Nuclear renaissance could fizzle after Japan quake

TORONTO - Japan's battle to avert a full-scale meltdown could damage the global nuclear energy industry, derailing plans to build dozens of new power plants and forestalling any surge in demand for uranium to fuel them.

The worst nuclear accident since the 1986 Chernobyl explosion could trigger a sharp drop in shares of nuclear plant builders such as General Electric, its Japanese partner Hitachi and France's Areva as investors reconsider the possibility of a renaissance for the industry.

Likewise, Canada's Cameco, Uranium One and other uranium producers could tumble when stock markets open on Monday.

Fresh interest in nuclear power as an alternative to expensive fossil fuels has boosted spot uranium prices by more than 50 percent since July and sent uranium equities soaring.

Investors are likely to reverse some of those gains as a result of the unfolding crisis in Japan, analysts said.

"If there is a nuclear accident," said Salman Partners senior mining analyst Raymond Goldie, "it would certainly provoke a global sentiment against nuclear power, and that would certainly affect the long-term demand for uranium."

Shares of Australia's top uranium miners - some of the world's biggest - fell sharply when trade opened in Sydney on Monday. Energy Resources of Australia, a unit of Rio Tinto, fell 9.5 percent in early trade while shares of Paladin dropped 11 percent.

Meanwhile, engineers in Japan were pumping seawater into damaged nuclear reactors to prevent a catastrophic full-scale meltdown, but major damage probably has already occurred and the plants won't operate again, experts said.

While Japanese authorities appear to have prevented a worst-case scenario from unfolding, the political impact of the crisis was already hitting home in the United States.

Senator Joe Lieberman, who chairs the U.S. Senate's homeland security panel, said on Sunday the United States should "put the brakes on" new nuclear power plants until the impact of the incident in Japan became clear.

The United States currently has 104 nuclear reactors operating, and analysts expect four to eight new reactors to be built. In 2008, there were more than 30 reactors in the planning stage - most of which fell prey to the economic downturn.

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"The nuclear renaissance was on the rocks in any case,"said Peter Bradford, a former commissioner on the U.S. Nuclear Regulatory Commission. He served on the commission in 1979 during the Three Mile Island accident in the U.S. state of Pennsylvania.

Bradford said a video of the explosion that destroyed a structure at the reactor at Japan's Fukushima complex would have a deep impact on the world's perception of nuclear power.

"It's going to be difficult to erase that from people's mental image of nuclear power for a long time," he said.

But industry advocates were quick to call for calm.

"It's probably a little premature to draw conclusions from what's going on in Japan," said Mitch Singer, a spokesman for the U.S. Nuclear Energy Institute. "Even the most seriously damaged of the ... reactors has not yet released radiation at a level that is dangerous to the public."