What Dutton's nuclear push could mean for ASX uranium shares

Opposition leader Peter Dutton is advocating nuclear energy to support renewables as part of Australia's energy transition.

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After a very strong year-long run, ASX uranium shares have come under selling pressure over the past month.

Amid some likely profit-taking and investor concerns that the rally may have gotten ahead of itself, here's how these leading uranium stocks have performed since this time last month:

  • Paladin Energy Ltd (ASX: PDN) shares are down 12.3%
  • Bannerman Energy Ltd (ASX: BMN) shares are down 17.5%
  • Deep Yellow Limited (ASX: DYL) shares are down 19.4%
  • Boss Energy Ltd (ASX: BOE) shares are down 20.7%
  • Alligator Energy Ltd (ASX: AGE) shares are down 31.3%

For some context, the All Ordinaries Index (ASX: XAO) has gained 1.8% over the last month.

While these are some hefty losses for investors buying last month, long-term investors should still be sitting on some outsized gains.

Here are the returns from these same ASX uranium shares over the past 12 months:

  • Paladin shares are up 67.6%
  • Bannerman shares are up 69.3%
  • Deep Yellow shares are up 91.2%
  • Boss Energy shares are up 89.6%
  • Alligator Energy shares are up 37.5%

The All Ords is up 6.1% over this time period.

With these moves in mind, what might the nuclear energy push from opposition leader Peter Dutton mean for Aussie uranium stocks over the longer term?

ASX uranium shares slip despite Dutton's nuclear proposal

In a proposal that's firing up some heated debate, Dutton is backing nuclear energy to provide reliable baseload power to support wind and solar as Australia transitions from coal and gas-fired plants.

The Liberal Party's policy was reported to likely include not only smaller modular type nuclear plants but also larger capacity next generation reactors.

"As we go from coal to a new system, we need to make sure that we can firm up the renewables that are in the system," Dutton said (quoted by The Northwest Star).

Now even if Australia opts to eventually embrace nuclear power, ASX uranium shares are unlikely to see any domestic demand for their product for many years yet.

But if Dutton's proposals are eventually enacted, Australia will join a growing list of major economies that are embracing nuclear energy to reduce emissions while keeping the lights on.

At December's United Nations Climate Change Conference (COP28) 22 nations, including the United States, Japan and France, pledged to triple their nuclear power capacity by 2050. And the world's two most populous nations, India and China, are leading the world in the construction of new nuclear power plants.

"Some of the smartest minds in the world have picked up what is a revolution within energy," Dutton said earlier today in his push for Australia to do the same.

Whether it makes economic sense for Australia to do so remains to be seen.

But over the longer-term ASX uranium shares should continue to see growing demand for the nuclear fuel they dig from the ground.

According to the International Energy Agency (IEA), the world will need to double its nuclear capacity by 2050 to meet the current climate goals.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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