Japanese quake rocks the world

On March 11, in a defining day of the new decade, residents of Japan’s northeast coastal region were hit by a deadly triple whammy of a 9.0-magnitude earthquake, a resulting tsunami with waves reaching 10 metres in height, and a growing threat of nuclear meltdown in damaged civilian reactors.

• The earthquake, Japan’s largest on record, happened at 2:46 p.m. local time, with the hypocenter reported to be at a depth of 24.4 km, off the Oshika peninsula on the east coast of Tohoku. With widespread power outages, severe damage to local infrastructure, and a nuclear crisis that grows worse by the day, a full reckoning of the damage and death toll – likely above 10,000 – is not yet available.

The Fukushima Daiichi nuclear plant located 240 km northeast of Tokyo was critically damaged, and technicians have been scrambling to maintain control over fission activity in four overheating reactors. There have already been several explosions and fires at the reactors, with military helicopters dropping seawater onto the reactors to cool them. 

Some 180,000 people have been evacuated from a 20-km radius around the nuclear plant, adding to the more than half a million residents made homeless by the quake and tsunami. Even so, some high-placed European officials accuse the Japanese government of underplaying the crisis’ severity.

In the commodities markets, the biggest reaction to all this dreadful news came in the uranium subsector, with new expectations of reduced uranium demand caused by actual demand drop-off in Japan due to the damage to nuclear plants, and the potential for a renewed anti-nuclear sentiment globally that will delay or derail construction of nuclear power plants.

While uranium’s spot market is pretty thin, the fall in uranium spot prices as tracked by Ux Consulting was breathtaking, as uranium oxide fell US$6.50 over the week to US$60 per lb. on March 15. The move accelerates a decline from the short-term peak of US$73.50 per lb. achieved in mid-January.

Projected exponential growth in uranium demand from China has long been a big selling point for uranium producers and juniors in their promotional campaigns, as the country now has six nuclear power plants in operation, seven under construction and plans to build 33 more in the near future. However, The Times of India reported on March 16 that China’s State Council, which is presided over by Premier Wen Jiabao, has suspended the approval process for nuclear plants under construction until new processes are created, and ordered safety checks on existing plants.

The effect on the shares prices of uranium miners has been harsh, with Cameco dropping to $30 from $36, Uranium One shrinking to $3.50 from $6, Denison Mines plummeting to $2.30 from $3.20, and Uranium Participation Corp. sinking to $6.25 from $8.35. Plenty of Grade A Canadian explorers were bashed, too, with UEX down 28%, Hathor Exploration off 39%, and Strateco dropping 35%.

On the other hand, mined commodities that will surely be in stronger demand for years to come because of the quake include those that will be needed to rebuild Japan’s shattered northeast, including aggregate, iron ore, copper and coal to fuel the nation’s remaining power plants. At the same time, short term demand in Japan for these items may be depressed as industrial production falls this year.

• The bloom is coming of the Colombia rose, with the frustrating news for Greystar Resources that environmental public hearings on its Angostura project there were terminated early owing to “confrontations” at the meeting in Bucaramanga.

Four days later, Colombia’s Mines and Energy Minister Carlos Rodado Noriega appeared at the “Colombia Day” session of the Prospectors and Developers Association convention in Toronto to face questions from hostile Greystar shareholders. An irritated Rodado repeatedly emphasized that the Colombian government “has not changed the rules of the game” and that the issue was specifically with “the quality of Greystar’s submissions” which he said did not match the quality that would be necessary for a project to proceed in Canada, for example.

Rodado was late for his PDAC speech, as he was dealing with the Colombian troops’ freeing that morning of 22 of 23 Talisman Energy-Ecopetrol contractors kidnapped by FARC guerillas in Vichado state the day before.

The two developments belied the country’s new travel slogan touted during the event, “Colombia: the only risk is wanting to stay.”