German nuclear shutdown drags on Canadian uranium stocks

CALGARY — Canadian uranium stocks were dragged lower on Monday as Germany announced a decision to shutter all of its nuclear power plants by 2022, in reaction to the Japanese nuclear crisis earlier this year.

CALGARY — Canadian uranium stocks were dragged lower on Monday as Germany announced a decision to shutter all of its nuclear power plants by 2022, in reaction to the Japanese nuclear crisis earlier this year.

Shares in Saskatoon-based Cameco Corp. (TSX:CCO), the world’s top miners of uranium, were down 4.2 per cent in mid-day trading — off $1.20 cents to $27.10 on the Toronto Stock Exchange.

Another big producer, Uranium One Inc. (TSX:UUU), fell 2.9 per cent to $3.69. Shares in First Uranium Corp. (TSX:FIU) were 1.4 per cent lower to 72 cents.

Denison Mines Ltd. (TSX:DML) fared better, gaining two cents to $2.31. On Monday, it announced plans to start exploring its Wheeler River project in Saskatchewan this summer.

Germany had already planned to phase out nuclear power, but Monday’s decision speeds up that process considerably. Only last year, Chancellor Angela Merkel’s centre-right government pushed through a plan to extend the life span of the country’s 17 reactors — with the last scheduled to go off line in 2036.

But the disaster at the Fukushima nuclear plant in Japan, which was badly damaged when an earthquake an tsunami struck in March, caused Germany to rethink nuclear technology.

“We want the electricity of the future to be safe, reliable and economically viable,” Merkel told reporters on Monday after overnight negotiations among the governing parties. “We have to follow a new path.”

Germany makes up only about three per cent of global uranium demand, so the phase-out doesn’t make much of a dent, said Marin Katusa, a market strategist at Casey Research.

China represents roughly the same amount of uranium demand at the moment, but construction is underway on 26 new reactors and another 28 are in the permitting planning stages.

Although China has paused to reflect on the ramifications of the Fukushima disaster, officials have said nuclear will still be an important part of its energy mix going forward.

“Either way by 2022… we’re going to be at a much higher number than we are today,” Katusa said, calling the German announcement “lip service.”

“For the Germans to replace 20,000 megawatts by 2022 is just unrealistic. They’ve already taken away their green subsidies.”

Despite the trepidation about nuclear power, Katusa sees growing economies like China, India and Brazil supporting uranium demand in the coming years.

Investors who aren’t spooked by day-to-day developments, and believe in the long-term uranium story, must be selective, he said.

“If you stay with the companies that are in the high-grade deposits, or the low cost producers, you’re going to do well.”