Developing countries with an insatiable thirst for electricity are going full speed ahead with new reactors a year after the Fukushima Daiichi disaster disrupted the growth of nuclear power around the world.
Innovations in nuclear design are tackling problems like the ones that contributed to the Fukushima Daiichi disaster in Japan. WSJ's Rebecca Smith reports.
Sixty nuclear reactors are currently under construction globally, with 163 more on order or planned, according to the World Nuclear Association. That is little changed from the trade group's February 2011 survey-a month before Fukushima-showing 62 reactors under construction and 156 on order or planned.
The numbers belie the perception that the nuclear power industry was stopped in its tracks after the meltdown at the Fukushima nuclear plant following an earthquake and tsunami, the worst nuclear disaster since Chernobyl in 1986. While Japan and some European nations prepare to shut down or idle their nuclear plants, the march to build reactors continues in developing countries.
"We didn't lose a single order after the Japanese Fukushima accident," said Sergei Novikov, a spokesman for Rosatom, a state company created to promote Russian nuclear exports. The company says its backlog of international orders rose to 21 plants at the end of 2011, up from 11 a year earlier.
The new reactors stem from crash industrialization programs in such emerging markets as China and Vietnam built around electricity-intensive industries like aluminum and glass. The new capacity also is raising living standards in more-advanced, but still accelerating, economies, like South Korea, where electricity increasingly powers everything from automated bathroom faucets to tablet computers.
David Fuller's view Nuclear power will always be a NIMBY issue,
not least in democracies where it is easier to mobilise green vote opposition.
I remain a proponent of new nuclear because we are going to need all the comparatively clean and reliable energy that the world can produce. Authors of the WSJ's article cite the International Energy Agency forecast that global energy demand will rise by more than 80% by 2035. There is absolutely no way that this demand can be met by renewable energy sources alone.
I said both before the Fukushima disaster and afterwards that a serious accident would stall the nuclear industry by up to a decade. Inevitably, this delay will vary considerably from country to country. For instance, growth economies have spent the last year reviewing their nuclear plans but there has been very little in the way of cancellations. Japan understandably has a different view and may never re-embrace a nuclear programme, albeit at the considerable additional cost to its economy of fossil fuel imports.
Abundant global supplies of shale gas and shale oil in many countries, although not Japan, will further delay nuclear power's renaissance now that we have the technology to develop these fossil fuel deposits comparatively cheaply. This is much more economical and reliable than any of the renewable power industries, although they will improve in line with mankind's scientific and technological advances.
Where does this leave uranium mining shares?
Most likely in an extended period of ranging, until the price of uranium completes its right-hand base formation extension and signals a new uptrend by sustaining a rally above the pre-Fukushima peak near $68. This will take time as investors are understandably concentrating on the many other stock market and commodity opportunities which are currently performing. Many shares favoured by Fullermoney also provide attractive yields.
Nevertheless, as other more obvious investment candidates fulfil more of their upside potential for this cyclical bull market, investors will be emboldened to speculate in some laggards among uranium mining shares and other depressed industries which have eventual catch-up potential. Additionally, the big, cash-rich miners are likely to do some bargain hunting, not least among cash-strapped junior miners with attractive portfolios of reserves in the ground. We can expect further takeovers in this sector.
Some institutional analysts are forecasting that strength in the uranium sector could come sooner rather than later. My thanks to a subscriber for these three reports on Dennison Mines (DML CN) (weekly & daily). For full disclosure, please note that Dennison is in my personal long-term investment portfolio.