Email of the day (1)
Comment of the Day

July 13 2011

Commentary by David Fuller

Email of the day (1)

On uranium:
"This may provide some heartening news to those (like me) who are still long on uranium.

"Thanks again for terrific recent commentary."

David Fuller's view Thanks for the feedback and an interesting article.

The problem, as you know, is that just when people were justifiably talking about a 'nuclear renaissance', Fukushima provided the world with a Category 7 (the worst) nuclear accident. Yes, the aged plant was built in the 1960s and 1970s, on a known tectonic plate fault line, and even though huge tsunami's are a rare event.

Nevertheless, Fukushima reminded everyone else with nuclear power that most of their plant was antiquated. Elected politicians panicked, not least in Germany, and everyone called for a safety review. Governments also realised that they should repair or decommission the old nuclear power plants before building the considerably safer, newer versions. Public confidence in nuclear was undermined.

I fear this has set the industry back a decade, as we have seen before. I agree that uranium miners are cheap but I am concerned that they may just lie there. Yes, China and India are leading a truncated version of the nuclear renaissance, partly because they currently have very little nuclear power and what they do have is modern compared to plants in the west. There is a possibility that this new demand will lift uranium prices but this is far from the certainty of pre-Fukushima.

The UK government is at least talking about nuclear, which I am glad to hear, and the decommissioning and cleanup at Sellafield has largely been completed. Unfortunately, the government is short of money for the new nuclear plant required, not least because of its commitment to vastly expensive and inefficient offshore wind farms.

Unfortunately, the costs of new nuclear plants in the west has soared because post- 9/11 governments insist on fortifying installations against every possible imagined attack or natural disaster, no matter how remote the possibility. Insurance costs have also soared post Fukushima, despite nuclear's superior safety record relative to all other competitive and reliable forms of energy.

I believe that China and India will now lead not only the building of nuclear power stations but also the further development of this important technology over the next decade or more. I suspect that when the west sees their success in producing cheaper and more reliable green energy, and our publics turn increasingly against inefficient, unreliable and extremely expensive wind farms, that we will invite China or India to build our next generation of modern nuclear power stations in Western Europe and the USA.

Meanwhile, regarding the stale bull positions in uranium miners which I hold and some of you hold, my guess is that it will take at least a year of bumbling along near the bottom before supply from disillusioned holders is absorbed and a demand driven recovery occurs. If they recover sooner, we may see it first in the uranium price (weekly & daily). A well managed investment trust such as Geiger Counter (GCL LN) (weekly & daily), which I also hold, may do better because it appears to be diversifying into companies which have other mining interests in addition to uranium.

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