CCJ Glowing On Report And Trend Toward Nuclear

COVID policies have hurt many industries, and mining companies like Cameco Corp (NYSE: CCJ) felt the impact as well. For a uranium producer like CCJ, that meant closing a productive, remote mine at Cigar Lake, Saskatchewan. The closure and other measures taken took their toll on Cameco as it posted an annual loss of $53 million. While production concerns remain, the long-term fundamentals of the uranium market look bright and their earnings report on Wednesday showed it.

The Electrification Craze

Policymakers are infatuated with subsidizing and pushing the auto industry and virtually everything else toward the use of batteries. The idea certainly has appeal as it is expected to reduce emissions amidst increasingly more populated cities. The issue with increased utilization is supplying enough power for all of the devices. The power grid has been something that has been discussed extensively but has yielded little in terms of advances in supply. If you’ve experienced a blackout in California during 110-degree heat, you know what I’m talking about.

While wind and solar are great, the notion of being able to electrify everything seems almost unattainable and certainly not at a price point that many can afford it. Clearly the acceptance of coal and natural gas is becoming increasingly less desired by elected officials and there is a gap in what is required and what is being provided.

Uranium and Nuclear Power

This is where nuclear power and uranium production enter the picture. Tim Gitzel, Cameco’s president and CEO, discussed this trend during the company’s conference call.

“This is occurring precisely at the same time countries and companies around the world are making net-zero commitments, including in the US where the new administration has expressed support for maintaining the existing domestic nuclear power fleet and the construction of advanced reactors, it has recommitted the US to the global Paris Agreement and has ambitions to re-establish the country’s position as a global leader in the development of commercial nuclear technologies. From a policy point of view, there is recognition that nuclear will be needed in the toolbox to sustainably achieve both electrification and decarbonization.”

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