Japan Joins the Race for Uranium Amid Global Expansion of Nuclear Power

Energy-hungry Japan is revving up its drive to secure uranium abroad as global demand for nuclear power rises amid stubbornly high oil and gas prices and growing environmental concerns. Major Japanese trading and energy firms are looking at multibillion yen investments in uranium mine projects, with electronics conglomerate Toshiba in February purchasing Westinghouse, the US power plant arm of British Nuclear Fuels, for about US$5.4 billion. Meanwhile, the government, which attaches great importance to nuclear power as a key to ensuring national energy security, is also considering assistance to help domestic firms in the intensifying global competition for fuel at nuclear power plants. Among those measures are financial aid and more investment-insurance coverage by government-affiliated organizations. Japan is already the world’s third-largest nuclear power nation in terms of the number of civilian nuclear plants in operation.

..Concern about supply shortages helped increase spot prices of uranium. Prices jumped after the two oil crises of the 1970s, rising to a record of more than $40 a pound in the late 1970s, but plummeted sharply after the Three Mile Island and Chernobyl accidents. Uranium prices remained below the $10-per-pound level on the spot market in 2002. But they have been on the rise in recent years, and the pace of increase has accelerated. Prices have risen 13% so far this year to the $40-per-pound level and may go higher because of investor demand and purchases by nuclear power generators to ensure future supplies for their reactors. Some analysts say uranium prices may go up to $54 per pound this year. The spot market, which makes up about 12% of uranium sales, sets a price reference for long-term contracts between miners and utilities.

Japan Focus