Financial Trading Blog
Which stocks reignite nuclear power
The energy crisis has put nuclear power stocks back on investors' radar. Does this sector have staying power, and who could benefit the most?
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A market reborn
Until recently, when talking about nuclear power plants, the companies involved were the ones focused on dismantling them, such as the Wood Group. The spike in energy prices lately has caused the Western world to reevaluate the utility of these plants. China and India were building nuclear power as fast as possible, while Europe was looking to shut them down. Given the energy cost, Germany has finally agreed to extend the life of the remaining three reactors.
It's not a complete shift in Germany since the government remains divided on the issue, and new plants aren't being considered (at least publicly, with the greens sharing power in the government). Other countries have become acutely aware of the benefits of nuclear power, with Slovenia and Croatia planning to expand their existing nuclear facilities.
The possible winners
Just extending the life of existing reactors means that more fuel will be needed in the future. The largest producer is state-owned Kazatomprom, with 15% of the company floating on the London Stock Exchange. But uranium needs to be refined before it can be used in reactors, and this is where companies like Yellow Cake in the US come in. It buys uranium from Kazakhstan to make it into fuel.
However, one of the largest known deposits of uranium is in Australia and is owned by BHP. Currently, the Olympic Dam is mainly focused on copper production, but with a renewed global interest in nuclear power, BHP is one of the companies that could increase production.
As far as new technology goes, Rolls Royce's modular reactors are gaining interest, recently awarded a contract from the US military to further develop the technology.
Looking for a way out
Key takeaways
The price of energy has caused the Western world to reevaluate nuclear power plants. Germany has agreed to extend the life of the remaining three reactors, but the government remains divided on the issue. Other countries are acutely aware of the benefits of nuclear power and are expanding their existing nuclear facilities. Nuclear power plants require fuel to run, refined from uranium. With one of the largest deposits of uranium owned by BHP, the company might be in for a good ride, along with its buyer – Yellow Cake.
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