Is nuclear power politically dead?

Last week, stocks related to uranium, which is necessary for nuclear power, fell 20% to 35%, and then moved back up. 

“Once the Japanese reactors are contained and other governments have assured themselves that their plants are safe, the world will return to using their nuclear power plants and building new ones,” Malcolm Gissen, co-manager of the Encompass Fund, told Financial Planning.

Gissen said that Russia just received good news from Turkey, which said it wants to fast-track building the $20 billion four-reactor Akkuyu plant with Rosatom, the Russian nuclear corporation. These reactors would rest only 25 kilometers from an active earthquake fault line, but the leaders of both countries  claim new technologies will assure the plant is safe.

At the same time, China declared its six operating plants safe, while suspending approval of new nuclear plants while it reviews safety standards. Some 25 plants are planned.

In Europe, talk of voluntary nuclear “stress tests” for the region’s 143 power reactors is underway. Last week, Germany’s Chancellor Angela Merkel, locked in a tight election campaign, put a three-month hold on plans to extend the lives of seven plants, while taking two older plants off the grid. But she reiterated the importance of nuclear power, declaring it necessary until renewable power sources become a viable option.

If European leaders go forward with the tests, they’ll help ensure the future of nuclear power in Europe, according to Luis Echávarri, director general of the Organization for Economic Cooperation and Development’s Nuclear Energy Agency. But many analysts say the stress tests will simply stoke fear.

Depending on how the political winds play out, stocks in uranium producers and explorers could be a long-term buy.  As Gissen noted, uranium prices had jumped 75% in the six months before the earthquake. He thinks prices will go back up.

Nuclear power already provides about 13% of the world’s energy, including 80% of the power in France and 20% in the United States. Sixty-five plants are under development. The world has been consuming about 180 million pounds of uranium per year for the last few years. Mining provides about 110 million pounds. The difference, about 70 million pounds, has come from Soviet nuclear weapons being dismantled on the terms of a 1993 treaty between the US and Russia that expires in 2013. Uranium demand should increase if the treaty is not renewed, and as the new plants come on line, Gissen said.

Stocks to watch include Cameco, the largest uranium producer in the world; Uranium Energy Corp., the newest producer with facilities in Texas; UR-Energy (URG), the next American company likely to begin production out of Wyoming; and Paladin, a mid-sized producer out of Namibia with projects in Australia.