28 September 2014

The Australian (Australia): Nuclear’s fortunes on the wane

Nuclear’s fortunes on the wane

The Australian, September 29, 2014 12:00AM

by Robin Bromby, Business columnist, Sydney

WE shall see this morning ­whether investors have spent an ­unsettled weekend and have ­decided to cut their losses when the market opens at 10am.

Who could blame them? There must be plenty of stale bulls who are now deciding whether to take their losses while they can or ­become accidental and unwilling “long-term” investors.

Even Pure Speculation is having doubts; after all, we have stood stubbornly behind a few stories — gold’s upward path is just having a short pause, we argued; a uranium crunch is heading out way, or so we thought; the developing world needs more electricity and the only quick way to effect that is to build coal-fired power stations — only to have them all blowing up in our face.

Gold is sitting at just $US1220 an ounce with Deutsche Bank saying a renewed slide could see bullion down to $US1185/oz (and silver to $US17.10/oz). What with Gaza, Ukraine and airstrikes in Iraq and Syria, you would have ­expected some safe haven buying of the yellow one. Alas, no.

We dealt with the dismal thermal coal situation last week only for McKinsey & Co to put another spanner in that works, arguing bioenergy could become competitive with coal. While it still can’t quite compete, McKinsey suggests technical improvements that would see it “step up as a fast and capital-efficient replacement for coal”.

Meanwhile, Japanese steel mills and Australian coking coal producers have set a new contract price of $US119 a tonne, the lowest for six years, neatly marking the sixth anniversary of the GFC onset.

And now along comes some disquieting analysis of the nuclear electricity story. Normally, we would have seized on the annual report during the week from Manhattan Corp (MHC), which has the Ponton uranium project in Western Australia, and which coincided with yet another rise in the spot uranium price, up $US2.50 a pound to $US36.50/lb. Executive chairman Alan Eggers writes that the uranium sector has been dominated by “negative industry sentiment, falling supply and lacklustre demand among buyers of nuclear fuel”. He then outlines a reasonably cheerful outlook, and one to which Pure Speculation has been an adherent.

Until we read another report written by eight European and Japanese heavyweight thinkers in the field, headed by Paris-based Mycle Schneider. Their World Nuclear Industry Status Report 2014 has a stark and simple message: “The nuclear industry is in ­decline”.

There are 388 operating reactors around the world, 50 fewer than in 2002. Installed capacity is back to where it was 20 years ago.

The nuclear share of the world’s power generation declined from its peak of 19.6 per cent in 1996 to 10.8 per cent in 2013. In terms of revenue, nuclear now accounts for a lower percentage than in 1984.

In all, there are 67 “current” ­nuclear reactor projects, which sounds impressive until the report explains that eight of those reactors have been listed as “under construction” for more than 20 years; at least 49 have encountered construction delays, some for several years, and for the first time Chinese projects have also been delayed; for the remaining 18 reactors, either construction began within the past five years or the reactors have not yet reached projected start-up dates.

“Delays have occurred in the development of the nuclear programs for most of the more advanced newcomer countries, including Bangladesh, Jordan, Lithuania, Poland, Saudi Arabia, Turkey and Vietnam,” the report adds.