Last week, I came across an interesting article from the Financial Times:
“Japan switches back to nuclear, 14 years after Fukushima.”
Apparently, the country is reviving nuclear reactors shut down after the Fukushima accident, with plans to initially reopen 14 of the 54 closed reactors.
According to the piece, soaring gas prices and the need to remain technologically competitive by building out power-hungry data centres have prompted a long-term ‘rethink’ on its energy strategy.
Mining Memo’s Take
Japan is not endowed with energy resources or mineral wealth.
As the second-largest economy in Asia and with a heavy reliance on manufacturing, this country is at the extreme end of energy vulnerability.
In other words, Japan will be among the first countries to feel the pain when energy and fragmented supply chains emerge.
And when desperation calls, nuclear power delivers energy-starved nations a beacon of hope.
That’s what happened during the 1970s, the last time advanced economies faced escalating energy costs and disruption to supply.
Here’s a quick recap of the events that led to this situation:
The War in Vietnam put a higher demand on oil supply.
The Cold War fragmented supply chains from major producer Russia.
But, perhaps most significant was the formation of OPEC in the Middle East, which led to price controls and embargoes.
COLLECTIVELY these events derailed global energy security.
The 1970s generated an era of energy anxiety among Western nations.
It’s no surprise, then, that it also led to a period of massive capital allocation toward nuclear energy expansion across the US and Europe.
When desperation calls… Nuclear answers the call.
And that’s precisely what’s underway in Japan right now.
But is it the only one?
In the wake of the Fukushima disaster over a decade ago, Japan wasn’t the only country to switch off nuclear plants… Germany did the same.
And in many ways, Germany is to Europe what Japan is to Asia.
A mature economy with advanced manufacturing but relying on cheap energy imports to power its economy.
Germany: Reviving Nuclear Ambitions
The last few years have been disastrous for Germany; its status as a manufacturing powerhouse has continued to erode.
According to Deutsche Bank, Germany’s industrial production has dropped for the last two years, driven by a sharp decline in exports.
Higher energy prices have made Germany less competitive globally, meaning energy and the country’s economic woes go hand in hand.
And with job losses mounting in the country’s manufacturing sector, Germans are demanding solutions.
Like the Japanese example, Germany seems set to return to a NUCLEAR solution.
A poll released earlier in the year by a marketing company, Innofact, found that 55% of Germans surveyed favoured a return to nuclear power.
No wonder!
But it won’t be the only one.
From Denmark to Germany, there’s a strong will to return to nuclear, the solution for energy-starved Europe to remain competitive amid the ongoing conflict with Russia.
But all these countries will be competing with the world’s two largest superpowers, both of which hold strong nuclear ambitions:
Trump’s Energy Chief, Chris Wright, is an avid supporter of nuclear.
After taking over the country’s Energy Department, he listed expansion of America’s nuclear power industry as his number one objective.
Meanwhile, America’s greatest rival (China) currently has over 100 nuclear reactors planned and under construction!
What does all this mean?
Nuclear power is coming home for Japan.
But this time around, it will look much different.
Japan’s nuclear ambitions are no longer unique… It’s set to pivot back amid a global rush for cheap and reliable energy.
So, how can you take advantage as an investor?
Investing in the fuel for nuclear reactors is the most direct way for most investors to join in the global race to pivot back to nuclear energy.
In other words, uranium stocks.
If you’d like to learn more, you can read my special report on investing in this crucial commodity here.
Enjoy!
Regards,
 |
James Cooper,
Editor, Mining: Phase One and Diggers and Drillers
Comments