A group of uranium mining companies saw their stock prices plunge on Monday after news emerged that a nuclear power plant in Southeast China flagged a performance issue. It was yet another unnecessary investor meltdown.
Canadian uranium mining companies Cameco and NexGen Energy dropped 10% and nearly 9%, respectively, and a basket of uranium-related companies tracked by the Global X Uranium ETF fell 6.5%. They regained some of that lost ground by Tuesday afternoon.
Monday’s reaction came after CNN reported that the U.S. government was assessing a report of a leak—not of radiation but of inert gases—at a Chinese nuclear power plant co-owned by two Chinese energy companies and French energy company EDF.
The market response is almost comparable to what happened after the Fukushima nuclear accident in 2011, which led Cameco shares to fall almost 13%. But that turned into a major hit to nuclear-fuel demand affecting the industry for years.
Monday’s drop looks like an outsize reaction for several reasons. Uranium mining companies tend to operate on multiyear supply contracts with utilities, so there is little risk that a nuclear power plant would immediately pull back buying from these mining companies.
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