Recent press reports say that Japan may be without any nuclear power come April 2012. The premise for this view is that local governments will not want nuclear generating stations restarted after routine maintenance. While we think the potential for a complete nuclear shutdown is unlikely, such an event would undoubtedly have a significant impact on the uranium, thermal coal and LNG markets.
In 2009, nuclear power comprised 30% of Japan's electricity production, in line with natural gas (through LNG) and higher than coal at 25%. If Japan were to close its nuclear facilities, the first question that needs to be answered is: can Japan replace the lost generation with its existing fossil fuel fleet? We believe they can. However, doing so would cost the country at least $30 to $38 billion more in fuel costs and would increase the country's CO2 output substantially.
David Fuller's view The Japanese may feel that they are caught between a rock and a hard place. The perceived dilemma: spend another $30 to $38 billion to pollute the planet, or risk being irradiated if another 30 to 40 year old nuclear plant succumbs to the next tsunami.
Of course it is somewhat of a phoney dilemma because Japan could spend the money on modernising and expanding its sensibly sited nuclear plants and closing those in harms way.
Unfortunately, the global nuclear debate since Fukushima has been more emotional than logical. This is understandable but plenty of taxpayers' money is going to be thrown at dubious renewable solutions and the polluting fossil fuel industry will be the practical beneficiary.
Uranium miners are cheap and offer long-term value for the most patient of investors.