Uranium (Nuclear Energy)

[winston]

Uranium to Fetch $90 as Indian Reactors Drive Demand (Update2)
By Yuriy Humber

June 23 (Bloomberg) -- The uranium industry's worst year is about to collide with a nuclear construction program in India and China that rivals the ones undertaken during the oil crisis of the 1970s.

The result is likely to be a 58 percent rebound in uranium to $90 a pound from $57 now, according to Goldman Sachs JBWere Pty and Rio Tinto Group, the third-biggest mining company. Uranium plunged 57 percent in the past year as an earthquake damaged a Japanese nuclear plant that's the world's largest and faults shut down reactors in the U.K. and Germany.

Plans for India and China to end electricity shortages will ripple from northwest Canada to the Australian outback and the flatlands of Kazakhstan, the primary sources of uranium. India will start up three reactors this year, with another six due in 2009, in India, China, Russia, Canada and Japan. Uranium demand worldwide will rise as fast as oil this year, or 0.8 percent, Deutsche Bank AG forecasts.

``The first wave of growth is going to come from the emerging economies,'' said John Wong, fund manager with CQS UK LLP in London, which has $10 billion under management including $150 million of uranium investments. ``People are starting to look at coal, at gas, at oil and seeing the energy prices go up, they wonder about uranium.''

The yearlong decline in uranium contrasts with record prices for oil and coal as Asian energy demand expands and concern mounts that emissions will cause global warming to worsen. The world needs to build 32 new nuclear plants each year as part of measures to cut emissions in half by 2050, the Paris-based International Energy Agency said.

2007's Drop

Because malfunctions shut reactors in Japan, the U.K. and Germany, nuclear power production and uranium use dropped 2 percent in 2007, only the third time consumption has fallen since the 1970s, according to data compiled by BP Plc, Europe's second-largest oil company by market value. Prices are so low that some uranium mines are close to being unprofitable, says Merrill Lynch & Co., the third-largest U.S. securities firm.

``If you look at what is necessary to sustain increased production, to make the kind of projects that everyone is talking about fly, prices better not get much lower or those projects are going to fall over,'' says Preston Chiaro, chief executive of Rio Tinto's energy unit. ``I don't think that spot price is indicative of what prices will look like through the course of the year.''

Iran's Reactor

In India, Nuclear Power Corp.'s 220-megawatt Kaiga plant in the southern province of Karnatka and another at Rawatbhata in the northern state of Rajasthan are due to come on line this year. China started two units in 2007 and will bring on three more through 2011, says the World Nuclear Association. Iran plans to begin generation this year at its 950-megawatt Bushehr reactor, which is at the center of the nation's conflict with the West.

``China is just on the verge of a second rapid phase of expansion,'' says Ian Hore-Lacy, director of public communications for the WNA in London. ``Each year China seems to raise their sights further.''

To be sure, safety concerns remain the biggest risk to nuclear construction and uranium's revival. Proposed reactors were canceled in the 1970s because of environmental protests, while accidents at Three Mile Island in Pennsylvania in 1979 and Chernobyl, Ukraine, in 1986 further eroded support. In Japan, new projects face delays as utilities improve earthquake resistance to restore confidence after the closure of Tokyo Electric Power Co.'s Kashiwazaki Kariwa and revelations that companies falsified safety records.

Safety Risks

``It is worth remembering that this is an industry that can be brought to its knees overnight by one major mishap or one well-executed terrorist action,'' Paul Hannon, an analyst at London-based commodities research company VM Group in London, wrote in a report this month.

Uranium demand was 66,500 metric tons last year, according to data from Denver-based consultant TradeTech LLP. Consumption may jump 55 percent to 102,000 tons by 2020, forecasts Macquarie Group Ltd., Australia's biggest securities firm.

Uranium use now is 69 percent greater than the 39,429 tons that was mined in 2006, the most recent data from the WNA show. The balance comes from inventories and decommissioned weapons. A Russian accord to export fuel recovered from warheads to the U.S. expires in 2013.

Nuclear Converts

``Secondary supplies are finite and rapidly being depleted,'' Deutsche Bank analysts led by Michael Lewis said in a June 20 report. ``Continual supply issues and the likelihood of increased demand from utilities should drive the spot price higher during the third quarter of this year.''

Demand is set to increase as existing reactors are brought back on line, while nuclear energy gains converts.

South Africa, which is struggling to meet electricity demand, plans to award a contract for construction of a 120 billion-rand ($15 billion) nuclear plant. In the U.K., the Labour government wants more atomic capacity to reduce its emissions.

U.S. Republican presidential candidate John McCain said last week he will push to almost double the number of nuclear reactors to lessen the nation's dependence on foreign oil. Barack Obama, the presumptive Democratic nominee, also backs nuclear power. There are 104 reactors operating in the U.S., though the last to come on line was in 1990, according to the Nuclear Energy Institute.

Production Costs

Prices will have to increase if uranium production is to meet the rising demand, said Kevin Smith, head of uranium trading at New York-based commodities brokerage Traxys.

Canada's Cameco Corp., the world's largest uranium producer, reported it spent a total of about C$45 ($44) to produce a pound of uranium in the first quarter, compared with its average realized price of C$40.85 a pound. While Cameco, which also mines gold, still posted a profit for the quarter, lower uranium prices are a problem for other companies developing new mines, according to Smith.

``There are a lot of production projects that are feeling the pain,'' Smith says.

Uranium Participation Corp., a speculative buyer of uranium, rose 50 cents, or 5.8 percent, to C$9.05 at 3:58 p.m. in Toronto Stock Exchange trading. Cameco increased C$1.74, or 4.6 percent, to C$39.64.

Source: Bloomberg

[ricky]

I've been following some of the Canadian juniors and a number of these companies made a good run in 2006 but they have been falling back to earth over the past years. Some names include:

XE - Xemplar (property in Namibia)
FSY - Forsys (also in Namibia)
PLN - Paladin (also has gold properties)

They have promising properties but dealing with the African governments for mining and water permits may be more tricky. If uranium prices do begin to rise, then these stocks likely will see another round of speculative run up in prices. However, patience is required as share prices may consolidate at this level for awhile.

[winston]

Hi ricky,

Good to see you here.

BTW, I have also started a thread on Canada. Will need your help to update that section regularly

TOL: If only I had hold on to Cameco and POT

Take care,
Winston

[LenaHuat]

If this crystallizes, oil prices will correct :

'The American Public Is Ready for Nuclear'
David Crane is CEO of NRG Energy, Inc, based in New Jersey. His company is planning to build two new nuclear reactors in Texas, the first such project in almost 30 years in the US. SPIEGEL ONLINE spoke to him about the worldwide nuclear renaissance.

SPIEGEL ONLINE: Republican presidential candidate John McCain has proposed building 45 new nuclear reactors by 2030 with a longer term goal of 55 more. His Democratic opponent, Barack Obama, is also in favor of more atomic energy. Is the US experiencing a nuclear power renaissance?

David Crane: It's still in the early stages. Clearly, the defining incident when it comes to the acceptance of nuclear energy in Europe was Chernobyl in 1986. But in this country, it was Three Mile Island near Harrisburg, Pennsylvania, which was seven years earlier than Chernobyl and a much less serious incident. You basically have to be 45 or 50 years old in the US to remember Three Mile Island.

SPIEGEL ONLINE: You mean to say that people are beginning to forget about the dangers of nuclear power?

Crane: There is a perception that the American public is ready for nuclear. It's a combination of things, and one of them is generational change. The overriding concern in this country, just like in Europe, is global warming. The recognition by most pragmatic people is that nuclear is the only advanced technology that exists to replace coal-fired power plants on a significant scale. This has jump-started the renaissance.

SPIEGEL ONLINE: Couldn't one achieve just as much by conserving energy and improving the efficiency of conventional power plants as well as by improving the efficiency of automobiles and buildings? There seems to be quite a bit of potential for that kind of thing in the US.

Crane: That's what I call the "Gore Approach." It's based on self-denial: Let's all go back to living without air conditioning and to drying our clothes on the clothes line. There's another option, though: the "Schwarzenegger Approach." It's the American Dream, but it's the carbon-free American Dream.

SPIEGEL ONLINE: What do you mean by that?

Crane: He's like, I want to drive my Hummer and fly my Gulfstream 4, I just don't want them to produce any greenhouse gas. That's a Republican philosophy of a technology-driven approach. I think it's very difficult to get the American people to engage in self-denial. It's just not the American way. The American way is based on consumption. You don't want to change the American way of life, you just want to show them a better way to get there, and nuclear power is a key part of that. The first breakthrough for nuclear power was the connection with global warming. The second breakthrough is happening right now.

SPIEGEL ONLINE: How have things changed?

Crane: I'm talking about the fundamental connection between nuclear power and electric cars. Gas prices are at $4.30 per gallon, and there are all these people driving 80 miles a day to work and back at just 14 miles to the gallon. That is breaking the back of the American commuter. If we start now, the automobile industry can be retooling itself at the same time as new nuclear plants are being built so they converge at the same time. And then you have nuclear plants that are not only displacing coal plants and their carbon emissions, but suddenly all the electric cars start to displace the classical engine. By our calculations, we will be able to offer electricity for cars at the equivalent of 80 cents to $1 per gallon -- less than a quarter of what people are paying now.

SPIEGEL ONLINE: What makes you so sure that you are right? What you are talking about is still a long way off. It could very well be that, by then, cars will be powered by something else entirely.

Crane: Even if it's hydrogen or something else, electricity will be needed to produce it. We are really in a unique situation. The American electricity industry is the single biggest part of the problem; we release 37 percent of the greenhouse gas emissions in the US. But we are a much bigger part of the solution. If we, the power industry, can get our act together and can start producing economic power on a tremendous scale, not only do we solve our own carbon emission problem, but we can then solve the problem of the transport industry and industry in general. We can just electrify all these things. I met a guy who runs a train company. He told me he wants to electrify his line; until now he has run his freight trains on diesel. I said, wouldn't that be stunningly expensive? He said, yeah, I need $15 billion. But, he said, in 2005, my diesel bill was $1 billion for the whole year. Now its $1 billion every two months![b](Lena : Wonder how Buffett is reacting to this afterall he acquired a freight train company last year [/b]:mrgreen:

SPIEGEL ONLINE: What should the energy mix of the future look like?

Crane: Obviously, we Americans are the most wasteful people on Earth. Right now, coal produces 50 percent of our power and nuclear 20 percent in the US. It would be nice over time -- by 2050, the year most global warming legislation is aimed at -- to have these percentages reversed. Right now, the US consumes 4.5 trillion kilowatt hours of electricity. Maybe you can get that down to 4 trillion, but that would demand a huge push towards conservation, which will be very difficult. If you turn all 240 million cars and light trucks in the US to electric-powered vehicles while boosting the share of nuclear power, the amount of carbon emissions that would be saved overall would be enormous.

SPIEGEL ONLINE: Imagining for a moment that so many new nuclear reactors do go on line, what is to be done with all of the radioactive waste? Even after years of debate on the issue, there is still no solution regarding final disposal.

Crane: A lot of people talk about a final solution, and we do need one. But this solution of on-site waste storage is deemed to be safe for a long time. Global warming is an immediate issue that nuclear energy can help solve. We should solve this issue now and solve the nuclear waste issue over the next 200 years.(Lena : Oh really?? Let's see how Americans react to McCain's and Obama's proposals. The French has embraced nuclear power in a big way but I suppose they dump the nuclear waste in their Pacific atoll).
Excerpts of an interview conducted by Frank Hornig

[millionairemind]

Lena - Two names come to mind. GE and Westinghouse

[winston]

Please do also note that there is a related thread on Uranium in the Commodities section.

[LenaHuat]

MM - Westinghouse.
Google Westinghouse and Georgia state and U'll find interesting stuff abt a nuclear plant to be built in the US after a lapse of some 30 years after Long Mile Isle.

[LenaHuat]

On Westinghouse again. 2day, I took a MRT ride at the City Hall station and guess what I saw :
"Westinghouse Brake and Signal Company" stamped on the floor of the train gates. Never took note of this b4.

[LenaHuat]

Switzerland : Putting nuclear to the vote & planning far ahead of need:

By Mathieu von Rohr

Switzerland may expand its nuclear power lineup from five to eight reactors. There is still little resistance to the new reactors among the Swiss, who have come to accept nuclear power.

Most of Switzerland's electricity is from renewable energy sources. The country currently derives 60 percent of electricity from hydroelectric and 40 percent from nuclear power. But the Swiss, concerned about possible supply shortages, plan to build up to three new nuclear power plants.

The Swiss government encourage private operators to replace or modernize current nuclear power plants. It had initially planned to build new gas power plants to bridge the anticipated shortage. But these plans were abandoned when new regulations on CO2 offsets came into effect.

Swiss electric utilities plan to build three new nuclear power plants, with a total output of 4,800 megawatts. The plants, Gösgen II, Beznau II and Mühleberg II, would be additions to the country's five existing reactors. However, it remains unclear whether all three projects will in fact come to fruition. Even the major electric utilities, Axpo, Atel and BKW, base their calculations on the assumption that only two new plants are needed.

Referendum to Decide

In June, Atel was the first operator to submit an application for a new plant, its Gösgen II project. The company plans to build a light-water reactor with an output of 1100 to 1600 megawatts, which would make it larger than any of Switzerland's existing nuclear power plants. The proposed plant would be built, at an estimated coast of between six and seven billion Swiss francs, directly adjacent to the current Gösgen nuclear power plant, in Switzerland's densely populated Mittelland region, near the town of Däniken in Solothurn Canton, halfway between Zurich and Bern.

Given the drawn-out approval process for a new nuclear power plant in Switzerland, the operators do not expect Gösgen II to be connected to the grid before 2025. The final decision will be in the hands of Swiss citizens, who will vote in a referendum, probably in 2012 or 2013, on whether a new nuclear power plant should be built at all.

[millionairemind]

Eight new nuclear power stations planned for England
By Robert Winnett, Deputy Political Editor
Last Updated: 9:01pm BST 13/07/2008

Ministers are to build eight new nuclear power stations across England, the Daily Telegraph can disclose.

The locations of the new nuclear reactors are expected to include

The new nuclear plants will mainly be based alongside existing facilities and are expected to be constructed over the next decade.

New planning laws will be used to fast-track approval for the nuclear plants which Gordon Brown believes are crucial in reducing Britain's dependency on fossil fuels.

However, the plans are likely to anger people living close to the new sites whose properties will now be close to nuclear plants for much of the century. Many environmentalists are also opposed to the plans. Earlier this year, the Government announced that it was committed to building a new generation of nuclear power stations to replace the existing facilities.

However, the scale of the proposed building programme has never previously been disclosed and the Government has promised to formally consult on plans before announcing the building programme.

Jean McSorley, nuclear campaigner at Greenpeace, said: "If there is a list that has already been signed off on for sites for new-build nuclear power stations then it makes a complete mockery of the Government's consultation on siting. It calls into question the legality of the whole process.

"No doubt the various parties interested in new build and owning British Energy will be very worried about such a pre-determined list."

The locations of the new nuclear reactors are expected to include Sizewell, Hartlepool, Heysham and Dungeness. There are currently eight nuclear sites across England which may house all the proposed new reactors.

The Scottish Executive has blocked any of the new nuclear stations being built north of the border.

Mr Brown is a strong backer of nuclear energy and said earlier this year: "When North Sea oil runs down, both oil and gas, people will want to know whether we have made sure that we've got the balance right between external dependence on energy and our ability to generate our own energy within our country."

At last week's G8 summit in Japan, the Prime Minister spoke of the need for up to 1,000 new nuclear power stations around the world to supply energy during the next century.

He said there should be nuclear plants on every continent. Energy prices have soared over the past few months in line with rising oil prices. Last Friday, the oil price hit a new high of more than $147 a barrel amid growing concerns over the actions of the Iranians.

The Government also signed a multi-billion pound deal with firms dealing with nuclear waste at Sellafield last week. Mr Brown hopes that oil-rich states such as Saudi Arabia may invest in new nuclear power stations in this country.

The Government has already said that the private sector and energy companies must be responsible for funding the new nuclear plants. However, a number of Government subsidies to help deal with the costs of waste may be available.

Britain has pledged to cut carbon dioxide emissions by more than fifty percent by 2050 and the ambitious nuclear building plan is seen as critical to meeting the target.

Environmental groups took the Government to court last year accusing it of failing to carry out a proper consultation on nuclear plans before they were announced. The Government lost the case and pledged to carry out proper consultations on each plant before the plans are unveiled.

The disclosure that ministers have decided on the eight new plants before the consultations is likely to anger environmentalists.