UPDATE 2-Cameco eyes Japan reactor re-starts after profit plunge

Wed May 1, 2013 2:49pm EDT
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By Rod Nickel

WINNIPEG, Manitoba May 1 (Reuters) - Profit at Cameco Corp , one of the world's biggest uranium producers, plunged 93 percent in the first quarter as uranium sales fell and prices were weaker, but the company said it expects Japan to restart some nuclear reactors this year, pointing to better times ahead.

The Saskatoon, Saskatchewan-based company, just trailing KazAtomProm and Areva SA in uranium production, said on Wednesday uncertainty in the short and medium term is hampering the uranium sector's recovery. However, it said it believes Japan will restart six to eight reactors this year, adding to demand for nuclear fuel to generate electricity.

A rebound in Japanese demand is expected to eventually lift depressed uranium prices, as are construction of new reactors in China and India and the scheduled end this year of a program to convert uranium from Russian warheads into low-enriched uranium for reactor fuel.

"I know we've been waiting for such movement longer than expected, but we are confident it will happen," Chief Executive Tim Gitzel said on a conference call. "The fundamentals of the industry, increasing demand and decreasing supply, require it. The question remains 'when.'"

Cameco shares were almost unchanged in Toronto, at C$19.68, recovering from a 5 percent drop earlier in the session. Cameco's Toronto-listed stock has lost more than half of its value since its 2011 peak.

The uranium market has been in a downward spiral since a massive earthquake and tsunami struck Japan in March 2011, crippling the Fukushima-Daiichi atomic power plant. Japan was the third-largest global producer of electricity from nuclear fuel in 2010, according to the World Nuclear Association.

Countries have reduced their dependence on nuclear power in the aftermath, sending the spot price for uranium sharply lower.   Continued...