Japan crisis hits U.S./Canada nuclear sector

By Julie Gordon and Matt Daily

TORONTO/NEW YORK (Reuters) - Investors punished shares of companies that build nuclear power plants and supply them with fuel on Monday as the disaster in Japan threw an industry "renaissance" into doubt.

Energy companies have touted nuclear power as an efficient, carbon-free source of power to counter climate change, prompting dozens of power companies to propose new reactors in the United States and around the globe.

But the earthquake and subsequent tsunami in Japan that has pushed the Fukushima nuclear complex there to the brink of meltdown has sparked fears the industry's rebound, touted by many executives as a "renaissance," may now be derailed.

Japan's crisis, already the worst nuclear accident since the 1986 Chernobyl disaster, hit shares of industry giant General Electric, which makes nuclear plant equipment, along with Cameco, the global No. 2 uranium producer. GE shares fell 2.2 percent and Cameco shares closed down 13 percent at C$31.70 in Toronto.

Shares in engineering and construction company Shaw Group tumbled nearly 10 percent. Shaw is a member of a consortium with Westinghouse Electric Co that plans to build several plants around the world and at least two reactors in the United States.

Uranium One, Canada's second-largest producer, tumbled nearly 28 percent to C$4.31.

U.S. nuclear power plant operators also suffered, particularly Entergy Corp, which could face new hurdles in extending the life of its Indian Point nuclear plant in New York state. Its shares fell 4.9 percent to close at $70.09.

"The New York plants are very valuable and are a significant component of shareholder value for Entergy," said Travis Miller, associate director for utilities at Morningstar Inc in Chicago.

Exelon Corp, a Chicago-based power generator and utility owner that operates the largest nuclear power plant fleet in the United States, saw its shares slip 0.6 percent.


Still, the immediate market pessimism may not last, analysts said, provided the crisis doesn't escalate into a full-scale catastrophe. If the worst-case scenario is avoided, the current price slump could quickly become a buying opportunity.

"Meltdown is a very big word in people's minds, so I think that the public sentiment is probably going to swing against nuclear power," said BMO Capital Markets analyst Edward Sterck. "But I don't think this is the end of the nuclear industry."

"With the hype that some commentators are making that this is the end of the nuclear energy, I think we're going to possibly see an overreaction in the stock prices. At some point there will be value there."

Cameco's CEO Gerald Grandey said he doubted the developments in Japan would have a major impact on the company's future.

"Some people have questioned whether the nuclear renaissance will survive this natural disaster. Looking beyond the events of recent days, we at Cameco don't see a dramatic effect on the fundamentals of our uranium business," he told a conference call.

TD analyst Greg Barnes said Cameco sells 10 to 15 percent of its uranium to Japan. If, in what he said was a worst case scenario, Cameco lost 10 percent of sales, it would translate to a 21 percent drop in earnings per share.

On Monday, in response to public pressure against nuclear development, some European countries announced delays or changes to their nuclear energy plans.

A White House spokesman said on Monday President Barack Obama remains committed to keeping nuclear energy as part of the U.S. energy mix despite concerns about its safety after the earthquake in Japan.

(Additional reporting by Lynn Adler, Steve James and Euan Rocha; editing by Janet Guttsman, Gary Hill)