Japanese Nuclear Problems Could be Good News for Australian Mining Sector

By Joel ScanlonMar 23 2011

As the world watched with bated breath how nuclear reactors leaked radiation in Japan, a more pressing problem is also developing in the island nation. The power and electrical generation capacity of the country is going to be severely challenged. This could translate into good news for the mining sector in Australia.

The demand for coal in Japan is likely to rise as the country tries to meet the shortfall left by the redundant nuclear plants in the short term by goal and natural gas. There is a good chance that Australia will be able to export coal and liquefied natural gas to Japan in the next couple of years as Japan struggles to get its power shortage sorted out.

Fitch analyst Arnon Musiker said that Australia's thermal coal and LNG export industries were well positioned to meet Japan's changing primary fuel requirements. He added that Japanese gas-fired electricity generators were operating at high capacity prior to the earthquake and have limited ability to further increase production.

Morningstar analyst Mark Taylor said that the Japanese disaster might result in some delays to approvals and some re-engineering and increase in reactor cost. There has been a rebound in uranium shares on Monday. The price of uranium may take a hit globally as well.