ltd. gained 12 percent.

‘Foggy’ Outlook

Uranium concentrate, or yellowcake -- the trade-able form of the commodity -- fetched $35.50 a pound yesterday, according to New York Mercantile Exchange futures prices. The commodity will average $43.25 this year, rising to $56 in 2015, according to the mean of 10 analysts’ estimates compiled by Bloomberg. Gitzel declined to give a price prediction.

“The short to medium term still seems foggy to us,” he said in Hollywood, Florida, where he was attending a mining conference organized by BMO Capital Markets. “I see probably more positive markers than negative now on the path” to reactor restarts.

Cameco, which is based in Saskatoon, Saskatchewan, last month agreed to sell a stake in a power plant for C$450 million as it focuses on uranium-mining. Gitzel said the company is excited about the long-term prospects for the market, with demand projected to outstrip supply.

“The price is going to have to move” or producers are going to have to respond, he said. “We have to just hunker down.”

To contact the reporters on this story: Liezel Hill in Toronto at lhill30@bloomberg.net; Christopher Donville in Vancouver at cjdonville@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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