COLUMN-Unloved uranium may shine as longer-term bet – by Clyde Russell (Reuters U.K. – September 26, 2013)

Clyde Russell is a Reuters market analyst. The views expressed are his own.

LAUNCESTON, Australia, Sept 26 (Reuters) – It would be hard to find a natural resource less liked than uranium, but the radioactive fuel may just be the place for contrarian investors.

It’s not hard to see why uranium isn’t popular with swathes of the world’s public, given the high-profile disaster at the Fukushima nuclear power plant after a major earthquake and tsunami struck Japan in March 2011.

Uranium prices, both spot and New York futures , plunged after the Fukushima meltdown and have stayed depressed as countries such as Germany backed away from nuclear power amid rising public mistrust. Spot uranium is around $35 a pound, less than half of what it was before Fukushima and about a quarter of the all-time high reached in the middle of 2007.

Given that all of Japan’s 50 reactors are offline and Fukushima is once again in the news over the problem of the build-up and leaking of contaminated water, it hardly seems the right time to turn bullish on uranium.

But a couple of factors are pointing to better times ahead for the sector, although these are more medium to long term.

The first is that the Fukushima crisis hasn’t deterred nuclear appetite in China, India and Russia, the three main countries committed to increasing atomic generation.

China has 29 units under construction, Russia has 10 and India has seven, according to data on the World Nuclear Association’s (WNA) website.

Furthermore, China recently committed to accelerating reactor building as part of efforts to cut pollution from coal-fired generation, planning to have 50 gigawatts (GW) of capacity by 2017 and 200 GW by 2030, up from 12.5 GW currently.

The proliferation of new reactors in coming years should be enough to overwhelm the potential new mine supply of uranium, even assuming closures of nuclear plants in Europe and a slow restart for Japan’s atomic generators.

The current fleet of nuclear plants needs about 68,000 tonnes of uranium per annum, according to the WNA, with mine supply standing at 58,394 tonnes in 2012.

The gap has been largely met from stockpiles and re-processing of military weapons into power plant fuel.

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