Japan to restart nuclear reactors: Will it save Paladin Energy Ltd?

Japan expected to restart at least 2 nuclear reactors this year

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Plans to restart at least two of Japan's 48 nuclear reactors could have positive implications for the price of uranium and deliver a boost to ASX-listed uranium miners, including Paladin Energy Ltd (ASX: PDN).

According to The Diplomat, Japan's Nuclear Regulation Authority (NRA) is about to begin safety inspections on at least one power plant. Japan's nine nuclear power companies all have plans to restart their nuclear reactors.

But with 58% of Japanese people opposing any restart, and 59% opposing the use of nuclear energy to kickstart economic growth, the government and the energy providers will have their work cut out for them. The issue for Japan is that meeting peak summer energy demand without the nuclear power plants is going to be tough.

Uranium prices have crashed since the Fukushima incident in 2011, losing a further 30% in the last year to hit US$28.15 a pound. That's well below the cost of production for most uranium miners. And in the short to medium term the outlook is not good, with RBC Capital Markets Analysts forecasting a price of US$31.50/lb this year and US$40 for 2015. But RBC has slashed its forecasts for 2016 to 2018 to between US$40 to US$45/lb, amid expectations that the uranium market will be in surplus until 2021.

5 Year Uranium Price Chart - Uranium Price Per Pound

Source: Infomine

Paladin's cost of production in the last quarter at its Langer Heinrich mine stood at US$29/lb – and that's not the all-in sustaining cost. The company was forced to place its other main mine Kayelekera mine on care & maintenance, with its production cost running at US$32.90/lb in the last quarter.

So it appears that the tough times will continue for Paladin and other ASX-listed uranium miners, including Energy Resources of Australia Limited (ASX: ERA) – which is majority-owned by Rio Tinto Limited (ASX: RIO). Foolish investors may want to skip the uranium producers for now.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »