Broker Canaccord Genuity (TSX:TSX:CF, LSE:CF) has noted that Japan's major policy shift to return to nuclear power augurs well for the wider industry and the uranium sector since the commodity is used to feed reactors.
In a note to clients, analysts wrote that Prime Minister Fumio Kishida said this week that the south-east Asian country aimed to restart seven further nuclear reactors from next summer.
This would increase the total number of reactors online to 17 out of the 33 ones in the country, which were operating before the Fukushima disaster of 2011.
READ: Standard Uranium says it is 'closer to a major discovery' at its Davidson River uranium project with completion of its spring/summer drill program
"This represents a major policy shift amid soaring energy costs, a global fuel shortage, and extreme weather," noted Canaccord analysts.
"While still subject to final approvals, this represents a dramatic shift in both government policy and public perception," they added.
"It is clear to us that many countries are revisiting nuclear power as a response to rising energy prices driven by the Ukraine war and as a tool for decarbonization."
The broker highlighted other recent examples of this, which included Belgium approving a 10-year lifespan extension for two of the country’s existing reactors that had been planned to shut down, and Germany reconsidering its plan to exit nuclear power.
Uranium bull run expected
Some believe uranium may be at the beginning of what could be a lengthy bull run as the world needs to shift to clean energy and as it faces a huge energy crisis.
The price is currently standing around US$50 per pound and has not fallen much in recent months. It is expected to move higher.
In terms of uranium companies, Canaccord said its preferred stocks included NexGen Energy, which it rates 'Speculative Buy' with a target price of C$10.75, and Denison Mines Corp (TSX:TSX:DML) ('Speculative Buy'; target price: C$3).
Other companies in the sector include Canadian Standard Uranium Ltd, which is bidding to make the next big discovery in the Athabasca Basin region of Saskatchewan. Its flagship asset is the Davidson River flagship project.
Meanwhile, GovieEx Uranium is advancing its flagship mine-permitted Madaouela project in Niger and the mine-permitted Mutanga project in Zambia.
Toronto-listed Appia Rare Earths & Uranium Corp is currently focusing on delineating high-grade critical rare earth elements and uranium on the Alces Lake property, as well as prospecting for high-grade uranium in the prolific Athabasca Basin at its Loranger, North Wollaston, and Eastside properties.
Blue Sky Uranium Corp is a Grosso Group company and has exclusive rights to properties in two provinces in Argentina.
Contact the author at giles@proactiveinvestors.com