The crisis at Japan’s earthquake-stricken Fukushima nuclear plant reached dangerous levels with radiation emissions continuing to rise after the explosions in three reactors, in what has been an alarming development both for global politics and economy. Discussions on nuclear safety resurfaced in countries that already have nuclear plants such as the US and Germany. The US announced plans to issue new directives regarding the safety of nuclear plants older than 30 years and located at earthquake zones. Germany said it would shut down all the nuclear plants built before 1980. Russia said it would increase the frequency of inspections of nuclear plants and would review the projects for new plants. Günther Öttinger, the EU commissioner for energy, asked EU nuclear energy experts to think again on whether the EU could be able to meet its energy needs without relying on nuclear power.
Wind and solar
Germany and France will launch an initiative to discuss the issue of nuclear safety among the G20 group of industrialized and developing nations. The renewable energy sector that harnesses wind and solar energy has benefited from the increased distrust toward nuclear energy brought about by the radiation leak in Japan. The disaster has also given somewhat of an upper hand to natural gas companies, as natural gas is generally regarded as a relatively environment-friendly form of energy. Even if the situation in Japan doesn’t grow to cataclysmal proportions, it will inevitably increase opposition against nuclear expansion and it will damage the recent revival in this sector in the US, which currently has more than 100 reactors. Eurasia Group estimates that the risks associated with nuclear energy brought to the globe’s attention with the earthquake will suspend plans for new plants in the US and the UK. Other analysts believe that this pessimism stems from the initial reactions that came in the immediate aftermath of the disaster. ”
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 Edward Sterck, an analyst at BMO Capital Markets. “But I don’t think this is the end of the nuclear industry.”
Disaster prompts anti-nuclear reaction
Russian Prime Minister Vladimir Putin ordered checks at all Russian nuclear facilities and a review of plans to develop nuclear energy as the situation in Japan deteriorated sharply. State-owned nuclear energy company Rosatom’s chief Sergei Kiriyenko said there was “no danger” to the Russian Far East even in a worst-case scenario because the short-lived isotopes released into the atmosphere would have broken down before winds could carry them to Russian shores.
German Chancellor Angela Merkel ordered an immediate shutdown of Germany’s seven pre-1980 nuclear plants. Sweden suspended some of the plans to build new plants, while Taiwan said it was reviewing the possibility of reducing the amount of nuclear energy production in the country.
Turkey’s nuclear plans
Japan’s nuclear reactor explosions have prompted all countries to either shut down plants or review plans for new plants, but Prime Minister Recep Tayyip Erdoğan said the government will stick to its plans to build nuclear power plants despite growing fears about atomic safety in the aftermath of the crisis in Japan. However, the government it now plans to ask Russia to increase safety precautions at a power plant Russia will build on the Mediterranean coast. It also announced that it will not back down on ongoing talks with Japan to build a nuclear plant in the Black Sea province of Sinop.
The Chamber of Mining Engineers (MMO) released a statement urging the government to reconsider the decision to build nuclear plants. MMO said Turkey had to review its energy policies in general, and the decision to build nuclear plants in Turkey, which is located in an earthquake zone. “It should be known that the cost of a mistake would be severe,” the statement warned.
Economic hit for Japan
The earthquake and tsunami disaster in Japan remains as a dire concern for global economists. Although the global impact remains hard to gauge days after the quake, experts say it could result in losses of up to $200 billion for Japan. A slow-down in the Japanese economy would certainly take its toll on the supply chain in the Asia-Pacific region, and even impede the world’s fragile growth.
This scenario coupled with increasing risk perceptions (and not only economic ones) is causing investors to look for safer harbors. There have also been sharp falls in the prices of raw materials. In addition to these, China stopped outgoing flights to Tokyo out of concern caused by the plant’s radiation levels. Japanese stocks suffered their worst two-day rout since the 1987 crash, losing a whopping $700 billion in value in only two days.
Positive impact on TL
These developments are likely to hurt global growth, but also have a positive impact on the Turkish Lira, which had depreciated sharply in early February and March due to an outflow of money caused by concern about the North Africa and Middle East uprisings. The value of the dollar against the lira rose up to as high as TL 1.62. The queasiness about the uprisings also caused the interest rates to rise above 9 percent. Thanks to the fall in oil prices and the positive perceptions regarding influences external to Turkey in light of the recent developments, the dollar declined against the lira to TL 1.57.
Impact on semi-conductor industry
Japan’s largest corporations, including high-tech companies and steel producers, have been forced to stop operations because of the disaster, and semi-conductor manufacturers and ship builders in South Korea have already been affected by this. Japan, an important electronics producer, accounts for 14 percent of the global production of computers, electronic and communication devices. South Korean LCD makers, chipmakers; silicon wafers and semi-conductors manufacturers are highly dependent on Japan for supplies. Hynix Semiconductor, the world’s number one chipmaker, has already expressed concern that its production could be affected adversely due to the difficulty in getting supplies from Japan . Toshiba, which produces one third of the NAND memory chip used in Apple’s iPad, announced that its plant in Iwate will soon resume production.
Quake rattles supply chain
Shin-Etsu Chemical , the world’s leading maker of silicon wafers, restarted a factory near Gunma, northwest of Tokyo on March 15, but two other plants near the worst hit quake areas in northeast Japan remained offline as of the same date. Spot prices for dynamic random access memory (DRAM) memory started shooting up in China. South Korean shipbuilders also might face supply constraints or higher prices. South Korea houses the world’s top three shipbuilders — Hyundai Heavy Industries, Daewoo Shipbuilding and Marine and Samsung Heavy Industries. “It (the quake) will disrupt production in Japan, one of the major steel producers exporting 40 per cent of its output. In contrast, steel demand will rise for damage restoration,” said Kim Hyun-tae, an analyst at Hyundai Securities in Seoul. Nippon Steel Corp of Japan, one of the world’s largest steelmakers, announced on March 12 that it has resumed shipments from all its steel plants except its Kaimishi facility in northern Japan. Its rival JFE holdings said it had to stop shipments from one of its plants near Tokyo due to power blackouts. Analysts say the crisis caused by the quake could sap demand in Japan for new solar modules and could disrupt the production of polysilicon, the key material that turns sunlight into electricity in most types of solar panels. Credit Suisse said it expected supply problems at solar wafer maker M. Setek Co, a unit of AU Optronics, whose plant is situated near Sendai town, close to the epicenter of the quake.
