Plugging in to Uranium's Glowing Future

By MOHAMMED HADI and MARI IWATA
Coveting uranium can get you into all kinds of trouble. Unless you are a power producer, when it can make smart business sense.
The International Atomic Energy Agency forecasts that power generated from nuclear plants could double by 2030. Power producers fear they could face a shortage of uranium, so they are lining up supplies. Kansai Electric Power -- using nearly a third of Japan's uranium demand -- plans to buy mines.
Such demand could make uranium one commodity that will hold up relatively well in an economic slump. A nuclear power plant, after all, is the kind of infrastructure project a government might still fund as the economy slows, though the time lag involved means investors need to be prepared for the long haul.

On the supply side, tight credit has made it tough to dig new mines. Short-term problems like the flooding of a large Canadian mine called Cigar Lake tighten supplies further.
Uranium prices, and shares of the miners, haven't been immune to market turmoil. The metal's spot price has fallen about 40% this year. In part, though, that reflects retreating hedge funds. Contract prices, analysts say, have held up better.
Meanwhile, deals are being struck. Australia delivered its first uranium to China last month. This past week, Nuclear Power Corp. of India tapped France's Areva to meet its needs, the first foreign supply pact in India, where at least 14 nuclear plants are planned.
The planned rise in capacity and the fact that reactors keep running once turned on gives uranium a glowing future -- at least relative to more cyclical commodities.
Write to Mohammed Hadi at mohammed.hadi@dowjones.com and Mari Iwata at