Why are ASX uranium shares having a week to forget?

ASX uranium shares are experiencing a tough week. At the time of writing, all but one of the major uranium stocks is in the red.

Despite market-sensitive announcements for only one company, it hasn’t stopped investors from selling down the sector today. Here’s the performance on Thursday at the time of writing:

• Paladin Energy Ltd (ASX: PDN): down 3.83%, at $12.92
• Deep Yellow Ltd (ASX: DYL): down 4.73%, at $1.31
• Boss Energy Ltd (ASX: BOE): down 1.92%, at $3.84
• Bannerman Energy Ltd (ASX: BMN): down 1.63%, at $3.02
• Peninsula Energy Ltd (ASX: PEN): flat, at 11 cents apiece

Whilst it’s been relatively quiet from the companies’ ends, it’s worth noting that the energy regulator has potentially ruled out nuclear as the country’s energy solution.

The Australian Energy Market Operator (AEMO) has chimed into the debate, and its comments could be one reason investors appear spooked today. Let’s take a look.

AEMO’s stance on nuclear power

Whilst not market-sensitive in any way, comments by Daniel Westerman, chief executive of the AEMO, could be one factor contributing to the decline in ASX uranium shares today.

According to its website, AEMO’s role is to “manage the electricity and gas systems and markets across Australia, helping to ensure Australians have access to affordable, secure and reliable energy”.

Speaking at the Clean Energy Summit on Tuesday, Westerman waved off nuclear power as a potential solution to Australia’s energy needs. He cited costs and timing as the main reasons.

Even on the most optimistic outlook, nuclear power won’t be ready in time for the exit of Australia’s coal-fired power stations.

And the imperative to replace that retiring coal generation is with us now.

He labelled nuclear power as “comparatively expensive” and impractical for replacing coal-fired generators in the near term. This may have ramifications on ASX uranium shares.

With coal plants shutting down faster than anticipated, the push for renewable energy sources – like wind and solar – could be the preferred path.

Westerman said AEMO doesn’t determine whether one type of energy supply is “good or bad” but is “focused on finding the least-cost path to reliable and affordable energy for Australian consumers”.

Apparently, this path of least resistance doesn’t include nuclear. This outlook could diminish the near-term prospects for uranium shares.

ASX uranium shares in focus

The overall sentiment in the uranium market has been shaky. Despite some positive developments, including potential supply constraints due to new tax policies in Kazakhstan, investor confidence remains fragile.

Deep Yellow is the only ASX uranium share that actually announced something today. The company posted its presentation from the Noosa Mining Investor Conference.

In it, the company touted its “significant exploration upside” and “significant production capacity”. It also discussed the case for uranium as “critical for a clean energy future”.

Time will tell if this statement is to be true or not.

Foolish takeout

Some might think the recent dip in ASX uranium shares presents a buying opportunity, especially if they believe in the long-term potential of nuclear energy.

However, the market remains highly volatile, and the political and regulatory situation regarding energy security does not help. As always, stay informed.

The post Why are ASX uranium shares having a week to forget? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.