The meltdown in uranium share is overdone and should offer opportunities to enter the market at prices back to Q3/Q4 2010, before the recent ramp up.

1. http://marketsandbeyond.blogspot.com/
http://www.pcgwm.com/
Uranium: follow-up
Uranium shares were hammered Monday and Tuesday following the nuclear crisis in
Japan and its consequences in the world for the nuclear electricity generation as a whole.
This is chilling people (therefore politicians in the West) and, as for the Three Mills Island
and Tchernobyl accidents, the anti-nuclear lobby is becoming more voiceful and media
start to listen.
• In India, the Minister (whoever he his) in charge of the nuclear industry said that
the design of nuclear plants will need to be reviewed (Areva is building 2 there).
• In France, ecologist are calling for a referendum within the next 2 years and
undoubtedly they will use this for the local elections next week et the following
• Gemany’s Merkel called for a 3 months moratorium on expanding the life of old
nuclear plants.
Let’s pause and reflect. Beyond the weak links (Germany, Switzerland, probably some
other Northern European countries and the Obama’s Administration), the leading
nuclear countries reaffirmed their commitment to the nuclear industry
(France, fast growing economies) – have they any sensible choice anyway. I even do not
see Japan renouncing to the nuclear electricity. After all the Fukushima nuclear power
station sustained the earth quake perfectly; it is the tsunami’s wave’s height that was
higher than the plant was designed for and caused damages to the cooling system. In
addition, from what I read (intox or reality?), the Fukushima reactors are from an old GE
design (1960s…) much less robust than recent designs. As reported by the NYT:
“But the type of containment vessel and pressure suppression system used in the failing
reactors at Japan's Fukushima Daiichi plant is physically less robust, and it has long been
thought to be more susceptible to failure in an emergency than competing designs.”
The question I am asking myself is: what could replace nuclear energy in the 20
coming years to meet demand? I do not see any but (1) increasing the consumption of
fossil fuel (coal and natural gas in particular - green energies will only represent a fraction
a requirements), (2) a technological breakthrough or (3) a substantial reduction in
demand.
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2. http://marketsandbeyond.blogspot.com/
http://www.pcgwm.com/
Today, (1) is the most likely alternative if the nuclear industry growth was to be phased
down, which I do not expect but if the Japanese problems turn out to be a nuclear disaster;
even so, I doubt China and other fast growing economies will stop their
programs beyond rhetoric toward the population to alleviate their fears. In the West, it
may be different in some countries, but I do not see the main nuclear ones to shift away
from this source of energy (France not being the least).
If one believes my "optimistic" (realistic) view of the nuclear industry, the coming days
may provide great opportunities to buy good uranium mining companies as
well as others involved in the nuclear chain.
In any case, contracts are long term by nature and due to the time horizon from the start of
building a plant to its completion, the collapse of uranium share prices (up to 50%
in 48h for most junior and intermediate miners), including Cameco (-24% at its lowest
Tuesday compared to Friday’s closing), the leading one, is unjustified in my opinion
when compared to fundamentals.
Disclosure: This was written to my Partners at P&C on Monday and updated/completed
Wednesday at Australia’s closing.
Source:
The New York Times: Experts Had Long Criticized Potential Weakness in Design of
Stricken Reactor
http://www.nytimes.com/2011/03/16/world/asia/16contain.html?hp
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