At approximately 10 p.m. ET Wednesday, Russia launched a major military assault on its neighbor Ukraine -- and all of a sudden, Europe's policy of depending on Russia to supply much of the natural gas it uses for heating homes and generating electricity is seeming less prudent.
One stock benefiting from this realization is Cameco (CCJ 1.97%), one of the world's biggest miners of uranium used in nuclear power plants. As of 2:15 p.m. ET Thursday, Cameco shares were up 6.7%.
This was a natural reaction on investors' part. As the BBC pointed out in an article published Thursday, Russia supplies around 40% of the natural gas that the European Union imports.
Much of that supply is now at risk due to the ongoing hostilities: Two of the major pipelines that Russia uses to export its natural gas run through Ukraine. Even more of that supply could be lost if Europe's sanctions are extended to ban the purchase of oil and natural gas from Russia. European leaders have been understandably reluctant to take that step, but the fact that Germany has already suspended certification of the Nord Stream 2 pipeline -- a step that few thought it would agree to -- suggests that firmer responses are possible.
And if natural gas supplies from Russia are cut in a long-term way, either in part or entirely, then obviously, Europe will need to supply its energy needs from other sources. The nuclear industry could benefit from meeting those electricity-generation needs.
Result: Investors are bidding up the share price of a company that would benefit from an increase in demand for the uranium that makes nuclear power possible.
As I said, this is a natural reaction. Investors should be aware, however, that it can take years -- even decades -- to build and commission a new nuclear power plant. Nor are the new uranium mines that would be needed to supply such plants developed in a day. In recent conversations with investment house Ocean Wall, which focuses on alternative investing opportunities, I was told it can take as long as three years to bring a new uranium mine on line.
Cameco stock rose Thursday based on the premise that the conflict in Ukraine will incentivize Europe to build more nuclear plants, but if this is the beginning of a policy shift, it's one that will take years to meaningfully play out.