Russian Nukes, Ukrainian Nuclear Power Plants, and Australian Uranium

Russian Nukes, Ukrainian Nuclear Power Plants, and Australian Uranium

While the world frets over nuclear war, and the stability of Ukraine’s nuclear reactors during the Russian invasion, a profound shift has taken place in Europe’s nuclear power policy. Almost as profound as what happened in South Korea, in fact.

After campaigning most ardently indeed against nuclear power for many years, South Korea’s President Moon recently said that South Korea should use nuclear power as its primary source for the next 60 years!

Interestingly, it’s news that I can’t find on any mainstream Western media source…

Now, I know Australians hate nuclear power even more than Putin. But the Europeans seem to be facing an actual choice between the two.

You see, their attempt to go green without nuclear power has landed them dependent on Russian gas instead of just the weather.

Initially, the result was just the recent inclusion of gas and nuclear power in the EU taxonomy on sustainable activities — basically giving the two industries the green light, as it were.

In fact, the Europeans are so ardent about dividing the economy into an approved and unapproved section that they’ve created a bit of a pickle for themselves.

They’re now faced with the problem of whether their new-found desire for epic defence spending requires them to reclassify manufacturers of murderous machines as environmental, sustainable, and well governed, or not…

If they do, the EU looks stupid for backing death dealers as ethical. If they don’t, they risk shooting themselves, and their domestic defence industry, in the foot because only politically correct industries get favourable funding these days.

Keep in mind that German tanks were equipped with broomsticks as gun turrets not so long ago. A move that got the German defence minister promoted to lead the EU.

I suppose, if you’re going to describe gas and nuclear power as ESG, you might as well throw bombs into the mix too.

But back to more radioactive matters.

The Ukraine crisis has highlighted how reliant on Russian gas the EU’s green energy policies have left the EU. Just when Chernobyl is back in the news, the reaction has been to bring nuclear power not just back on the table, but front and centre!

There’s a lot of irony in today’s Daily Reckoning Australia, isn’t there?

Even the Germans, who had opposed the inclusion of nuclear power in the EU’s taxonomy, are busily turning the Titanic. There’s nothing like striking an iceberg to make you realise you’re in cold waters.

The German economy minister stated that he is ‘not ideologically opposed’ to keeping Germany’s nuclear power plants open. Despite leading a political party that is very much ideologically opposed to nuclear power…

Two of Germany’s energy companies responded by saying they can extend nuclear power operations beyond 2022, but that this would be challenging for a long list of reasons.

Bloomberg and several other news sites were quick to emphasise a key issue: ‘Companies have no contracts to buy nuclear fuel after deadline’. They had expected to close the plants soon, after all. This means they’d be buying spot price uranium if the plants stay open…

You’ll never guess what has happened to the spot price of uranium. And Aussie uranium stocks.

Of course, the green campaigners are not happy that nuclear is back. But the Germans are also going to establish a strategic coal reserve over the Ukraine crisis…

You’ll never guess what happened to the Aussie price of coal. And Aussie coal stocks.

In fact, the coal price is going almost as parabolic as gas prices (you’ll never guess what happened…), European electricity prices, and thereby the price of everything else in Europe too.

I digress once again.

It’s not just the Germans who are going nuclear, of course. Bulgaria and Greece are negotiating over a joint nuclear power plant. There’s the Philippines, where the president has signed an executive order to add nuclear power to the energy mix. The UK is also keen to go nuclear, having carefully placed one future reactor right next to the ocean…

What could possibly go wrong?

The point is, nuclear has suddenly become mighty popular. About 10 years too late, but still.

Adding to the pressure in the short term is Sweden’s state-owned utility Vattenfall, which suspended buying nuclear fuel from Russia. The US nuclear industry is warning about the US doing the same.

Russia produces about 35% of the world’s enriched uranium. (Australia produces none, despite plenty of uranium supply and mining.)

And so now the nuclear space is waking up again. The uranium ETF Yellow Cake [YCA-L] is up more than 25% since the end of February.

Of course, Australian investors will be able to profit handsomely from all of this. There are some good uranium stocks listed on the ASX, alongside coal and gas.

But I can’t help wondering whether Australia might finally wake up to the power of nuclear power because of all this.

Much of the world has realised that it risks being left behind without nuclear power. Even if we don’t face the same immediate risks and consequences, we’d be left behind without nuclear power too.

But maybe none of this will ever convince you to invest in uranium, let alone backing nuclear power. Even if it’ll save the planet without you.

In which case, it’s worth noting it’s not only uranium that’s on the move. And it’s not just nuclear power policy either.

The sanctions on Russia’s financial system and economy are wreaking havoc. Especially cutting Russia out of the SWIFT system.

Jim Rickards helpfully explained to his Strategic Intelligence Australia readers what this means:

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. Contrary to what you may hear, SWIFT is not a financial institution and it’s not a payment channel. It’s a message system. But the messages are of the utmost importance. It’s how one major bank confirms to another major bank that a large payment is being made by specifying the sender, receiving bank, amount, currency, date and other details. Once the message is sent, the receiving bank becomes the legal owner of the amount in question.

The actual payment may go through various payment systems such as Fedwire, ACH, TARGET2, etc. but that’s mechanical. The SWIFT message is what sets the legally binding terms for both sides. SWIFT messages are irrevocable. If there’s an error, the sender and receiver have to sort that out on their own; SWIFT does not act a referee or arbitrator.

To be clear, Canadian protestors had their bank accounts frozen, Russia had its international transactions frozen, the UK is freezing Russian stocks listed on the London Stock Exchange, cash is being frozen out of many economies, central banks are launching CBDCs, and so on and so forth — it’s all part of a trend.

As a result, the only form of money that has always functioned when governments crack down on the economy is back in fashion. Gold has broken out of its downtrend at last.

Find out a way you can profit from it, here.

Until next time,

Nick Hubble Signature

Nickolai Hubble,
Editor, The Daily Reckoning Australia Weekend