Uranium Prices

Japan’s Urgent Need for Electricity Could Drive Uranium Prices Even Higher

Japan spends more money on importing fuels ( like coal and liquified natural gas) than it makes exporting cars, according to Bloomberg. That’s a consequence of the 2011 Fukushima Daiichi natural disaster.

That’s when an earthquake and then tsunami destroyed a major reactor, causing one of the worst nuclear disasters in history. Immediately after, Japan shut down all of its nuclear power plants. 

Before the 2011 disaster, Japan generated 30% of the country’s electricity from nuclear power plants. Today, the country restored just 15% of that capacity.  It produces less nuclear power today than it did since 1978. 

That’s a result of the political fallout from the disaster. At the time, Japan believed its reactors to be indestructible. The terrible earthquake/tsunami was a natural disaster. But it eroded public opinion regarding the safety of these power plants. 

And the disaster showed huge flaws in Japan’s nuclear regulatory system. Rather than overhaul the system, the politicians chose to shut down its power plants and phase out nuclear power by 2030. That came with a massive cost.

Japan had to import $22 billion worth of fossil fuels to replace the electric power production. And it killed about $300 billion in economic benefit to the Japanese economy created by those nuclear power plants. In addition, according to a McKinsey research report, it will cost Japan $34.9 billion to decommission and dismantle its existing nuclear power plants (not including Fukushima Daiichi).

But that’s all changing now.

The country has thirty-three reactors ready to go and two more under construction…but only six reactors are producing power today. That means Japan must import 90% of the country’s power. Today 34% of that power comes from natural gas, 31% comes from coal and 4% comes from oil. 

But it needs more electricity right away.

The country wants to bring more chip makers and data centers into its borders. And that means it needs more reliable power sooner, rather than later. That’s spurring a push to restart the idle reactors. The Japan Times wrote:

“There’s consensus now building that nuclear is necessary,” Toshiharu Sasaki, vice chairman of the Federation of Electric Power Companies of Japan told the Japan Atomic Industrial Forum’s annual conference in Tokyo. “The issue is the volume — as data centers and IT facilities are set up, they consume more electricity.”

According to the Federation of Electric Power Companies of Japan, the country needs nuclear power to meet demand from data centers as well as its 2050 net zero goals. 

The restart of Japan’s reactors could lead to a further spike in demand for uranium. Each gigawatt of nuclear capacity needs between 200 to 300 metric tons of uranium per year. Japan can turn on 22 GW of power in short order. That would require 4,400 to 6,600 metric tons per year.

To put that in perspective, the world used 60,000 metric tons of uranium last year. So, an additional 6,600 metric tons would be a 10% increase in demand.

The world’s largest nuclear power plant, the Kashiwazaki-Kariwa plant sits idle in Japan. It could come online quickly. That plant alone would need 1,600 to 2,400 metric tons of uranium per year. That’s a 4% increase from that plant alone.

In other words, if Japan moves ahead in its goal to lure tech to its shores, get ready for another jump in the uranium price,

For the Good,
The Mangrove Investor Team

Numbers You Need to Know

772 Billion

U.S. nuclear power plants generated 772 billion kilowatt hours of electricity in 2022. That’s enough to power more than 72 million homes. (Energy.gov)

4

4 things “The Simpsons” got wrong about nuclear reactors. 1) Control room operators do not work by themselves. 2) Nuclear spent fuel is not liquid, 3) Nuclear waste is safely stored and 4) Nuclear power plants do not cause mutations. (Energy.gov)

440

There are currently 440 operable nuclear reactors worldwide. (World Nuclear Association)

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