The price of uranium could receive a boost from renewed instability in the Middle East if governments turn again to nuclear power, an industry executive told CNBC.
Last March, the Japanese earthquake and subsequent crisis at the Fukushima Daiichi nuclear power plants reignited safety concerns about nuclear power and stalled the industry's revival.
In the wake of the disaster, Germany announced plans to close its nuclear reactors and the Italian public voted to ban nuclear power for decades in a referendum.
The Market Vectors Uranium+Nuclear Energy ETF has been on a steady downward trajectory since the accident – although it has ticked up slightly this week.
Yet the supply and demand issues which drove the reinvigoration of the industry in the years before Fukushima still remain.
“Governments and policymakers are focused on finding energy sources that are secure and clean, and nuclear is still very much part of the mix, despite the situation in Japan,” Amir Adnani, CEO, Uranium Energy Corp, told CNBC Thursday.
Rapidly growing economies such as China and India are most focused on nuclear energy, as their need for electricity grows, Adnani said.
Supply of uranium to the world market has been supplemented with secondary sources of uranium, such as decommissioned Cold War nuclear warheads from Russia and the US, since the collapse of the Soviet Union, but this source is set to expire in 2013.
“That will be a real pinch in supply. The diminishing secondary supplies really drive supply and demand,” Adnani said.
There are around 60 reactors under construction around the world at the moment, with up to 300 planned over the next decade. At the moment, there are around 430 in total.
There is still a huge need for more electricity. Close to 20 percent of the world’s population – around 1.3 billion people - had no access to electricity in 2009, according to the International Energy Agency.
There has also been plenty of consolidation in the industry recently, as bigger players such as Rio Tinto, which completed the acquisition of Canadian uranium junior Hathor Exploration in January, looked for a presence in the nuclear space.