The result is likely to be a 58 percent rebound in uranium to $90 a pound from $57 now, according to Goldman Sachs JBWere Pty and Rio Tinto Group, the third-biggest mining company. Uranium plunged 57 percent in the past year as an earthquake damaged a Japanese nuclear plant that's the world's largest and faults shut down reactors in the U.K. and Germany.
Plans for India and China to end electricity shortages will ripple from northwest Canada to the Australian outback and the flatlands of Kazakhstan, the primary sources of uranium. India will start up three reactors this year, with another six due in 2009, in India, China, Russia, Canada and Japan. Uranium demand worldwide will rise as fast as oil this year, or 0.8 percent, Deutsche Bank AG forecasts.
''The first wave of growth is going to come from the emerging economies,'' said John Wong, fund manager with CQS UK LLP in London, which has $10 billion under management including $150 million of uranium investments. ''People are starting to look at coal, at gas, at oil and seeing the energy prices go up, they wonder about uranium.''
The yearlong decline in uranium contrasts with record prices for oil and coal as Asian energy demand expands and concern mounts that emissions will cause global warming to worsen. The world needs to build 32 new nuclear plants each year as part of measures to cut emissions in half by 2050, the Paris-based International Energy Agency says.
Because malfunctions shut reactors in Japan, the U.K. and Germany, nuclear power production and uranium use dropped 2 percent in 2007, only the third time consumption has fallen since the 1970s, according to data compiled by BP Plc, Europe's second-largest oil company by market value. Prices are so low that some uranium mines are close to being unprofitable, says Merrill Lynch & Co., the third- largest U.S. securities firm.
''If you look at what is necessary to sustain increased production, to make the kind of projects that everyone is talking about fly, prices better not get much lower or those projects are going to fall over,'' says Preston Chiaro, chief executive of Rio Tinto's energy unit. ''I don't think that spot price is indicative of what prices will look like through the course of the year.''
In India, Nuclear Power Corp.'s 220-megawatt Kaiga plant in the southern province of Karnatka and another at Rawatbhata in the northern state of Rajasthan are due to come on line this year. China started two units in 2007 and will bring on three more through 2011, says the World Nuclear Association. Iran plans to begin generation this year at its 950-megawatt Bushehr reactor, which is at the center of the nation's conflict with the West.
''China is just on the verge of a second rapid phase of expansion,'' says Ian Hore-Lacy, director of public communications for the WNA in London. ``Each year China seems to raise their sights further.''
To be sure, safety concerns remain the biggest risk to nuclear construction and uranium's revival. Proposed reactors were canceled in the 1970s because of environmental protests, while accidents at Three Mile Island in Pennsylvania in 1979 and Chernobyl, Ukraine, in 1986 further eroded support. In Japan, new projects face delays as utilities improve earthquake resistance to restore confidence after the closure of Tokyo Electric Power Co.'s Kashiwazaki Kariwa and revelations that companies falsified safety records.
''It is worth remembering that this is an industry that can be brought to its knees overnight by one major mishap or one well-executed terrorist action,'' Paul Hannon, an analyst at London-based commodities research company VM Group in London, wrote in a report this month.
Uranium demand was 66,500 metric tons last year, according to data from Denver-based consultant TradeTech LLP. Consumption may jump 55 percent to 102,000 tons by 2020, forecasts Macquarie Group Ltd., Australia's biggest securities firm.
Uranium use now is 69 percent greater than the 39,429 tons that was mined in 2006, the most recent data from the WNA show. The balance comes from inventories and decommissioned weapons. A Russian accord to export fuel recovered from warheads to the U.S. expiries in 2013.
''Secondary supplies are finite and rapidly being depleted,'' Deutsche Bank analysts led by Michael Lewis said in a June 20 report. ``Continual supply issues and the likelihood of increased demand from utilities should drive the spot price higher during the third quarter of this year.''
Demand is set to increase as existing reactors are brought back on line, while nuclear energy gains converts.
South Africa, which is struggling to meet electricity demand, plans to award a contract for construction of a 120 billion-rand ($15 billion) nuclear plant. In the U.K., the Labour government wants more atomic capacity to reduce its emissions.
U.S. Republican presidential candidate John McCain said last week he will push to almost double the number of nuclear reactors to lessen the nation's dependence on foreign oil. Barack Obama, the presumptive Democratic nominee, also backs nuclear power. There are 104 reactors operating in the U.S., though the last to come on line was in 1990, according to the Nuclear Energy Institute.
Prices will have to increase if uranium production is to meet the rising demand, said Kevin Smith, head of uranium trading at New York-based commodities brokerage Traxys.
Canada's Cameco Corp., the world's largest uranium producer, reported it spent a total of about $45 to produce a pound of uranium in the first quarter, compared with its average realized price of C$40.85 a pound. While Cameco, which also mines gold, still posted a profit for the quarter, lower uranium prices are a problem for other companies developing new mines, according to Smith.
''There are a lot of production projects that are feeling the pain,'' Smith says.