Nuclear renaissance will survive despite Japanese crisis - Cameco

As Japan teeters on the brink of a disaster at its Fukushima DaiIchi nuclear power plant, Cameco chief Jerry Grandey suggests the uncertainty may delay, but not end the global nuclear renaissance.

Author: Dorothy Kosich
Posted: Tuesday , 15 Mar 2011

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RENO, NV -

As international news media reports broadcast the spectre of another Chernobyl at Japan's Fukushima DaiIchi nuclear power plant into billions of living rooms globally, the chief of one of the world's top uranium miners speaks from the perspective of decades of involvement in uranium mining and nuclear power generation.

Cameco CEO Jerry Grandey says he firmly believes the nuclear renaissance will survive the unfolding Japanese nuclear disaster, as the 60-plus power plants now under construction around the globe continue to forge ahead.

As of early Thursday morning, Tokyo Electric Power-a Cameco uranium customer for 38 years-ordered the evacuation of all but 50 most essential workers as radiation readers at the plant reached levels that Japanese government officials say can impact human health. Prime Minister Naoto Kan told the nation Tuesday morning that the radiation had spread from the Fukushima DaiIchi reactors and there was a very high risk of further radioactive material escaping.

The International Atomic Energy Agency (IMEA) reported that Japan has evacuated 185,000 people from towns near the nuclear complex, which has sustained a loss of grid power due to the massive earthquake Friday, followed by a loss of backup diesel generations due to the subsequent tsunami, which caused the failure of cooling systems needed to keep the reactor cores from overheating.

During a conference call with analysts, investors and news media Monday, Grandey said two Japanese utilities are directly affected. However, even if they were to temporarily deter part of their deliveries, Cameco would still be well within its guidance for their year, he emphasized.

Of the 54 nuclear power stations in Japan, 11 are now down due to the earthquake and the tsunami, Grandey said. Nevertheless, he explained, "Even if the 11 units remain down, it would not be all that significant to Cameco."

And, Grandey stressed, Cameco will not shift its uranium portfolio as a consequence of the events in Japan. Nor does he anticipate that the Saskatchewan-based uranium miner will have to sell back into the spot market.

No long-term contracts have been canceled at this point, Grandey noted.

In the meantime, it is "way too early" to tell if the nuclear crisis in Japan will impact global uranium joint ventures or mergers and acquisitions, he advised.

The most predictable consequence of the events in Japan is that the global nuclear industry will study what went wrong and learn from it, Grandey observed. The industry will need to understand what happened at Fukushima DaiIchi; and ensure that those nuclear reactors currently under construction modify their designs to mitigate any system failures in the future.

Nevertheless, global stock markets have taken a beating in the wake of the crisis, particularly Tokyo Electric Power, as well as companies with nuclear-power related businesses such as Hitachi and Toshiba.

Meanwhile, the electricity shortage caused by the damage has forced Japanese automakers, such as Toyota, Honda and Nissan to close for an indefinite period.

However, Chinese officials said they will not change the country's nuclear power plants energy policy as a consequence of the Japanese crisis. China and India have been driving the nuclear renaissance. China has 27 reactors under construction and plans to build another 160.

However, both Grandey and uranium analysts suggest the Japanese disaster could impact North American permitting processes for new reactors since they are already susceptible to the delays created by the political pressures of anti-nuclear energy NGOs. Grandey said press reports and "some people" were "fear mongering and spreading a lot of rumors" about the nuclear disaster.

The New York Times reported Sunday that "even staunch supporters of nuclear power are now advocating a pause in licensing and building new reactors in the United States to make sure that proper safety and evacuation measures are in place. ...Mr. Obama still sees nuclear power as a major element of future American energy policy, but he is injecting a new tone of caution into his endorsement."

President Obama last year made billions in federal loans guarantees for two planned nuclear reactors in Georgia. A project in South Carolina is under construction.

However, Senate Minority Leader Mitch McConnell of Kentucky told a news program Sunday, "I don't think right after a major environmental catastrophe is a very good time to be making American domestic policy."

Japan's nuclear crisis has reignited a heated political debate in Germany, which could have consequences for the planned extensions of the life spans of German nuclear power plants. Last October, Germany's parliament approved an extension of the lifespans of the country's 17 nuclear power plants, effectively reversing a planned phase-out of German nuclear power.

The issue is such a heated topic in the country; Germany's Green Party was founded as an anti-nuclear political party. Grandey told analysts Cameco has a "very small portfolio" with German nuclear power plants.

NUCLEAR RENASSIANCE STILL LIVES

Meanwhile, Grandey noted that the bulk of new nuclear power plant construction is taking place in "countries that desperately need the energy." Therefore, he is confident these nations will remain committed to their nuclear programs.

The IAEA says 29 countries now operating 442 reactors while another 65 plants are now under construction worldwide. The agency expects between 10 to 25 new countries to bring their first nuclear power plants online by 2030.

Sweden was phasing out nuclear energy until the Swedish parliament last year reversed a three-decade policy to move away from nuclear power. New legislation could allow up to 10 new plants to be built.

Russia is building 11 new reactors, as Moscow has advocated the development of small, floating reactors to supply power in the Russian Arctic.

As Grandey noted Monday-while the stock market is now reacting in fear to the crisis in Japan-ultimately, developing nations still require sources of reasonably priced and clean power to meet a global power demand that is expected to increase by 50 percent by2030