[miningmx.com] — JSE-LISTED uranium miners took a beating on Monday, following two explosions at Japan’s Fukushima reactor in the wake of Friday’s devastating earthquake and subsequent tsunamis, which raised fears over the future demand for nuclear energy.
During late afternoon trade, Uranium One and First Uranium traded down 25.2% (at R31.07) and 6.19% (at R6.52) respectively.
According to Imara SP Reid analyst Percy Takunda, nuclear disasters have historically had a significantly dampening effect on power plant development.
“We are concerned about the long-term implications on planning and future nuclear power developments in the region if there is a radioactive disaster following the earthquake,’ said Takunda in a note to clients. “The uranium industry was in equilibrium and the current price incorporated some of the future demand coming on stream after 2014, particularly from China, but a disturbance in a significant demand area like Japan will alter the metal’s economics significantly.’
Japan generates about 10% of the world’s nuclear power.
Similarly, China is building 28 reactors – about 40% of the world’s total – representing 40 gigawatts of new nuclear capacity by 2015.
While China’s vice environment minister Zhang Lijun said on Saturday the country would not change its plans to develop nuclear power, according to Reuters, he said some lessons learnt from Japan would be considered in the construction of China’s power plants.
However, the news agency also quoted a senior official of the China Nuclear Society who said the Chinese target had been delayed for some months already due to conflicts between those who favour an aggressive expansion and those who want a more cautious approach, primarily due to concerns over safety and a lack of experienced personel to run the envisaged number of plants.
India, which plans for a 13-fold increase in power generation, has also indicated it would reconsider its expansion plans.
“This event may be a big dampener for our programme,’ Shreyans Kumar Jain, chairperson of India’s state-run monopoly producer, said in an interview with Bloomberg on Monday. “We and the department of atomic energy will definitely revisit the entire thing, including our new reactor plans, after we receive more information from Japan.’
The downward movement of First Uranium and Uranium One followed a similar fall in uranium shares on the Australian Securities Exchange earlier in the day, where stocks had lost between 8% and 17% in value.
Uranium traded at spot prices of about $66 per pound last week, representing an annual rally of around 40% on the back of higher demand forecasts.
Last week, Uranium One said it expected to produce around 10.5 million pounds of uranium at a cash cost of $18/lb.
First Uranium, which has recently derived all its revenue from gold sales, plans to recommission its Ezulwini uranium plant in the second quarter.
