The sole US provider of low-enriched uranium fuel for nuclear power plants is in serious trouble. USEC Inc. (NYSE: USU) shares have fallen more than -12% this morning and posted another new 52-week low on concern that the company’s loan guarantee from the federal government will not be approved in time to prevent USEC from running into liquidity problems.
Every US company involved in the nuclear fuel business is getting beaten up this morning. Uranium Resources, Inc. (NASDAQ: URRE) is down nearly -12% and Uranium Energy Corp. (AMEX: UEC) is down -4%. Ur-Energy Inc. (AMEX: URG) is off nearly -11% and Uranerz Energy Corp. (AMEX: URZ) is off nearly -5%. The disaster at Japan’s Fukushima Daiichi power plant following the March earthquake and tsunami has essentially killed investor enthusiasm for uranium stocks.
In USEC’s case, the federal government had delayed approval for a conditional loan guarantee for $2 billion to complete construction of its centrifuge project in Ohio. The US Department of Energy is seeking additional information before reaching a decision. USEC has told investors that unless the loan guarantee shows some signs of moving toward approval, the company may have to ultimately discontinue its operations. And a possible shutdown could happen within weeks, not months.
The federal government and the Obama administration re-iterated support for nuclear power shortly after the Japanese disaster, but both remain cautious about making any high visibility moves too soon. Especially moves that indicate on-going support for nuclear power development.
That’s why all the uranium stocks are getting a beating today. Investors have no reason to believe that federal support will be forthcoming for the nuclear industry in the US, and, like so many non-hydrocarbon-based energy projects, lack of federal government support equals the kiss of death.
The other uranium stocks are all miners, but if there is no support for new nuclear development, then the value of these stocks will drop as well. Aside from early comments supporting nuclear power, the US has been non-committal, whereas Germany and Italy have both indicated that no new nuclear plants will be built and, in Germany, existing plants will be closed over the next decade or so.
Just before noon USEC shares are trading down nearly -15%, at $2.04, having set a new low for the 52-week range of $2.03-$6.35. Uranium Resources shares are off -14%, at $1.11, within a 52-week range of $0.50-$3.98, while Uranium Energy shares have come back slightly to $2.94, off -2%, in a 52-week range of $2.40-$7.48. Ur-Energy shares are down -12%, at $1.32, in a 52-week range of $0.80-$3.37, and Uranerz shares are down nearly -7.5%, to $2.41, in a 52-week range of $1.10-$5.93.
The Global X Uranium ETF (NYSE: URA) holds assets in all these stocks and is off nearly -6% today, at $10.57, a new 52-week low with 52-week high of $22.42.