By: Dr. Mike Campbell
Japan is still in the critical phase of the tragedy which struck on Friday when an earthquake off the Japanese coast triggered a tsunami. The event was extreme and one of the most violent earthquakes that the nation has experienced, with a magnitude of 8.9. The loss of life and destruction caused by the event has yet to be fully evaluated, but there has been substantial disruption to Japan. Power supplies have been interrupted by the disaster which has led to disruption of production in areas which were not directly affected by the quake.
Japan has 55 nuclear facilities which generate electrical power. When the earthquake struck, these reactors will have been automatically shutdown, terminating the nuclear chain reaction which generates heat, but the reactor cores will remain hot for some time. The Fukushima nuclear facility was closest to the epicentre of the quake and sustained a second magnitude 6 quake after the first earthquake struck. These events have led to damage to the reactor complex and there are fears that a significant release of radiation may occur. This fear has been enough to wipe a further 11% of the Nikkei which currently stands at 8605 – at Thursday’s close, before the earthquake struck, the index stood at 10434.
Lessons Learned From the Earthquake Thus Far
The fact that the plant survived a major earthquake intact should have provided confidence in the nuclear industry, but such is the public wariness over nuclear power that the event has promoted an immediate political rethink about the future of nuclear energy around the world. Not a single life has been lost as a result of this nuclear incident, but the toll from the natural cataclysm is likely to be measured in the thousands.
There has been little reaction to the disaster with respect to the value of the Yen so far. Indeed, the currency has strengthened slightly against the US Dollar; a trend the Japanese would no doubt rather see reverse with respect to the competitivity of their exports.