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The German government recently announced that it plans to shut down all of its nuclear reactors by 2022.
Germany’s decision is the result of anti-nuclear sentiment in the wake of the earthquake and tsunami in Japan, which damaged the reactors at the Fukushima nuclear plant.
Right now, nuclear reactors supply about a quarter of Germany’s electric power. It’s doubtful that the country can replace that with wind and solar. What’s more likely is that Germany will have to increase its already large imports of electricity from France, where nuclear already accounts for about 80% of electricity generation.
(You can get our latest views on the outlook for uranium, as well as our advice on how to spot the best uranium stocks, in our FREE special report, “Mining Stocks: How to Spot the Best Uranium Stocks, Metal Stocks and Junior Mines.” Click here to download yours now.)
Regardless, Germany accounts of only about 5% of global uranium consumption. Long-term global demand for nuclear power and uranium fuel appears intact. China and other emerging countries, such as India, will likely continue or expand their nuclear-power programs.
Already, increased nuclear power use in China has pushed up the country’s uranium imports to as much as three times 2009 levels. In addition, China recently raised its nuclear-power targets for the next decade by 60%, and shows no sign of moving away from those targets in the wake of the Fukushima disaster.
While these factors look promising, investing in uranium stocks does entail some unique risks. With any mine, for example, there is a long lead time from exploration and discovery to production. That’s especially so with uranium, which needs extra regulatory approval because of its radioactivity.
To lower your risk, we continue to recommend that uranium stocks make up only a limited portion of your portfolio’s resource segment. We also advise that you mainly invest in stocks of profitable, well-established companies with high-quality reserves.
Cameco Corp., symbol CCO on Toronto, provides an example. Cameco is the world’s largest uranium producer. The company supplies over 18% of global production, and has large, high-grade reserves, low-cost operations, significant market share and a number of uranium mines.
(You can get full details on this uranium stock in “Mining Stocks: How to Spot the Best Uranium Stocks, Metal Stocks and Junior Mines.”)
Cameco recently signed two contracts with Chinese nuclear authorities: it will deliver 23 million pounds of uranium to China National Nuclear Corp., China’s largest nuclear-power producer, by 2020. It will also deliver 29 million pounds of uranium oxide to fast-growing nuclear producer China Guangdong Nuclear Power through 2025.
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