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Plans for nuclear reactors have been put on hold worldwide in the wake of Japan's nuclear crisis, blurring the short-term outlook for uranium, but the need for low-carbon energy supplies promises to keep demand for the metal burning for a long time.
Reactor programs are under threat as Europe, the United States and China review plans after Japan's worst earthquake left some reactors on the edge of meltdown, stirring fears that additional mine supply being developed after years of under-investment could find few takers.
Uranium prices have fallen 10 percent to below $60 US a pound since the March 11 earthquake and tsunami, losing a fifth from January's price of nearly $75, itself nearly half an all-time of $136 in 2007.
Commodities analysts do not rule out further declines as the sector faces the equivalent of a nuclear winter of public opposition and consequent divestment.
"A $60-per-pound uranium oxide figure is the minimum required to encourage new mines," said Warwick Grigor, a sector analyst and chairman of BGF Equities in Sydney.
It is too early to tell if the world will again turn away from nuclear power generation as it did in 1979, after the Three Mile Island incident in the United States, and the 1986 Chernobyl disaster in what was then the Soviet Union.
"If the outcome of the reviews leads to widespread cancellation of new nuclear capacity, there could be sufficient new demand for liquefied natural gas to compensate for the shortfall," said Arnon Musiker, an energy and utilities analyst for credit ratings agency Fitch.
Japan's worst humanitarian crisis since World War Two appears far from over more than a week after a 9.0 magnitude earthquake and 10-metre tsunami flattened coastal cities and killed thousands, as well as triggering the world's worst nuclear crisis since Chernobyl.
While every existing plant in the United States is likely to undergo a review, Jerry Grandey, chief executive of Canada's top uranium producer, Cameco (CCO-T) said he didn't see an end to re-licensing.
"I don't think they're at risk of being shut down," he told Reuters. "I think they're all going to go through this self-examination and that would be expected."
There are 23 reactors in the United States of design similar to the one affected by the crisis in Japan.
Japan is a large consumer of uranium, accounting for 12 percent of global demand, which is estimated at around 85,000 tonnes, but the run-up in prices over the last six months was fueled by Chinese demand.
Energy-hungry China's ambitious reactor building program has been the spur for plans by mining companies to boost output of the uranium oxide necessary for nuclear power plants.
China put on hold approvals last week for proposed plants and vowed to reconsider long-term plans for 28 new reactors, or 40 percent of all those being built worldwide.
Before the disaster at Japan's Fukushima Daiichi nuclear facility, China's demand for uranium was projected to grow 44 percent a year to reach 18,000 tonnes by 2016, said Rebecca Petchey, an analyst for the Australian Bureau of Agricultural and Resource Economics and Sciences.
But a strategy heavily weighted toward China now appears more risky after Beijing suspended construction plans for nuclear power stations in the wake of the disaster.
Further clouding China's future uranium requirements, the State Council also ordered relevant departments to make emergency safety checks at existing nuclear plants.
And in Europe, where nuclear power is widely employed, Germany has shut down seven reactors built in the 1980s for safety checks in response to the crisis.
No new forecasts have been issued since the Japanese disaster, but industry and analyst forecasts of a shortfall in mine supply of uranium, seen at around 59,000 tonnes against consumption of 86,800 tonnes this year, may now be overstated.
Sydney-based Stock Resource is warning clients it could take three to four years for tightness to return to the uranium market because of the problems in Japan and uncertainty over other nuclear power plants.
After falling as far as $7 a pound on spot markets in 2000, uranium prices staged a spectacular rebound to highs of $136/lb by mid 2007 on the spot market U3O8.
Prices were pushed up as it became apparent that demand for uranium was increasingly outpacing new mine supplies, a feature of the market since 1990.
Much of the gap was being filled with secondary supplies of uranium -- stockpiled fuel and nuclear arms decommissioned since the end of the Cold War -- which are now in decline. That additional supply provided nearly half of demand in 1999 but by 2010 it had dropped to 30 percent, Petchey estimated.
The decline in secondary supply may accelerate once the megatons for megawatts program that converts Russian nuclear warheads into reactor fuel expires in two years, taking secondary supply lines from Russian and U.S. uranium stocks to as low as 5 percent from 40 percent now, analysts say.
MARKET VOLATILITY MAY HIT JUNIORS
John Borshoff, chief executive of uranium miner Paladin Energy (PDN-T), predicts uranium prices will rise in the short term on a supply shortage and demand will remain strong from developed nations that have no alternative to nuclear energy for significant portions of electricity output.
But market volatility amid the Japanese crisis will make it more difficult for junior miners to raise funds, presenting some opportunities for bigger players, the executive said in a TV interview on Australia's Inside Business.
"I think that the position of all sensible people is that the industry will learn and it will become even safer, and if you think Japan is going to give up its nuclear generating, well, I don't know what's going to replace that," Borshoff said.
Doug Ritchie, chief of the energy division of global miner Rio Tinto, is in the same camp as Borshoff.
Ritchie sees the uranium market in balance through at least 2020, he said in a presentation on the company's website, without making any mention of the Fukushima Daiichi catastrophe.
He said Rio was doing studies to extend the life of its Rossing mine in South Africa, the world's third-largest uranium mine, beyond 2023.
Rio was also pursuing "multiple options" to extend the life of Ranger Pit 3 deposit in Australia, operated by its 68 percent subsidiary Energy Resources Australia beyond 2012.
An increase in outstanding shares of a uranium exchange-traded fund suggests others too still see a bright future for the nuclear industry.
About 500,000 new shares in Global X Uranium were created last week, even as the share price of the ETF plunged about 25 percent since the disaster.
Despite its uranium endowment as home to the world's largest deposit, Australia holds barely a fifth of the global market.
Australia has almost 40 percent of the world's known uranium reserves, but supplies only 19 pct of the world market. It has no nuclear power stations.
The country now has only three mines, BHP Billiton's Olympic Dam, the world's biggest, Energy Resources Australia's Ranger mine in the Northern Territory, and the Beverly mine, owned by U.S. company General Atomics.
The big uranium producers developing plants in Australia have mostly been silent on the implications of events in Japan.
BHP Billiton, Cameco, Rio Tinto and others are taking steps to dig new mines and expand old ones in hopes of capturing a forecast 20 percent leap in consumption of uranium raw material yellowcake, by 2015.
In Australia, BHP wants to mine 90,000 tonnes of uranium from its yet-to-be-developed Yeelirrie over 30 years but has yet to break any ground.
BHP's Yeelirrie deposit in northwest Australia is the country's second-biggest unmined uranium deposit after Rio Tinto's mothballed Jabiluka lode in the Northern Territory.
BHP also owns the Olympic Dam mine in neighboring South Australia, where it plans a massive expansion to 19,000 tonnes a year from 4,000 tonnes now, but has given no further details.
Cameco has set a tentative start date of 2015 for its Kintyre uranium mine. Nearby, ERA owns the Mulga Rock deposit, holding enough uranium to light up Tokyo for 30 years.
Countries such as Kazakhstan, the world's top producer, and parts of Africa, are also racing to dig new lodes, with Kazakhstan's output alone forecast to grow 12 percent this year to 20,200 tonnes, according to Petchey.
Japan's envoy to Kazakhstan, Yuzo Harada, has said he doubts the tragic events in his country will affect nuclear cooperation or uranium supply pacts, adding that Kazakhstan aims to capture 40 percent of the Japanese uranium market.