Staying Bullish on Uranium
http://seekingalpha.com/article/273262-staying-bullish-on-uranium
The fear around nuclear energy is palpable. The catastrophic events in Japan on March 11 have put a damper on the momentum of what was fast becoming a nuclear renaissance. For the past several years, nuclear proponents promoted nuclear energy as a clean, efficient, reliable and safe alternative to dirty fossil fuels, and the world agreed.
A wave of new orders from BRIC countries as well as developed nations created a nuclear renaissance. Then over the past nine months, the price of uranium began to climb. Dormant since the 2008 recession, uranium rose from $42 per pound to a 52-week high of $72.65 in February.
The spot price of uranium fell over 25 percent in the days following the earthquake and subsequent tsunami in Japan. Value investors helped the troubled commodity regain ground by buying the plunge. But the question is still on everyone’s minds: What’s going to happen from this point forward?
On Monday, Germany announced it will shut down all of its nuclear reactors by 2022. The new policy is a complete reversal to the proposal to enhance Germany’s nuclear energy established by the government only seven months prior.
German Chancellor Angela Merkel stated to reporters on Monday: "Our energy system has to be fundamentally changed, and can be fundamentally changed .... We want the electricity of the future to be safer and, at the same time, reliable and economical.”
The decision by the German government to end its dependence on nuclear energy has once again riled the uranium market, but I believe the German decision is just creating short-term noise. Once this noise is gone, uranium stocks will once again reflect earnings -- and while sales to reactors in Japan and Germany may slump, the world's other 436 reactors will be as hungry as ever for uranium fuel.
Because as people are recovering from the Japan disaster – and possibly hating nuclear power more than ever – the supply and demand fundamentals of uranium have not changed in a significant way. The bottom line is that even in the wake of the Japanese catastrophe, uranium’s supply crunch lives on.
If we look out over the next eight to 10 years, which is the amount of time it takes a nuclear power plant to become fully operational, the market is still about 400 million pounds short of projected demand. The top 10 producers, which make up almost 90 percent of the uranium market, only produced 110 million pounds of uranium in 2010. In other words, uranium producers need to produce nearly four times the amount just to meet estimated new demand. The new supply will have to come from somewhere, or the price of the existing supply will need to increase to clear the market.
For uranium miners, the market is red hot. For investors, shares of the best uranium mining stocks could represent the best energy investment opportunity in decades.
The World Nuclear Association’s chart below sums up why now is the time to get into uranium-related investments. The world will be using more uranium for years to come, and many great investment opportunities appear in the midst of a supply crunch.
[Click to enlarge]
The supply crunch easily has the potential to become even more strained with 63 percent (note this is not the same as the top 10 producers mentioned above) of the current uranium production coming from only 10 mines worldwide. Additionally, the global supply of mined uranium is susceptible to supply shocks if one mine floods, or stops production for other reasons.
The most direct way to profit from the coming growth in nuclear energy and the shortage in uranium is to buy shares in the most productive uranium miners in the world. As I stated over a month ago, the tragedy in Japan and subsequent fear in the market have presented us with the opportunity to invest in several well-managed and fundamentally sound uranium companies. For well-informed investors with the patience to tolerate volatility for a couple of months, I think this could potentially be the single best opportunity to buy and hold uranium stocks.
A wave of new orders from BRIC countries as well as developed nations created a nuclear renaissance. Then over the past nine months, the price of uranium began to climb. Dormant since the 2008 recession, uranium rose from $42 per pound to a 52-week high of $72.65 in February.
The spot price of uranium fell over 25 percent in the days following the earthquake and subsequent tsunami in Japan. Value investors helped the troubled commodity regain ground by buying the plunge. But the question is still on everyone’s minds: What’s going to happen from this point forward?
On Monday, Germany announced it will shut down all of its nuclear reactors by 2022. The new policy is a complete reversal to the proposal to enhance Germany’s nuclear energy established by the government only seven months prior.
German Chancellor Angela Merkel stated to reporters on Monday: "Our energy system has to be fundamentally changed, and can be fundamentally changed .... We want the electricity of the future to be safer and, at the same time, reliable and economical.”
The decision by the German government to end its dependence on nuclear energy has once again riled the uranium market, but I believe the German decision is just creating short-term noise. Once this noise is gone, uranium stocks will once again reflect earnings -- and while sales to reactors in Japan and Germany may slump, the world's other 436 reactors will be as hungry as ever for uranium fuel.
Because as people are recovering from the Japan disaster – and possibly hating nuclear power more than ever – the supply and demand fundamentals of uranium have not changed in a significant way. The bottom line is that even in the wake of the Japanese catastrophe, uranium’s supply crunch lives on.
If we look out over the next eight to 10 years, which is the amount of time it takes a nuclear power plant to become fully operational, the market is still about 400 million pounds short of projected demand. The top 10 producers, which make up almost 90 percent of the uranium market, only produced 110 million pounds of uranium in 2010. In other words, uranium producers need to produce nearly four times the amount just to meet estimated new demand. The new supply will have to come from somewhere, or the price of the existing supply will need to increase to clear the market.
For uranium miners, the market is red hot. For investors, shares of the best uranium mining stocks could represent the best energy investment opportunity in decades.
The World Nuclear Association’s chart below sums up why now is the time to get into uranium-related investments. The world will be using more uranium for years to come, and many great investment opportunities appear in the midst of a supply crunch.
[Click to enlarge]
The supply crunch easily has the potential to become even more strained with 63 percent (note this is not the same as the top 10 producers mentioned above) of the current uranium production coming from only 10 mines worldwide. Additionally, the global supply of mined uranium is susceptible to supply shocks if one mine floods, or stops production for other reasons.
The most direct way to profit from the coming growth in nuclear energy and the shortage in uranium is to buy shares in the most productive uranium miners in the world. As I stated over a month ago, the tragedy in Japan and subsequent fear in the market have presented us with the opportunity to invest in several well-managed and fundamentally sound uranium companies. For well-informed investors with the patience to tolerate volatility for a couple of months, I think this could potentially be the single best opportunity to buy and hold uranium stocks.
Japan nuke plant gets tanks for radioactive water
TOKYO — Tanks for storing radioactive water were on their way Saturday to the crippled nuclear power plant in northeastern Japan where reactor cores melted after the massive earthquake and tsunami.
- APIn this June 3, 2011 photo released by Tokyo Electric Power Co., workers try to install a pressure indicator inside the Unit 1 reactor at Fukushima Dai-ichi nuclear power plant in Okuma, Fukushima Prefecture, northern Japan. (AP Photo/Tokyo Electric Power Co.) EDITORIAL USE ONLY
AP
In this June 3, 2011 photo released by Tokyo Electric Power Co., workers try to install a pressure indicator inside the Unit 1 reactor at Fukushima Dai-ichi nuclear power plant in Okuma, Fukushima Prefecture, northern Japan. (AP Photo/Tokyo Electric Power Co.) EDITORIAL USE ONLYAgoda - Hotels worldwide
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The new tanks should help prevent further environmental damage in the evacuated area around the Fukushima Dai-ichi plant by providing a secure place to store the contaminated water being used to cool the reactors as workers continue their battle to bring them under control.
Radioactive water has been leaking from the plant since it was struck by the March 11 disasters, with tons having already flushed into the sea and more continuing to pool across the complex.
Tokyo Electric Power Co., the utility that operates the plant, has said radioactive water could start overflowing from temporary storage areas on June 20, or possibly sooner if there is heavy rainfall.
Two of the 370 tanks were due to arrive Saturday from a manufacturer in nearby Tochigi prefecture (state), TEPCO said. Two hundred of them can store 100 tons, and 170 can store 120 tons.
The tanks will continue arriving through August, and will store a total of 40,000 tons of radioactive water.
Workers have been fighting to get the plant under control since the tsunami knocked out power, destroyed backup generators and halted the crucial cooling systems for the reactors, causing the world's worst nuclear disaster since Chernobyl in 1986. Several explosions have scattered radioactive debris around the plant, and reactors are puffing radiation into the air.
TEPCO also said robots with cameras that entered Unit 1 -- one of the three reactors whose cores have melted -- found Friday that steam was spewing from the floor. Nationally televised news Saturday showed blurry video of steady smoke curling up from an opening in the reactor floor.
The radioactive fumes were suspected to be coming from the suppression pool area, which is near the reactor core.
The radiation level near the smoky area reached as high as 4,000 millisieverts per hour, much too high for any human to get near that area, and confirming the formidable obstacles Fukushima workers face in fixing the problems at the reactors.
Nuclear fuel rods are believed to have melted almost completely and sunk to the bottom of three reactor containers, although falling short of a complete meltdown, in which case the fuel would have melted entirely through the container bottoms.
In one progress update, TEPCO said workers were successful in attaching additional pressure monitors at Unit 1. The plan is to keep adding pressure-reading equipment at all three hobbled reactors. The ones already there may have been damaged by the tsunami and quake, and may not be working properly.
TEPCO has promised to bring the plant under control by January, but doubts are growing that the plan was too optimistic. The plan calls for a reprocessing system for the radioactive water by June 15, with hopes of reusing the water as coolant in the reactors.
The March earthquake and tsunami left 24,000 people dead or missing, and left tens of thousands of others living in evacuation centers -- including residents near Fukushima Dai-ichi whose homes were intact but still had to leave to avoid risks of radiation exposure.
http://www.usatoday.com/money/topstories/2011-06-03-733815698_x.htm
___
Yuri Kageyama can be reached at http://twitter.com/yurikageyama
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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| http://news.xinhuanet.com/english2010/world/2011-06/04/c_13911020.htm |
| English.news.cn 2011-06-04 16:17:25 |
TOKYO, June 4 (Xinhua) -- The operator of the Fukushima No. 1 nuclear power plant in Japan said Saturday extremely high radiation was detected at the No.1 reactor building of the plant.
The radiation readings were up to 4,000 millisieverts per hour at the building, the Tokyo Electric Power Co. (TEPCO) said.
Earlier, the company sent a robot into the No. 1 reactor building on Friday to inspect its inside.
TEPCO also said that steam was observed rising out of the floor of the reactor's building. The stream is probably coming from water accumulated in the basement of the reactor building.
The utility has been battling to keep the plant under control since it was crippled by the twin disasters in March.
The radiation readings were up to 4,000 millisieverts per hour at the building, the Tokyo Electric Power Co. (TEPCO) said.
Earlier, the company sent a robot into the No. 1 reactor building on Friday to inspect its inside.
TEPCO also said that steam was observed rising out of the floor of the reactor's building. The stream is probably coming from water accumulated in the basement of the reactor building.
The utility has been battling to keep the plant under control since it was crippled by the twin disasters in March.
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