Pure play uranium miner Cameco (NYSE:CCJ) likes the long-term potential for nuclear power. However, the near-term outlook is more challenging. That's why the company just pulled its application for a new mine in Canada.

Fukushima overhang
The Fukushima nuclear disaster has had far-reaching implications. For starters, Japan shut down its entire nuclear fleet. That directly affected uranium demand. Further, other countries have questioned the value of nuclear power. Most notably, Germany announced that it would, over time, shutter its nuclear plants. And, of course, nuclear opponents are quick to point to the frightening events of Fukushima when attempting to stop nuclear development.

Whether you see Fukushima as a smashing success (no one died as a direct result of the meltdown) or as a sign of the risks nuclear power faces, there's less debate about the benefits nuclear has over carbon base-load power options like coal and natural gas. Nuclear is clean, and nuclear technology is far advanced from the plant that was hit with an earthquake and tsunami in Japan.

(Source: Maximilian Dörrbecker, via Wikimedia Commons)

It's why Cameco is still positive about the long-term future of nuclear power. In fact, there were 70 nuclear reactors under construction last year. Granted, Cameco expects over 50 reactors to shut between now and 2023, but it expects a net addition of more than 90 reactors over that span. China alone is expected to increase its fleet from 19 to 78!

Too much supply and not enough demand
However, while Cameco expects future demand to leave a supply shortfall of 15% that will have to be made up by new uranium production, that's just not the situation today. In fact, uranium prices remain weak due to oversupply, and demand hasn't recovered after Japan's nuclear exit. This helps explain why Cameco's earnings peaked in 2009 at about $2.80 a share and have been well under a dollar in each of the last two years.

(Source: U.S. Government)

Production last year was over 13% higher than in 2009, but uranium sales were about 3% lower. It's no wonder that Cameco is pulling in its horns on expansion projects like the Millennium mine in Canada. Why keep adding production in a weak pricing environment with tepid demand? The new goal is to expand as demand materializes.

Not a unique experience
The thing is, Cameco's experience isn't unique in the mining world. After China's growth began to slow, the supply/demand balance for a host of basic materials came unhinged. For example, Vale (NYSE:VALE) recently announced that it was shutting its Integra Coal mine in Australia. The mine is being put into "care and maintenance, as the operation is not economically feasible under current market conditions," according to a company news release.

That said, Vale sees a bright future for the various commodities it sells, just like Cameco expects good things for uranium. China, again, is the prime example. Vale points out that the country's urban population was about 20% in 1980 but is expected to hit as much as 80% by 2050. That will require massive spending on infrastructure and power.

But this move toward cities isn't a China phenomena; Vale expects the urbanization rate to stay above 1% for several decades even as the rate in China begins to slow. No wonder Cameco and Vale like what the future looks like. It's unfortunate that today doesn't look quite as rosy. And, thus, both are pulling back. Vale, for example, sold $6 billion worth of non-core assets last year. The idling of its Aussie coal mine is just a continuation of the trend.

If you take the long view...
Mining is a tough business these days regardless of whether you are pulling iron ore, coal, or uranium from the ground. Supply and demand are out of balance, but long-term trends still suggest a positive future. For more aggressive investors buying shares of miners like focused Cameco or more diversified Vale could be a good, if early, bet on continued global growth. They are both doing the right things to deal with today's market, but still have their eyes on tomorrow.