Paladin Energy Ltd. (PDN) led declines in Australian uranium companies in Sydney as damage to Japanese nuclear reactors from a record earthquake prompted concern the disaster will hurt demand for the atomic fuel.
Paladin, a producer of uranium in Africa, fell 16.5 percent to A$3.95 at the 4:10 p.m. close, the biggest decline in 29 months. Energy Resources of Australia Ltd. (ERA), operator of the Ranger mine in Australia’s Northern Territory, dropped 12 percent to A$8.25, while Extract Resources Ltd. (EXT), developer of a uranium project in Namibia, slumped 7.7 percent to A$9.81. The benchmark S&P/ASX 200 slipped 0.4 percent.
“Attitudes were slowly changing toward favoring nuclear power as a means to address carbon emissions, but you would have to think there is permanent damage to that effort,” said Lyndon Fagan, an analyst at Royal Bank of Scotland Group Plc in Sydney.
Energy Resources, controlled by Rio Tinto Group, and BHP Billiton Ltd. (BHP), the world’s biggest mining company, are among uranium producers aiming to benefit from rising demand as countries such as China expand the use of nuclear power to curb emissions from burning coal. Australia is the third-biggest uranium producer behind Kazakhstan and Canada, and has the largest reserves, according to the World Nuclear Association.
Gain for Gas
Safety concerns about nuclear power generation may help Australian producers of liquefied natural gas such as Woodside Petroleum Ltd. (WPL), Fitch Ratings said in a report. Gas is a “natural substitute fuel” for nuclear power, Fitch said.
Woodside, operator the North West Shelf LNG venture in Western Australia, rose 1 percent to A$42.20.
The closure of nuclear power plants may prompt Japanese utilities to seek more LNG cargoes in the spot market. Asked about a potential increase in LNG shipments, Woodside’s Perth- based spokeswoman Laura Hammer said in an e-mail that the company is “assessing the situation.” ConocoPhillips (COP) also is evaluating the possibility, Robin Antrobus, a spokesman for the company’s Australian operations, said in an e-mailed statement.
Tokyo Electric Power Co. said today a meltdown is possible in the No. 3 reactor at its Fukushima Dai-Ichi nuclear plant, 135 miles (217 kilometers) north of Tokyo. The vessel containing the radioactive core of the reactor is intact after a hydrogen explosion at 11:01 a.m. local time, Chief Cabinet Secretary Yukio Edano said earlier.
The blast follows a similar explosion on March 12 as hydrogen leaked from the station’s No. 1 reactor, a day after the 8.9-magnitude quake also triggered a tsunami.
“I would expect a short, severe reaction” in the uranium market, with declining prices for producers, David Lennox, a resources analysts at Fat Prophets in Sydney, said by phone. “There will be softening, and yes, it will create a new round of debates about nuclear power. But, if the situation doesn’t deteriorate further, we think it will probably be a matter of only months before a more realistic view starts to come back.”
Berkeley Resources Ltd. (BKY), a Perth-based explorer that has a uranium project in Spain, dropped 15 percent to A$1.21, its biggest decline in more than two years.
“The world does require energy, and uranium is one of those commodities that can supply significant amounts,” Lennox of Fat Prophets said. “Hopefully, out of this we will see a drive toward safer nuclear power activity.”
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