Critical Demand For Energy Will Dictate Push For Nuclear Power

In the past thirty years we have seen several bubbles grow and eventually pop, lasting no more than a year or two on average. Markets and their perception are based around investor sentiment which is reflected to some degree by public sentiment. I have transformed my self several times over in utter confusion over which theory; 'based on key fundamentals or price action', dictate the markets

The problem is that we do not consider the perspective of individuals rather we consider groups, but groups are not known for unity either. It is human nature to argue/discuss and finally agree/disagree with the conclusion. Today a great deal of, "murky waters", float in the markets whether they are commodities, equities, bonds or currencies. All the momentum in the markets is geared around two emotions; Fear and Greed. Technical indicators are not helping to find an entry point in this market.

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There are several differences between what occurred at Chernobyl and what occurred at Fukushima. The number of Nuclear power stations being built had not gained momentum, while when the Fukushima incident occurred there were more than a few power stations being constructed. Chernobyl was considered a human and technological error, present day designs have factored in and rectified the safety issues. The cost of these projects had to be weighed against several good reasons to stop work on them. When Chernobyl occurred there were very few stations under construction but the momentum was gathering pace. At the time the demand for electricity was considerably less. Further still it required a complete changeover of what alternative energy source would make up for the loss of supply from these in the future.

A number of other reasons also required to be taken into consideration including the importance of dependence of energy supply on other countries. Nuclear power and politics go hand in hand. We saw major issues in supplying Gas to Europe in the recent past when some Balkan states did not appreciate the price being paid to them by Russia to supply gas through their countries to Europe. It took a year for this to be sorted out. Nuclear power stations take any where from two years to 10 years to construct, this leads to a demand increasing very gradually.

While Europe and the US are currently going through a recession, China and India have a completely different set of problems. Both China and India have a exponentially growing middle class who are demanding basic amenities such as water and electricity and other goods that all require electricity to manufacture. While China and India are concerned about export demand they are equally concerned with domestic consumption.

In countries such as India and China, water is a major issue. The production of electricity in these countries contradicts the supply of water to people. The Indus valley and similar one in China have dams constructed in as many places as it is possible. Almost every small town and village have small man made lakes constructed to help with the supply of water for the farms in the area. The reason these are required is because the government is not in a position to provide supply lines at a national level to cope with the demand and rainfall is seasonal.

Since India is already at peak dam construction for the supply of electricity, and there are massive shortfalls, it is logical to assume that they require to have an alternative plan. Countries such as China, India and Korea are accelerating their development of Nuclear power, this may reduce the time line eventually, alternatively paying close attention to the contract and spot prices of Uranium may give us an indication to the possibility of rising demand.

India and China both have a similar situation with one key difference in that while India is the biggest democracy in the world, China is not run on a democratic political system. While in India the progress is based around action, reaction and interaction, China is dominated by a central government that makes all the key decisions. This allows decisions for them (right or wrong) to be made more quickly. Despite this difference both countries are acutely aware of the demand and requirement of electricity both for their industries and their domestic use. Recent power cuts in India made it acutely aware of how bad the situation is there. Recently India stated that they too are looking for deposits in other countries.

When Fukushima occurred, China had a knee jerk reaction much like any of the other countries involved in the production of electricity through Nuclear power. However once cool rational set in most countries have decided to go back to continue construction as the pressure of demand began to take precedence over ideas of safety that were already in place. The issues of water and power once more took priority. China recently purchased the Husab deposit in Namibia.

During the same time that countries were considering whether to continue with construction, uranium mid cap and exploration companies were beginning to feel the pressure from the news and the possibility of the Nuclear renaissance dissipating even before its bud began to show above the ground. By 2012 a number of companies exploring for new deposits had begun to reduce their drilling and expenditure as investors began to dwindle. It is difficult to analyze such companies as their financial position becomes more and more desperate. Some of these exploration companies do have large deposits. Some have pure uranium deposits while others have multiple mineral deposits.

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