World shelves nuclear plans

Fukishima. Photo: REUTERS

Sector faces winter of anti-nuclear public opposition and divestment

JAMES REGAN

Published: 2011/03/24 07:25:20 AM

PLANS for nuclear reactors have been put on hold worldwide in the wake of Japan’s nuclear crisis, blurring the short-term outlook for uranium, but the need for low carbon energy supplies promises to keep demand for the metal burning for a long time.


Reactor programmes are under threat as Europe, the US and China review plans after Japan’s worst earthquake left some reactors on the edge of meltdown, stirring fears that additional mine supply being developed after years of under-investment could find few takers.


Uranium prices have fallen 10% to below $60/lb since the March 11 earthquake and tsunami, losing a fifth from January’s price of nearly $75, itself nearly half the record high of $136 in 2007.


Commodities analysts do not rule out further declines as the sector faces the equivalent of a nuclear winter of public opposition and consequent divestment.


"A $60/lb uranium oxide figure is the minimum required to encourage new mines," said Warwick Grigor, a sector analyst and chairman of BGF Equities in Sydney, yesterday.


It is too early to tell if the world will again turn away from nuclear power generation as it did in 1979, after the Three Mile Island incident in the US, and the 1986 Chernobyl disaster in what was then the Soviet Union.


"If the outcome of the reviews leads to widespread cancellation of new nuclear capacity, there could be sufficient new demand for liquefied natural gas to compensate for the shortfall," said Arnon Musiker, an energy and utilities analyst for credit rating agency Fitch.




While every nuclear plant in the US is likely to undergo a review, Jerry Grandey, CE of Canada’s top uranium producer, Cameco, said he did not see an end to re-licensing. "I don’t think they’re at risk of being shut down," he said.


"I think they’re all going to go through this self-examination and that would be expected."


There are 23 reactors in the US of similar design to the one damaged in Japan.


Japan is a large consumer of uranium, accounting for 12% of global demand.


There could be sufficient new demand for liquefied natural gas to compensate for the shortfall.