There is a net shortage of global electricity generating capacity projected. IAEA forecasts (Aug 2012) for growth in nuclear power plants range up to 740 GWe in place by 2030, 101% above 2011 installed global operating capacity of 369Gwe. WNA reference case forecast (2011 WNFM study) is 614 GWe of nuclear power generating capacity by 2030. The WNA upper case forecast is 790 GWe by 2030.

Strong growth in nuclear reactor construction is expected to continue globally with 484 planned and proposed nuclear reactors (Nov '12) up 2 from 482 pre-Fukushima (Mar '11). Growth is expected to remain particularly strong in Asia, with Chinese expansion continuing to lead the pack. China's official installed nuclear capacity projections are 70-80 GWe by 2020, 200 GWe by 2030 and 400-500 GWe by 2050. This compares with a 12 GWe capacity today (15 reactors). China has 26 reactors currently under construction.

Support and demand for new nuclear power reactors is expected not only from China and India, but also South Korea, USA, UK, the Middle East, Russia and Ukraine. Demand for uranium is expected to increase from around 164mlbspa U3O8 in 2011 to 226mlbspa by 2020 and 280mlbspa by 2030. Current primary supply of uranium (139mlbs U3O8 2011) is only around 50% of expected uranium demand in 2020.

Eoin Treacy's view

My view – The uranium sector understandably took a significant hit following the Fukushima accident as Japan mothballed facilities and a number of other governments decided to abandon nuclear energy all together. This was long described as a possibility at Fullermoney and can be viewed as a worst case scenario for the sector.

However, even amidst a distinctly hostile regulatory environment for the nuclear industry generally, the necessity of a cost effective reliable energy source that can provide base load electricity remains well made. Shinzo Abe's victory in the Japanese elections should boost sentiment towards the sector, since he is likely to put national security ahead of fears for nuclear safety and will probably reopen shuttered facilities.

Over the medium-term, the introduction of next generation, safer, energy efficient designs should help to at least partially allay public fears of nuclear energy. (Also see Comment of the Day on December 6th). The prospect of low natural gas prices represents another consideration since it represents a competing, reliable, low cost energy source. However, given the anti-carbon bias of regulation, natural gas will probably pose more of a direct threat to coal and oil fired generation capacity than nuclear.

Uranium miners remain under pressure, with a significant number still in downtrends. However, there are tentative signs that some are in base formations. Powertech Uranium, Laramide Resources, Uranium Participation Corp, Uranium Focused Energy Fund, Uranium One, Pinetree Capital, Uranium Energy Corp, Energy Resources of Australia and Denison Mines have all found support in the region of the lower side of their respective bases.

Mawson Minerals continues to range above $1 and has rallied to test the yearlong progression of lower rally highs. A sustained move above $1.78 would confirm a return to medium-term demand dominance.

Toro Energy rallied impressively from the July lows and has been consolidating above 10 ¢ for the last couple of months. A sustained move below the 200-day MA currently near 8.4 ¢ would be required to question medium-term scope for additional upside.