Andrew Walker reports that Cameco Corp. stock prices are up 50% in the past six months, and investors are wondering if this is the beginning of a longer-term recovery. Uranium prices have been in a severe slump for six years, and Cameco stock has been under pressure for a decade.
Most of the industry pain since 2011 is connected to the Fukushima nuclear plant damage that occurred in Japan because of the impact of the tsunami. The country shut down its entire fleet of nuclear reactors in the wake of the accident, and progress remains slow on getting them back online. In fact, only three of the previously 42 operable reactors were back in operation as of January this year.
Cameco and its peers are hoping 2017 will bring better results. The Japan Nuclear Regulatory Authority (NRA) accepted restart applications for 26 plants in March.
In addition, a court recently lifted an injunction on two other reactors that were restarted last year. So, things are slowly improving in Japan, and 4 new reactors are planned.
Around the world, more than 60 new reactors are under construction, and more than 150 in the planning stage in countries such as China and India, who are working to ensure that they have the power generation needed to keep up with development. As a result, annual uranium demand is expected to rise soon and by 50% through 2030.
This all sounds positive, and it is, but tough times are still on the horizon in the near term, such as low prices and demand are expected to improve soon, e.g. TEPCO contract, evaluation of selling U.S. properties and mines, and other actions.
But, Cameco is embroiled in a battle with the Canada Revenue Agency (CRA) over taxes owed on earnings generated through a foreign subsidiary. If Cameco loses the case, it could be liable for more than $2 billion in taxes and penalties.
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