Germany Abandons Nuclear Power---Market Yawns

Another sagacious decision by the Germans--a people known for wise decisions (LOL). Today it was announced that Germany will completely phase-out their nuclear reactors by 2022. The negative news had little impact on uranium stocks. This is not surprising as they are currently trading below liquidation value, despite uranium's positive fundamentals. Uranium One's Anton Jivov noted that:

Germany's plans to shut all of its nuclear power reactors by 2022 won't change the fundamentals of the uranium market, Anton Jivov, Uranium One's (UUU.T) manager of corporate development, says in an interview.

The company has reduced its forecast for uranium demand to 2020 to decrease by 5%, but this will likely be offset by growing demand from China, India and other emerging markets, Jivov says.
The bottom line: it does not matter what Western countries do regarding nuclear power. The future of the nuclear industry is in China, Russia, and India. These countries are the ones who need more power and have chosen nuclear power to provide clean, reliable, and domestic energy. Furthermore, most analysts do not expect other countries to follow Germany in exiting nuclear power. Energy consulting firm Lightbridge noted:

Germany's decision to shut all of its nuclear reactors by 2022 is an "emotional" response that will unlikely be matched by other countries, says Jim Malone, chief nuclear fuel development officer at nuclear-energy consultants Lightbridge. Shutting these plants will have a modest affect on the uranium market because there are currently 440 reactors and there could be more than 500 by 2022, he added. But there will likely be delays in building new nuclear in places like the US, Spain and Switzerland.
More importantly, the uranium market has already priced in a uranium depression, sending most uranium stocks down 60-85% since the Fukushima disaster. Outside of another nuclear meltdown, it is hard to see these stocks trade lower over the next 1-3 years. Remember, by 2013 the uranium market will be in a structural deficit as Russia's Megatons to Megawatts Program ends. The program currently supplies 40% of the global uranium market. Without a significantly higher uranium price, there is no way supply will be able to match demand longer-term.

Black Swan Insights 


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