Fukushima blow will not prevent nuclear future

Philip Salter
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IN THE immediate aftermath of the Fukushima Daiichi nuclear power plant crisis, apocalyptic fears proliferated across the globe. Despite the panic that always accompanies nuclear incidents, the world’s growing energy needs will not disappear: nuclear is a solution that will not go away.

The nuclear industry has been seriously set-back by this disaster. Uranium dropped from $68.24 to $50.01 a pound, while the $1.16bn takeover offer from Russia’s ARMZ for Australian uranium miner Mantra Resources fell through. The latter plunged 29 per cent, while Cameco, the world’s largest uranium producer, was down by around a third. Although we have seen a slight bounce back, prices are still far lower than before the earthquake. According to Angus Campbell of London Capital Group, “uranium resource companies could be attractive investments” if CFD traders believe nuclear power has a future. Phil Gillett of Spreadex suggests that Rio Tinto, though not a pure uranium miner, could be a good play.

Until threats at the Fukushima plant have been resolved, the nuclear industry will not be able to move forward. Even then, there will be hurdles to jump. The political reaction in Germany shows the risks. Angela Merkel has shut all reactors built prior to 1980 to placate entrenched nuclear suspicions of her voters. Emerging markets have reacted less severely. Premier Wen Jiabao called for the suspension of approvals for new Chinese nuclear power projects, while Prime Minister Manmohan Singh asked for a safety review of India’s twenty nuclear power plants.

With phase three of the EU’s Emissions Trading Scheme (ETS) starting in early 2012 – part of a broader and sustained movement to decrease carbon emissions – it is hard to imagine that nuclear will not be an option. Michael Hewson of CMC Markets suggests that as wind and solar are unable to offer competitive economies of scale, the choice is between fossil fuels, nuclear and natural gas. In fact, Hewson suggests that CFDs in natural gas, or companies involved in its exploration, are options for traders. Campbell also says that “natural gas which is clean and relatively cheap” has a role to play in meeting future energy needs.

Despite this setback for the nuclear industry, and unless events in Fukushima turn far worse than currently expected, the nuclear sector will not be halted. China is set to complete twenty-seven nuclear reactors by 2015 and India has five plants under construction. Nuclear will remain part of meeting the world’s growing energy needs.