The nuclear emergency at the Fukushima Daiichi power plant in Japan that followed the massive earthquake and tsunami quickly spiralled into the country’s biggest post-war disaster.
After weeks of dealing with the dramatic radiation fears arising from the crisis, the Japanese have admitted the nuclear plant must now be scrapped, giving rise to major questions about the future operation of other facilities around the north-east Asian country.
Japan accounts for 12 per cent of global demand for uranium and it plans to build another nine nuclear plants by 2020 and at least 14 by 2030 in a bid to reduce national carbon emissions.
Globally, the International Atomic Energy Agency (IAEA) expects to see at least 73 gigawatts-electric (GWe) in net new capacity added by 2020 and 546 to 803 GWe by 2030. This compared with just 377 GWe of operating capacity at the end of 2010.
However, in the wake of the Japanese disaster, many countries are starting to question the viability and safety of their own nuclear plants.
Egypt has called on the IAEA to review the technical specifications of up to four plants to be built by 2025 as part of the north African nation’s bid to shift away from dependence on fossil fuels.
In parts of Europe, the response has been equally tough.
Germany has shut seven of the country’s 17 nuclear power stations on safety fears, even though the utilities that operate the facilities have not broken any regulations. The United States administration has gone the other way, publicly supporting its massive nuclear industry with plans to expand a loan guarantee program for nuclear plants to $US36 billion compared with just $US18.5 billion previously.
Yet it’s in the emerging countries of Asia where the actions of governments are being most closely watched.
China, the biggest energy user in the world, has indicated it will cut its 2020 target for nuclear power capacity and instead focus on installing fresh solar capacity.
The investment group CLSA in Hong Kong said recently that after speaking with contacts in China, it has cut its nuclear power order-flow estimates for Chinese power equipment suppliers by 60 per cent to 90 per cent. “With China halting new approvals the global nuclear build-out will slow down," CLSA’s Asian energy analysts said.
“We are unlikely to see any new construction starts in China in 2011 and very few in 2012-13."
Meanwhile India is, for the time being, continuing with aggressive expansion of its industry.
In many respects the underlying drivers for the uranium industry remain strong. The research company Bernstein estimates that for both China and India to increase their power consumption to developed world levels would require about four times as much uranium as now produced around the world.
Other stakeholders and observers are even more bullish.
Barry Brook, director of the Research Institute for Climate Change & Sustainability at the University of Adelaide, says if the trend for more low-carbon energy continues, nuclear energy will have to comprise up to 75 per cent of baseload electricity supply for modern and emerging economies by 2060.
“Globally, to service such power demands will need current levels of nuclear energy supply to increase 21-fold around the world," Brook told an industry conference in Adelaide in late March.
“For the protagonists of alternative energy sources such as solar and wind, those contributors would have to increase their infrastructure more than 40-fold to take even a 15 per cent slice of the future energy mix pie."
Australian Uranium Association chief executive officer Michael Angwin says he expects most countries with nuclear facilities to take some time to review their safety systems in light of lapses exposed in Japan.
“A number of countries have decided to take a look at some of the safety aspects of their nuclear industries and I think that’s a not surprising result and also, in some ways, a welcome result.
“I think in most cases what those countries will find is their nuclear power industries remain very safe. If there are changes to be made then they’ll be made," Angwin says.
China’s reported reversal on nuclear energy may still result in strong growth, according to Angwin.
“I have read the story about China but I think, at the moment, it’s pretty difficult to say what some countries might do and what they might not do," he argues.
“Even if there was some scaling back in China, the Chinese have very ambitious plans for the growth of their nuclear industry, which is quite fundamental to its economic growth and also to its contribution to managing climate change."
Australian explorers and producers also face an uphill battle to restore public confidence in both projects and demand for their output.
The country is the third largest producer of uranium in the world, behind Canada and Kazakhstan, and holds extra weight in the market by holding about a quarter of known global reserves.
Despite the fact that about 13 per cent of worldwide electricity is generated by nuclear plants, markets panicked as a result of meltdown fears and left uranium stocks battered and bruised.
Several producers, including
In a conference call held last month in the wake of the Japan nuclear incident, Paladin Energy chief executive
“I firmly believe that the [nuclear] outlook remains positive," Borshoff told investor and analysts.
“The 440 reactors that exist today will continue to deliver electricity at optimal levels [and] the 60-odd reactors under construction will be completed and those on schedule for construction start-ups – particularly those in the emerging nuclear economies, along with Russia and Korea – will remain."
But despite that bullishness, another executive at the company admitted Paladin would not be selling uranium at any price.
“We’re looking at our sales strategy and I think with where the prices are today, we certainly won’t be an active seller," said Dustin Garrow, Paladin’s general manager for marketing.
At the Australian Uranium Association, Angwin says he understands the fear but does not expect prices to remain depressed over the medium term.
“I do understand the fear and I do understand uncertainty and markets don’t respond very well to uncertainty," Angwin says.
“I think the fact is that the uncertainty at Fukushima will continue for some time. Yet there’s been a rebound in share prices and a rebound in the spot price . . . which I think will continue."
For Paladin’s Borshoff, any snap reaction to the nuclear incident is unjustified given the public’s faith in such industries as airlines that also entail safety fears. “In the end even, if you have a series of calamitous airline crashes, this will not stop the airline industry. It will learn, improve and move on and will not go back to sailing ships or dream of air balloons as being alternatives."
Angwin agrees that it is important for the industry to learn every available lesson from the accident.
“I think the thing which you can say about the nuclear industry is that it does its utmost to learn from the mistakes that are made," he says.
“I expect that there will be a range of inquiries conducted by the IAEA, by the government of Japan, by its nuclear safety authorities and by the utility itself to discover what happened here, and to deal with the lessons that are learned."
The Australian Financial Review