What happened
Shares of uranium mining companies including NexGen Energy (NXE -1.28%), Denison Mines (DNN), and Uranium Energy (UEC 0.60%) soared on Monday as fighting continued throughout Ukraine, and Western nations levied economic and financial sanctions on Russia.
As of 12:15 p.m. ET today, shares of NexGen Energy are up 9.2%, Denison is gaining 9.6%, and Uranium Energy is up most of all -- 14.6%.
Image source: Getty Images.
So what
Russian military forces attacked neighboring Ukraine last week, sparking fears of an exacerbated energy crisis in Europe, which depends on Russian exports for about 40% of its natural gas.
Granted, natural gas is just one of many things that an energy company can burn to generate electricity. In a pinch, you can also burn oil, coal, or wood if you've got the right equipment to accept them as alternative fuel sources, haven't disassembled your factories entirely in order to focus on using natural gas, and aren't overly concerned about creating greenhouse gases.
Alternatively, you can create abundant energy without any greenhouse gases by using uranium fuel at nuclear power plants. And as it turns out, one country that's been famously anti-nuclear for the last 11 years -- Germany -- is starting to rethink its energy policy. As Reuters reported over the weekend, new German economy minister Robert Habeck is considering reversing past policy and trying to find a way to extend the lifespan of Germany's last three remaining nuclear power plants.
Now what
News that such an outspoken opponent of nuclear power as Germany is having a rethink sparked immediate enthusiasm for the nuclear fuel, and the price of a pound of uranium has jumped 13% over the last five days, according to data from TradingEconomics.com.
Before investors get too excited over this prospect, however, consider that in his comments, Habeck expressed more than a little skepticism about Germany's ability to reverse a policy more than a decade in the making. "Preparations for the shutdowns are already so far advanced that the nuclear power plants could only continue to operate under the highest safety concerns," warned the minister, and even were Germany willing to accept this risk, "fuel supplies ... have not yet been secured" to permit continued operation.
Thus there are at least two ways investors can look at all of this: Either Germany may soon reenter the market for uranium, helping to boost uranium prices, or Germany might decide not to revive its nuclear plants at all.
In that latter case, today's jump in uranium prices could disappear as quickly as it arrived.
