Three Mile Island. Chernobyl. Montgomery Burns. Nothing good, you might well argue, ever comes of nuclear power.
But the world is currently facing a bit of a dilemma; either we start splitting some serious atoms, or the lights go out.
One city-based uranium trader, who declined to be named, says the need for nuclear is clear. "Wind and solar - you're in cloud cuckoo land if you think that's the answer. You need baseload power, and the carbon issue means it's going to be nuclear."
Now everyone, from Homer Simpson's boss to Barack Obama, is supporting nuclear. It's ironic for anyone who grew up in the 1980s with Greenham Common, posh-boy agitprop and Michael Foot's famous duffel coat that we should ever be looking at large lumps of uranium with a warm, fuzzy glow in our hearts.
The warm, fuzzy glow was always supposed to be a side effect of this metal at the crazy end of the periodic table.
But the simple maths is this: making electricity with advanced nuclear technology costs around $16 per megawatt hour. Clean coal is $23; clean gas is $55.
And when even the US stands up and says it's time to look at the nuclear option for real safety of sustainable supply, we should all take note. Especially investors. Uranium oxide. U3O8. Yellowcake: the new green fuel.
Currently, there are 45 nuclear reactors being built. According to industry analysts UxC, there are plans for more than 400 new nuclear power stations currently announced - roughly the same as those currently in use.
From Algeria to Vietnam, the race to get low-carbon, dependable power is taking shape.
By 2015, industry forecasts show uranium demand again exceeding supply as new nuclear comes online and existing mines are depleted. It's a great time to be a nuclear power station builder, or indeed a uranium miner or refiner.
It's unlikely you or I will be able to take a night course and start our own nuclear plant construction company, so the natural thing to do is look at where the investment angle lies.
Like most commodities, the demand and supply is easy to understand - utilities need it, and burn it up in their power plants; roughly 200lbs of uranium oxide per gigawatt equivalent of electricity, but the initial load is roughly triple that.
Miners find it, processors refine it, specialist companies store it. Like oil, gaining a permit, and extracting first product can take a decade.
Unlike oil, from extracting the raw material to production of a fuel rod can take 18 months. Worse, spot prices at $40/lb make marginal mines plain unfeasible; if they close, and then demand picks up, prices will spike.
That pushed prices to $130 in 2007. Another issue is that of concentration; lots of places have uranium, from Canada to western US, eastern Europe, and sub-Sahara, but 40% of reserves are in Australia. That said, Kazakhstan increased production by 58% last year to become the number one producer.
When a new mine like Cameco Corp's Cigar Lake in Canada springs a massive leak, which it did in 2006 and again in 2008, then 10% of the world's future supply is put on hold.
Imagine one oil field pumping 10 times what Prudhoe Bay does, and you have an equivalent. Cameco, listed in New York and Toronto only recently updated on repair works. Industry experts suspect full production won't start until 2013, but Cameco is expected to provide further guidance at the end of February.
However, Cameco has several producing mines, accounts for 15% of global production, a market value of $11 billion, and has 500 million pounds of proven and probable uranium reserves - not to mention its gold and electricity businesses.
The stock returned 62% gains in the past year, but is $5 off its 52-week high seen in January, and trades on 21.5x forward earnings.
Toro Energy, listed in Sydney, is poised for better fortunes after a change of government in Western Australia allowed it to acquire leases there, it has producing mines in Oz and Africa, and the shares trade at 12 cents to give it a cap of A$110 million. Uranium One is also worth a look - the Toronto-based explorer just announced a 400% rise in Kazakh reserves, to a healthy 47.8 million.
A more direct way to play the nuclear story is in Uranium Participation Corp. It buys and holds uranium, its stock tracks the spot price, and the company holds just north of C$600 million worth of product; investors track the net asset value, which is reflected in the share price. If uranium prices rise, so does the share price - simple.
One final idea is a bit broader. There are a couple of ETFs that track global nuclear indices, so giving you exposure to miners, refiners, technology and utilities.
First is the iShares S&P Global, listed in New York, which has an asset value of $14 million and a TER of 0.48. Cameco is its top holding. Also there's the World Nuclear Association Global Index run by ETF Securities, which is more diversified with 65 holdings and a higher TER of 0.65%.
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EXT Price at posting:
$7.15 Sentiment: LT Buy Disclosure: Held
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