Uranium Report 2011
Critical Mass - a point or situation at which change occurs -
support for the measure has reached critical mass.
By Richard (Rick) Mills
Ahead of the herd
As a general rule, the most successful man in life is the man
who has the best information
Our future energy course is being charted today because of the
ramifications of peak oil, because cars pollute too much,
because of climate change and because we wish to end our
dependence on foreign supplied energy.
Many countries have energy independence and global warming as
two of the key policy issues of their current administrations.
For instance US President Obama made a pledge to eliminate oil
imports from the Middle East and Venezuela within a decade and
to slash his country’s carbon dioxide emissions by more than 30
per cent by the year 2020.
If any country were to try and implement such a program they
would have to do two things:
Wean their country off using fossil fuels (coal, oil and natural
gas) to produce energy
Develop alternative clean energy sources within their country to
avoid energy imports
The Fuel of the Future
The electricity needed for any country to successfully replace
fossil fuels, both for transportation and everyday use, will
have to come from nuclear generation.
There is simply no other logical alternative:
Coal and natural gas plants emit carbon dioxide emissions
and natural gas needs an incredible amount of investment in
pipelines and supporting infrastructure
Operating a 1,000-MW coal plant, for one year, produces
30,000 truckloads of ash that contains large amounts of
carcinogens and toxins. Every second, up the smokestack,
goes 600 pounds of carbon dioxide and ten pounds of sulfur
Extensive use of hydrogen is not practical due to its
volatile nature and lack of infrastructure
Solar, wind and geothermal are all niche suppliers and are
untried on a large scale. Geothermal seems to be limited to
a few parts of any country and all three alternative means
of generating electricity need massive investment in power
transmission lines to get the power to where it’s needed.
All three of these technologies are extremely important and
each will successfully contribute, in a small way, to energy
independence. But none are, today, capable of supplying base
A 1,000-MW solar plant would cover 129 to 259 square
kilometers and use a thousand times the material needed to
construct a nuclear plant of the same capacity.
To equal the output of South Korea’s Yongwangs six
one-thousand-megawatt nuclear reactors, wind generators
would require an 245 kilometers wide extending from San
Francisco to Los Angeles. Solar would require roughly 52
square kilometers of collector area.
High emissions, a negative energy return and severe
environmental costs are associated with ethanol and make its
Hydro - going to clean eco-friendly energy isn’t
accomplished by damming what free-flowing rivers are left
“The potential scope for renewables contributing to the
electricity supply is very much less because the sources,
particularly solar and wind, are diffuse, intermittent and
unreliable.” World Nuclear Association
As the world’s population and standard of living continues to
climb, demand for more - and cleaner energy - grows alongside
the pressures we continue to put on our environment.
“As a zero-carbon energy source, nuclear power must be part
of our energy mix as we work toward energy independence and
meeting the challenge of global warming.” Nobel physicist
Steven Chu, U.S. Secretary of Energy - May 6, 2009
"The principal motivation to reconsider the nuclear option is
that nuclear power, as an alternative to fossil fuel resources,
does not impair air quality and does not release greenhouse
gases into the atmosphere." John Deutch, professor MIT
Today, there is an almost global wide move to develop higher
levels of nuclear energy production. This is because nuclear
energy works, it’s safe and recognition is slowly dawning it’s
going to be impossible to meet the global, growing demand for
energy and cut carbon dioxide emissions without nuclear
Reasons to Use Nuclear Energy:
One pound of yellowcake (U3O8 - the final product of the
uranium milling process) has the energy equivalence of 35
barrels of oil. One 7 gram uranium fuel pellet has an energy
to electricity equivalent of 17,000 cubic feet of natural
gas, 564 liters of oil or 1,780 pounds of coal
Nuclear power's life-cycle emissions range from 2 to 59
gram-equivalents of carbon dioxide per kilowatt-hour. Only
hydropower's range ranked lower at 2 to 48 grams of carbon
dioxide-equivalents per kilowatt-hour. Wind came in at 7 to
124 grams and solar photovoltaic at 13 to 731 grams.
Emissions from natural gas fired plants ranged from 389 to
511 grams. Coal produces 790 to 1,182 grams of carbon
dioxide equivalents per kilowatt hour. International Energy
Nuclear energy is the only proven technology that can
deliver baseload electricity on a large scale, 24 hours a
day, 7 days a week, regardless-of-the-weather, without
producing carbon dioxide emissions. Nuclear power plants
emit no carbon pollution—no carbon monoxide, no sulfur
oxides and no nitrogen oxides to the atmosphere.
Natural gas accounts for 80% of the cost to produce power
from an NG power plant. Uranium accounts for 5%–10% of the
price of nuclear energy
Power production cost results when comparing nuclear/gas,
nuclear/coal or nuclear/hydro – only coal is cheaper
Nuclear energy is reliable. Nuclear power plants do not
depend on weather conditions to produce electricity nor do
they need costly electricity storage options
One ton of uranium produces more energy than several million
tons of coal and oil. Fuel transportation costs are less and
there is less impact on our environment from mining or
fracking shale gas
Nuclear power plants require very little space and can be
situated close to where their power output is needed
“Through the release of atomic energy, our generation has
brought into the world the most revolutionary force since
prehistoric man's discovery of fire.” Albert Einstein
Supply and Demand
Today, there are some 441 nuclear power reactors operating in 30
countries. These 441 reactors, with combined capacity of over
376 Gigawatts (One GWe equals one billion watts or one thousand
megawatts), require 69,000 tonnes of uranium oxide (U3O8).
There are 59 power reactors currently being constructed. In all
there are 493 new power reactors planned or proposed with 84 new
reactors scheduled to be commissioned by 2017.
The International Atomic Energy Agency, in its 2009 report,
anticipates at least 807 GWe in new net capacity to be in place
The Energy Information Administration (EIA) projects electricity
generation from nuclear power to increase from about 2.7
trillion kilowatt hours in 2006 to 3.8 trillion kilowatt hours
in 2030. U.S.
Each GWe of increased capacity will require about 195 tU per
year of extra mine production – three times this for the first
fuel load. Let's also consider the fact that no one builds a $4
to $6-billion dollar reactor just to watch it go idle. They will
order one or perhaps several year’s worth of fuel supply to
guarantee it doesn’t.
By the year 2020, China will have at least 60 nuclear reactors
using 20,000 tonnes of fuel per year.
India and France recently signed a multibillion dollar agreement
to build two Nuclear power plants in India - Areva SA, will
build two pressurized reactors of 1,650 megawatts each. These
are the first two in the proposed construction of a total of 20
such nuclear plants in India. India’s need for uranium is
predicted to increase 10-fold by 2020.
The Russians are planning to build a large number of nuclear
reactors so they can use nuclear power domestically and increase
their exports of natural gas to Europe.
"We believe there is not enough uranium production, either
current or planned, to satisfy reactor needs, initial core
requirements and inventories for new reactors." Adam Schatzker,
analyst RBC Capital Markets
In 2008, mines supplied 51,600 tonnes of uranium oxide
concentrate containing 43,853 tU, which means mining supplied
roughly 75% of nuclear utility power requirements.
Spot Market and Megatons to Megawatts
The 25% mine supply deficit used to be made up from stockpiled
uranium held by nuclear power utilities and the Megatons to
Utility stockpiles are pretty much depleted and nuclear power
utilities are expected to be back in the market, after a long
absence, to sign long term contracts for uranium supply starting
in early 2011.
China has given top priority to nuclear energy in its 12th
Five-Year Plan (2011-2015) and they have already been a very
strong buyer of uranium on the open spot market. China Guangdong
Nuclear Power Corporation entered into a 10-year agreement to
buy uranium at a price that was well above the spot price at the
time of the announcement - China is building its strategic
working inventory for future nuclear requirements.
Japanese and Indian utility purchases will also increasingly
impact the spot market and many countries in Europe are
reconsidering their current nuclear policy and extending the
life of existing nuclear reactor fleets. New capacity is also
being built or considered in both Taiwan and South Korea.
"It appears that the character of the spot market has changed
markedly over the past few months from one that was heavily
oversupplied with weak demand to one that is in high demand with
very little supply." Adam Schatzker, analyst, RBC Capital
Mine production is now primarily supplemented by ex-military
material - the Megatons to Megawatts program. The Highly
Enriched Uranium (HEU) Purchase Agreement to convert 500 tonnes
of HEU to low enriched uranium (LEU) with Russia will expire in
2013 - Russia has said they will not renew it.
While working for Shell Oil during the 1940's Dr. M. King
Hubbert noticed the production of crude oil from individual oil
fields plotted a normal bell shaped curve. Roughly half of the
oil from a field has been exhausted when the bell curve peaks.
Carrying that insight further he surmised that oil production
from a group of oil fields would follow a similar bell shaped
In 1956 Dr. Hubbert predicted the cumulative group of oil fields
within the US would reach peak production in the 1970's, and
thereafter decline – no matter how much money would be thrown at
exploration and development of reserves US oil production would
not rise higher after this date. Dr. Hubbert’s prediction was
uncannily accurate and is not restricted to just US oil field
“In most fields, oil production has now peaked...Even if
demand remained steady, the world would have to find the
equivalent of four Saudi Arabia’s to maintain production, and
six Saudi Arabia’s if it is to keep up with the expected
increase in demand between now and 2030.” Dr. Fatih Birol
chief economist at the International Energy Agency (IEA)
As is the current situation with oil, the USA, and most other
countries, are highly reliant on foreign sources for their
A country’s dependence on imported energy increases its
strategic vulnerability. Energy suppliers who are willing to do
so (Russian supplying natural gas to Europe comes to mind) can
use their energy resources as leverage - holding whole countries
hostage - to pursue their own policies.
“Keeping America competitive requires affordable energy. And
here we have a serious problem: America is addicted to oil,
which is often imported from unstable parts of the world.”
George W. Bush, 2006 State of the Union Address
Developing countries such as China and India, with 2.3 billion
people between them, will, even while increasing their nuclear
fleet, drastically increase their consumption of fossil fuels.
Oil, natural gas and coal are all going higher in price.
Accessing a sustainable, and secure, supply of raw materials is
going to become the number one priority for all countries.
Increasingly we are going to see countries ensuring their own
industries have first rights of access to internally produced
commodities. If any country is to end its dependence on foreign
supplied fossil fuels and vastly reduce its carbon footprint it
will have to develop its own source(s) of uranium.
Global climate change, reducing our carbon footprints, weaning
ourselves off fossil fuels and achieving energy independence are
all key issues facing us and future generations and the herd is
not paying attention to HOW our future power is going to be
But as more and more investors figure out how we are going to
produce our future energy, companies in the uranium sector could
very well deliver spectacular gains for their shareholders.
Uranium should be on every investors radar screen.
Is it on yours?
Richard (Rick) Mills
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