Uranium set to receive boost from Japanese election outcome

The victory of the pro-business Liberal Democratic Party in Japan’s election over the weekend is expected to revive the fortunes of uranium producers and explorers, hard hit since the 2011 Fukushima disaster.

The Australian reports that the Liberal Democratic Party, traditionally considered the pro-business and pro-nuclear wing of Japanese politics, is expected to introduce new measures which will provide a major boost to the global uranium sector.

Despite the recent Fukushima disaster which has tainted the reputation of nuclear energy in Japan the LDB has a relatively nuclear-friendly policy platform which would see a number of Japan’s 48 decommissioned reactors rebooted following a three-year review process.

If implemented the proposal would revive uranium demand from Japan and significantly bolster the fortunes of producers and explorers of the nuclear raw material, all of whom have endured hard times in the wake of the Fukushima disaster.

The closure of Japan’s nuclear power system took a severe toll on the global uranium sector, with uranium prices and shares in key producers falling precipitously. Australia’s Paladin Energy has seen its share price fall from $5 just prior to the Fukushima disaster to around 89c at present, while the plunge in uranium prices due to the absence of Japanese demand has attenuated profits.

The Telegraph reports that shares in Japanese nuclear power companies leaped following the announcement of Abe’s election win, with Tepco, operator of the Fukushima nuclear power station, surging 33%, Chubu Electric Power gaining 9.59% and Kansai Electric up a stunning 17.6%.

Another factor likely to boost the fortunes of uranium in the near-term is the expiration of the highly enriched uranium agreement (HEU) next year, which currently provides around 15% of global uranium supply via the conversion of which Soviet nuclear warheads into reactor fuel.

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