The world continues to feel the impact of the Fukushima nuclear disaster.

The disaster in Japan in 2011 has left 48 of Japan’s nuclear reactors sitting idle, awaiting government approval to resume operations, with just 2 restarted. In mid-September, the Japanese government approved a new energy plan which included reducing the nation’s reliance on nuclear energy substantially.

Following the Fukushima accident, Germany immediately shut 8 of its reactors, and plans to close its remaining 9 reactors by 2022.

The impact is being felt by uranium miners globally.

Paladin Energy Ltd (ASX: PDN) recently stated that annual demand for uranium has fallen, as the future of nuclear energy was cast into doubt. The world’s largest uranium producer, Canada’s Cameco, has also forecast lower sales and highlighted doubts about the take-up of nuclear power in future.

This appears to be a similar situation following the US 3 Mile Island incident in 1979 and the Ukrainian Chernobyl incident in 1986. Following those disasters, growth in nuclear reactors completely derailed. Before those accidents, more than 1,000 reactors had been planned to be built by the year 2000.

The world currently has just 430 reactors, and the Fukushima incident could have the same effect on planned nuclear reactors. According to the World Nuclear Association, 160 reactors are planned and over 320 have been proposed. We have serious doubts that many of those will go ahead, further reducing demand for uranium.

Adding to the miners’ woes, uranium prices continue to fall, from US$73 a pound in March 2011, to around US$43 currently. That’s lower than the cash cost of production at Paladin’s Kayelekera mine in Malawi, giving the miner a decent sized headache.

The big hope for many miners is for India to embrace nuclear energy to resolve its ongoing power outages. However, the massive increase in gas exploration and generation, including coal seam gas and shale gas, and the subsequent fall in gas prices, could make gas a much more attractive option for power generation than nuclear.

Foolish takeaway

If you want exposure to uranium, with a margin of safety, you can’t go past BHP Billiton (ASX: BHP). The company’s Olympic Dam mine contains the world’s largest uranium ore body, and if prices are driven up by higher demand, BHP will likely ramp up production of uranium from the mine. Alternatively, Rio Tinto Limited (ASX: RIO) holds 70% of Energy Resources of Australia (ASX: ERA). ERA owns and operates one of Australia’s largest producing uranium mines.

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Motley Fool writer/analyst Mike King owns shares in BHP. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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