redback report week ended 11/3/2011, page-3

Hi Jeffy,

At least three and perhaps five nuclear power stations are now out of action. One is probably in melt-down and possibly a second one.

Japan has a high dependency on LNG as a source for fuelling many of its power stations. Many of those power stations have excess capacity.

To make up for the loss of power generation from the failing nuclear reactors, it is likely that LNG imports will increase significantly.

Coal is another fuel used extensively by Japan. The same scenario will apply to that fuel source.

The political fall-out from the failing nuclear power stations will probably ensure that support for nuclear in Japan will cease.

(In America, although new nuclear power stations are still being built, ground breaking for all new nuclear power stations began before 1974. That's well before the Three-Mile Island Accident in 1979. One of those is scheduled for completion in 2012. The lead-time for a new nuclear power-plant is extremely long.)

In the short, medium and long term - there seems to be a good case for increasing demand from Japan for LNG and coal. That looks to me like a good scenario for Woodside and the coal miners in Australia.

Cheers
Red