Japan goes nuclear-free

Japan and Australia may be oceans apart, but the two countries are closely linked.

Japan is closing down its last operating nuclear reactor for scheduled maintenance, putting the country in “nuclear-free” territory for the first time since the Fukushima crisis necessitated nationwide inspections two years ago. Japan has 50 commercial reactors nationwide, and the March 2011 Fukushima disaster marked the first time in over 40 years that the country pulled power exclusively from non-nuclear sources.

Japan is split on the future of this fuel. While Prime Minister Shinzo Abe and utilities point to the need for nuclear to meet Japan’s growing energy demands, the general public and environmental activist groups remain apprehensive about the safety of local reactors.

Foolish takeaway

Japan and Australia may be oceans apart, but the two countries are closely linked. Energy Resources of Australia (ASX: ERA) is one of the largest uranium producers in the world, the secret sauce of nuclear reactors. Rio Tinto (ASX: RIO) has a 64% stake in the company as well, and Japan’s exit from nuclear could push prices down drastically if it bids adieu indefinitely. Paladin Energy (ASX: PDN) and its 82%-owned Summit Resources (ASX: SMM) subsidiary tell a similar story. Spot prices have already dropped from $65 highs in 2011 and are currently hovering around $35, similar to 2006 markets.

Japan’s nuclear notions are unclear, and proponents of the energy have warned of blackouts if the country doesn’t jump back on the nuclear track. Opponents, including Greenpeace Japan, are instead pushing Japan to seize the opportunity to become a leader in renewable energy. Regardless of the ultimate outcome, this latest nuclear shutdown is another bump in the road (read “increased risk”) for nuclear energy and its uranium producers.

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Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.

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