by Kevin McKern
February 22, 2006


While 16% of the world's electricity comes from nuclear power, 80% of the 441 nuclear reactors in operation today are near twenty years old. The demand for new base load power in both the developed and developing world will continue to grow and "peak oil" will, sooner or later, only put more pressure on the grid.

What seems undeniable evidence of global warming has placed concerns about nuclear power into perspective. Even James Lovelock, of "Gaia hypothesis" fame and a green saint, has called for a crash nuclear power program as the only practical means of bridging the energy gap without producing dangerous levels of carbon emissions.

As investors we need to note that those who invested in uranium stocks in 2004 have been well rewarded. The question is should we join them.

Spot Uranium

My guess is that the yellowcake express hasn't even left the station. The spot price is now $37.5 a pound: while it pauses, it never corrects.


Some two dozen power plants are scheduled during the next five years in Canada, China, the European Union, India, Iran, Pakistan, Russia, and South Africa. In the US there may be nine new reactor orders by 2007 while Tony Blair is expected to shortly announce six new reactors for the UK.

Most of the new reactor designs are third-generation pressurized-water reactors (PWR's), although companies in China, France, and South Africa are looking to build a fourth-generation design called a gas-pebble-bed reactor.

The new reactors should be cheap to build, meltdown proof by design and be able to work for 60 years between refits. The Ontario Power Authority has proposed plans to build 12 new nuclear plants and the Europeans plan two massive 1600 MegaWatt PWR's.

Russia has several reactors under construction including an 800MW fast neutron reactor. Iran is building two Russian-designed reactors, the first of which should go on line later this year and a South African Pebble Bed Modular Reactor is set to be completed in 2012.

Japan is building five new power plants by 2010, and China plans to build 30 nuclear reactors by 2020 at home as well as working on the second of four power plants for Pakistan.

In the future nuclear power plant construction will be a major Chinese export industry.

India has nine plants under construction. Argentina, Brazil, Bulgaria, Chile, the Czech Republic, and Turkey may build two to five PWRs each, while Germany, Sweden, and Switzerland are re-evaluating their plans to phase-out nuclear power.

As for the US, changing attitudes became evident when the 2005 energy bill provided for tax credits worth $3.1 billion, liability protection and a provision that allows for compensation for legislative delays for the Nuclear power industry. Further evidence that things are moving is that the Nuclear Regulatory Commission (NRC) has certified a new reactor design for the first time in twenty years, the US power-plant operators preparing construction and operating license (COL) requests include NuStart Energy, a consortium of nine energy companies.

Two AP-1000 reactors may be built in the Carolinas by Duke Energy and another reactor is planned by Progress Energy.

Entergy has plans for a new reactor at River Bend, Louisiana while Scana Corp and Santee Cooper have filed a letter of intent seeking permission to build two new reactors near Columbia, South Carolina.

What's unique about nuclear power is that the cost of fuel is less than 10% of the cost of plant operations. Uranium oxide at $200 dollars a pound will still be dirt cheap, replacing as it does thousands of tons of coal.

It's surely not too late to board the Uranium train.