Uranium May Lead Rally in Metals on Revival in Nuclear Power
21st-Century Nuclear Energy Plan
Uranium Star Shining Brighter
[miningmx.com] -- URANIUM'S star
is shining increasingly brighter as it becomes clear that nuclear power is
being seen as the best answer to the world's energy crisis. Latest
predictions are that the uranium price could reach a new record level of
US$50/lb within the next six months.
The current price is about $39/lb, which should already be highly
profitable when South Africa's listed uranium producers sxr Uranium One
and Simmer & Jack get going.
Neal Froneman, CEO of SXR, says that the Dominion Reefs deposits that his
group wants to mine should produce at a maximum cost of $18/lb. Simmers is
in the beneficial position that the tailings dams of the old
Buffelsfontein and Hartebeesfontein gold mines have significant quantities
of uranium, which were dumped there because in years gone by it wasn't
profitable to mine them due to low prices. It can be reclaimed at minimal
cost. There's also underground uranium-bearing ore available.
Uranium could reach a new record level
The uranium price increased by around 76% in
2005, which - with one exception, sugar - represents the largest single
percentage increase in a commodity price. Strong growth is predicted,
especially from demand from China and India, which have to provide more
electricity for their industries due to their rapid economic growth.
The management of hedge funds, such as Sprott Opportunities, of Toronto,
Canada, says that international uranium stocks are limited and new
deposits must be found. Though there's a shortage of uranium, it's being
temporarily supplemented by sales from Russia's strategic stockpiles and
Uranium May Lead Rally in Metals on Revival in Nuclear Power
March 13 (Bloomberg) -- Nuclear energy's revival can best be seen in
uranium, which outperformed the metals markets in 2005 and may do so again
Uranium is poised to climb 27 percent to $50 a pound in the next six
months because ``there's not a lot of uranium available,'' said
Jean-Francois Tardif, who put 8.4 percent of his C$300 million ($259
million) Sprott Opportunities Hedge Fund LP into uranium. The
Toronto-based fund jumped 39 percent in 2005, when its peers on average
returned 9.3 percent, according to Hedge Fund Research Inc. of Chicago.
Wellington Management Co. of Boston, which oversees $521 billion, in the
fourth quarter raised its stake in Saskatoon, Saskatchewan-based Cameco
Corp., the largest uranium producer. The fund holds 13.6 percent of Cameco
worth C$2 billion, according to Bloomberg data. The Anglican Church in
Sydney took uranium off a list of unethical investments last year, and its
funds benefited from a 23 percent gain in BHP Billiton, the No. 4 uranium
Uranium last year gained 76 percent, beating all but one of the 19
commodities in the Reuters/Jefferies CRB Index. Only sugar jumped more.
Not even zinc, the favourite this year among commodity specialists surveyed
by Bloomberg News in January, will keep pace with uranium. Analysts
surveyed then said zinc would offer the best return from the six primary
London Metal Exchange markets, advancing 21 percent.
Just 60 percent of the uranium consumed in the world's nuclear reactors is
mined each year. Without supplies from stockpiles and recycled from
Russian warheads, the energy industry wouldn't have enough uranium to keep
all of its plants running.
Demand for nuclear power is increasing in China and India because of
rising prices for oil, gas and coal. Finland is building a new reactor,
and utilities in France and the U.S. are considering additions. Concern
that the burning of fossil fuels contributes to global warming is
accelerating the push.
Bob Mitchell, the manager of a hedge fund that invests in wholesale
uranium, is so bullish that he turned down offers from mining companies to
buy his entire inventory. He wouldn't identify the companies or give
details on his holdings.
``I remain a buyer of uranium,'' said Mitchell, 52, of Adit Capital
Management LP in Portland, Oregon. Mitchell said he began buying uranium
in November 2004 at $20 a pound amid reports that some power companies
were moving to replenish their inventories. Uranium ended last week at
$39.25 a pound, according to Metal Bulletin.
Speculators ``have taken out whatever slack exists in the market,'' said
James Cornell, president of RWE Nukem Inc., a trader of uranium and unit
of RWE AG of Essen, Germany's second- largest utility. Investors are
``getting to available supplies of uranium before the utilities.''
After three decades of stagnation, the nuclear industry may receive more
than $200 billion of investment by 2030, according to the International
Energy Agency in Paris. As well as the 24 reactors now being built,
another 41, with a capacity of almost 43,000 megawatts, have been ordered
or are planned, according to the World Nuclear Association in London.
About a ton of uranium fuel is used every two weeks to supply a
1,000-megawatt power station, according to Australia's Uranium Information
Center. About nine tons of uranium oxide would be needed to make the fuel.
``The nuclear industry is currently undergoing a rebirth,'' said Paul
Gray, an analyst at Goldman Sachs in London. ``The uranium market will
remain tight for at least the next three years.''
Gray was among the Goldman Sachs analysts who at the start of last year
correctly predicted uranium prices would extend their advance.
Uranium's surge has revived interest in mining, threatening to end the
London-based Rio Tinto, the world's third-largest mining company, scrapped
plans to close a site in northern Namibia and approved a $112 million
project to extend the life of its Rossing mine by seven years. The site
had been slated to shut in 2009, ending jobs for more than 1,000 workers.
The mine supplies about 8 percent of the world's uranium and made money in
2005 after two years of losses.
Because of rising prices, ``we are certainly in a better position than
this time last year,'' said Managing Director Michael Leech of Rossing
Uranium in Swakopmund, Namibia.
Last month, Toronto-based SXR Uranium One Inc. more than doubled a stock
offering to $147 million to fund redevelopment of South Africa's largest
uranium deposit, shut since 1982. Melbourne-based BHP Billiton, the
world's biggest miner, is considering tripling output from its Olympic Dam
mine in South Australia.
`Faint of Heart'
Victor Lazarovici, an analyst at BMO Nesbitt Burns Inc. in New York,
forecasts that wholesale uranium will peak at an average $38 a pound next
year and fall to $32 in 2008 as new mines come on stream and reactors use
uranium more efficiently.
``This is not a sector for the faint of heart,'' he said. ``We're
projecting the market will go back into surplus in a couple of years.''
New generators may increase uranium consumption by 2.5 percent a year for
each of the next five years, straining supplies as stockpiles are drawn
down, according to Glyn Lawcock, head of resources research at the
Australian equities unit of Zurich-based UBS AG, Europe's biggest bank by
assets. Prices may average $40 a pound in 2007, up from $28 last year, the
``The big problem with uranium is that there's a scarcity of supply,''
said Lawcock, who works from Sydney.
China's 21st-Century Nuclear
by Marsha Freeman
The People's Republic of China is
implementing an energy program which will bring online as many as to 30
new nuclear power plants over the next 15 years, and which has put China
in the forefront of world research and development in nuclear science and
engineering. This effort stands in stark contrast to the situation in the
United States, where the Bush Administration's "pro-nuclear" energy plan
is to try get one new commercial power plant built over the next decade,
and to delay development of advanced reactor systems—some of which the
U.S. tested decades ago—into the indefinite future.
The Chinese economy has been growing at an average rate of 8% per year,
with electricity demand growing twice that fast. The Ministry of Electric
Power has estimated that 15-20% of China's present energy demand cannot be
met, and that 100 million Chinese have no access to electricity. Last
year, China's State Electricity Regulatory Commission warned that the
situation was worsening, as the country faced, in the Summer of 2004, a
shortfall twice as large as that of the year before. To keep up with its
rate of economic growth, China estimates that it will have to double its
electric-generating capacity every decade. At 385,000 MW (megawatts) of
current online capacity, China has an electric grid system second only to
the United States.
Simply expanding the use of coal to meet this growing demand is not an
option. Already 40% of China's railroad capacity is dedicated to hauling
more than 1 billion tons of coal per year (two-thirds of China's energy is
produced from burning coal). Although China is the world's sixth-largest
producer of petroleum, it now imports one-third of its oil. As far back as
the late 1970s, China knew it had to go nuclear; now it is systematically
carrying out the multifaceted program that will make it a world leader in
nuclear energy technology.
China Goes Nuclear
China's multi-pronged nuclear strategy follows the same strategy as its
program in space exploration. First, rather than reinventing the wheel,
China has imported commercial power plants from Russia, France, and
Canada, to have the immediate benefit of nuclear energy, and to train its
own cadre of engineers and operators. Today, China has nine reactors
operating and two under construction, with nuclear energy accounting for
about 2% of its total electricity output.
In the late 1990s, as the large-scale construction of nuclear plants was
under way, Chinese officials were already planning for the 21st Century.
China plans to choose one reactor design (and supplier) for its next group
of nuclear plants, to enable it to standardize its nuclear operations,
rather than continue with the widely varying designs now in place, from
different suppliers. The goal is to have an increase of nearly sixfold in
nuclear capacity, up to 40,000 MW by 2020, from 8,700 MW today. Due to the
size of China's electric system, even this aggressive effort will bring
nuclear's share up to only 6% of installed electric-generating capacity.
This program requires that at least two new reactors come online each
year, over the next 16 years. By 2050, China plans to have 150,000 MW of
nuclear capacity, equivalent to 150 large power plants. There are about
440 nuclear reactors today, worldwide, and 103 in the United States.
Critics of all political persuasions have insisted that such "breakneck"
speed in nuclear power plant construction cannot be achieved. John Moens,
an analyst at the U.S. Department of Energy, begged to differ. On Jan. 15,
he told the New York Times: "In 1970 we had a net capability of 7 million
kilowatt hours [of nuclear generating capacity in the U.S.], and by 1981
we had reached 56 million kilowatt hours. So the rate of growth [the
Chinese] propose is not only conceivable, it has been done before."
According to officials from the China National Nuclear Corporation (CNNC),
the decision has not yet been made as to how many reactors in the next
group of imported plants will incorporate the newer, recently licensed
next- or third-generation technology, and how many will use the
current-generation designs, with "some improvements." CNNC estimates that
for quick expansion, the most efficient approach is to add more plants at
existing sites, using the same reactor design as the operating units. More
advanced, next-generation reactors will likely be chosen for new power
plant sites. This program is of such national priority that, according to
China Business Weekly, delegations which included Chinese President Hu
Jintao have been visiting existing and potential sites for nuclear plants,
along China's coastal areas.
In July, the government approved the construction of four nuclear plants,
and in September, CNNC director Yu Jianfeng said during an interview at
the World Energy Congress in Sydney that China will soon award an $8
billion contract for the four nuclear reactors, with work to begin 2007.
Each set of two reactors will be located in Guangdong and Zhejiang
provinces, which have been suffering from power shortages, and are
expected to come online in about 2012. Yu said that about 70% of the
equipment for the reactors will be Chinese-made.
China has invited Westinghouse, French-based Areva, and Russia's
AtomStroyExport to bid on the first four plants. In September 2004, the
government also approved construction of another four reactors.
As a second aspect of its overall effort, at the same time that China has
been importing commercial-scale nuclear plants to add to its electricity
grid, domestic programs have been under way to develop indigenous
conventional nuclear power plant designs, in order to give China an
independent production capability for domestic use, and also for export.
The 300-MW reactor at Qinshan, designed in China and built with 70% of its
components produced domestically, began operation in 1991, and helped
create a Chinese nuclear industry. In Phase II of its domestic R&D
program, two 600-MW indigenously developed reactors were installed at
Qinshan, and became operational in April 2002 and May 2004.
In July 2004, Ye Qizhen, chief designer of the second phase of the Qinshan
nuclear project, and a member of the Chinese Academy of Engineering, said
that Chinese engineers could "easily develop" a 1,000-MW-class reactor,
based on the 600-MW design, if they introduced foreign-developed design
software. China Business Weekly reported in February that China plans to
build its 1,000-MW reactor before the first foreign third-generation
nuclear reactors are built, around 2012.
China's program to develop its own nuclear power plant production
infrastructure is aimed at export, as well as domestic deployment. In
1999, the Chashma-1 nuclear reactor became operational, 167 miles south of
Islamabad, in Pakistan. The 300-MW reactor had been completed with help
from China. In 2004, China's First Heavy Industries Company won a public
bid to supply the Chashma-2 reactor's pressure vessel, which will be built
in Dalian and completed in 38 months.
The international nuclear non-proliferation mafia has tried to bully China
into reneging on the latest Pakistan nuclear plant project, but since that
reactor will be under the inspection regime of the International Atomic
Energy Agency, and the U.S. is eager to procure at least part of China's
$8 billion construction program, no threats have yet been made.
Versatile High-Temperature Reactors
A third facet of the program, occurring at the same time that the Chinese
are importing commercial nuclear plants, and developing their own capacity
to build and export them, is the research and development program in which
China is engaged, intended to push forward on the next-generation nuclear
Energy produced from the fission of nuclei is typically captured as heat
and used to boil water for turbine-generator sets to produce electricity
in a power plant. This is the least efficient use of the energy from
nuclear fission: Two-thirds of it is wasted in the thermal-to-electricity
If the temperature that can be extracted from a nuclear reactor is higher,
in the 800-1,000°F range—perhaps three times that of a conventional
reactor—that higher-quality heat can be used to produce hydrogen from
water to be used for fuel, direct electrical production, and desalination.
China started a high-temperature gas-cooled reactor research and
development program in the 1990s at Tsinghua University in Beijing, often
described as China's MIT. Tsinghua also has a very active space
engineering program, and has designed satellites and space experiments.
A $30 million, 10-MW high-temperature gas-cooled pebble bed reactor
(HTR-10) began construction in 1995, and started thermal testing in
December 2000. In 2003, the reactor was incorporated into the power grid.
In the Fall of 2004, Chinese scientists proudly displayed their HTR-10 to
an international group of nuclear experts, and carried out a
demonstration, showing that it is "passively safe." In other tests, the
coolant for the reactor has been switched off, and it cooled down by
The "pebbles" in the reactor are the 27,000 graphite billiard-sized balls
that enclose the fissionable uranium, insulating each particle and
dispersing the fuel. Instead of circulating water, with its miles of
pipes, the reactor is cooled by the circulation of helium gas, which can
withstand higher temperatures. The reactor does not have to be shut down
for refuelling, since the spent fuel balls can be automatically removed,
and new ones inserted.
China is not the first country to build or test this advanced-design
high-temperature reactor. Rudolf Schulten designed a pebble bed
high-temperature gas-cooled reactor prototype that was built in what was
then West Germany, in 1985. The United States also had a high-temperature
test reactor in that period, in Colorado. But anti-nuclear hysteria and
the decline in energy growth, due to growing depression economic
conditions in the past 30 years, left those, and other, experimental
reactors, shuttered or dismantled.
In the mid-1990s, the government national utility company of South Africa
licensed the German pebble bed reactor design and has been developing a
prototype modular small reactor. China chose Tsinghua University to be its
center for the development of the technology.
China plans to have a full-scale 195-MW version of its HTR-10 on line by
the end of this decade, at an estimated cost of $300 million. Half of the
financial stake in the joint venture building the plant has been taken by
one of China's largest electricity generators, Huaneng. Concrete will be
poured in the Spring of 2007.
China's nuclear industry plans to sell these 200-MW-sized reactors to
utilities and in rural areas as modules which can be mass-produced and
assembled quickly, with additional modules grouped together as electricity
demand grows. Wang Yingsu, an official of Huaneng, told the Financial
Times during a recent tour of the HTR-10: "If it succeeds, we can then
spread this technology both at home and to the whole world."
Some policymakers are concerned that China may make progress in its space
program fast enough to send their citizens to the Moon before George
Bush's go-slow Moon-Mars mission gets the United States back there. In the
nuclear field, China has already pulled ahead.