India's NPCIL to Secure 2,000 Tons of Uranium in 2008 from Overseas Sources

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Researched by Industrial Info Resources (Sugar Land, Texas)--In a bid to kick-start India's nuclear power program and ensure an adequate fuel supply, the Nuclear Power Corporation of India (NPCIL) (Mumbai) announced plans to order up to 2,000 tons of fuel by the end of 2008. NPCIL, which monopolizes the nation's atomic power generation sector, is in talks with international majors for long-term contracts and is also looking to invest up to $1 billion to acquire stakes in four uranium mines overseas.

The company is reported to have approached firms in Africa, Canada, Kazakhstan and Russia for long-term supply contracts. It is exploring joint-venture opportunities in uranium mining and is planning to pick up stakes in abandoned mines that haven't been developed because of a shortage of funds. The firm has yet to approach Australian companies for uranium. Although Australia is home to the world's largest known reserves of uranium, it has been rigid on its stance of not supplying fuel to nations excluded from the Nuclear Non-Proliferation Treaty, which was signed in 1968 to limit the spread of nuclear weapons.

NPCIL is looking to source fuel to feed its reactors that are running at less than 50% of their operating capacities. It is also securing fuel supplies for the proposed development of 28 nuclear reactors to meet India's target of achieving an installed nuclear power generation capacity of 40,000 megawatts (MW) by 2020. The firm currently consumes an estimated 545 tons of uranium to power the country's existing 17 nuclear plants that supply 4,120 MW of power. It is looking to commission four of its ongoing projects in Karnataka, Rajasthan and Tamil Nadu over the next four years to produce an additional 3,160 MW of power. The upcoming 2,000-MW nuclear power project in Kudankulam, Tamil Nadu, is NPCIL's largest under construction. The firm is looking to commission the two 1,000-MW units each by 2009. The upcoming 440-MW nuclear power plant in Rajasthan is likely to be commissioned by March 2009 whereas the 200-MW Kaiga project in Karnataka is scheduled to be commissioned by December 2009.

India's nuclear power program is likely to see an investment of $14 billion in the purchase of nuclear reactors from leading worldwide suppliers, including Areva SA (EPA:CEI) (Paris), General Electric Company (NYSE:GE) (Fairfield, Connecticut), Rosatom Nuclear Energy State Corporation (Moscow, Russia) and Westinghouse Electric Company LLC (Monroeville, Pennsylvania). NPCIL has been in talks with these firms for the last three years and plans to initially secure a pair of reactors with a power generation capacity of at least 1,000 MW from each of the companies. The engagement would then be extended to procure a basket of six to eight reactors from each of the firms. India is also following up on its proposed nuclear agreements with France and Russia.

According to a recent report released by JPMorgan Chase & Company (NYSE:JPM) (New York, New York), prices of uranium are unlikely to soar because of an increase in spot-market sales of the metal in September. The firm has cut its forecast for prices of uranium through 2010 because of the imminent impact of the current worldwide economic downturn and the subsequent credit freeze that is likely to decelerate the development of nuclear power projects. Spot uranium prices reached a high of $138 per pound in June 2007 and fell to a low of $73 per pound in February 2008. Indicators in March 2008 suggested that uranium prices would increase to about $105 per pound by September 2008. However, a reverse trend was seen with spot prices hovering at $63.25 per pound in July, increasing to $64.50 in August, and slipping back to $58 per pound by mid-September. Spot prices in 2008 are likely to be an average of $65.98 per pound as opposed to an earlier forecast of $69.62 per pound. The firm also reduced its price forecast for 2009 by 14% to $64.75 per pound and for 2010 by 4.7% to $71.50 per pound.

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