This is the first concrete sign that the Chinese nuclear industry is springing back to life.
Australia's most important trading partner has approved the construction of two nuclear power plants, which is a first since the Fukushima disaster in March 2011.
It has long been speculated that China would be forced to turn to nuclear power to curb the air pollution that has become a national embarrassment to the ruling party.
According to Bloomberg, 77% of electricity used by the world's largest energy consumer comes from coal- and gas-fired power stations, while only 2.4% of power is generated from nuclear.
China's original plans to triple its nuclear power capacity were put on hold following the Fukushima meltdown, which brought the global nuclear power industry to its knees.
It looks like China could wait no more, and that is great news for us as Australia has the largest known reserves of uranium, with most of it at BHP Billiton Limited's (ASX: BHP) Olympic Dam in South Australia.
Production and export of uranium (U3O8) in Australia crashed in the 2013-14 financial year, according to figures from the World Uranium.
The amount of U3O8 exported crashed over 38% to 5,512 tonnes in the last financial year compared with 2012-13, while the value of exports dropped nearly a quarter to $622 million.
The price of U3O8 is also starting to recover. Industry research company UXC reports an 11% jump in the price of yellow cake this calendar year to $US39.25 a pound.
This would be good news for not only the likes of BHP, but our two most notable pure-play uranium miners Energy Resources of Australia Limited (ASX: ERA) and Paladin Energy Limited (ASX: PDN). Shares in both companies have fallen 13% and 28% over the past year, respectively.
There's another small cap that's very leveraged to the health of the uranium industry. I am referring to Silex Systems Ltd (ASX: SLX).
I wrote about the blue sky potential for the stock a month ago, but warned that the stock is only suited for those with an iron stomach for risk.
Recently, Silex fell 7.3%, or 4 cents, to 51 cents – its lowest since February 13 this year. While I can't stress enough that the stock is only for those with a high tolerance for risk, the stock is worth a punt at current levels and in light of the improving fundamentals for nuclear power.
Let's hope there're no other nasty shocks.
