Nuclear Power Plant Prospects Spawn Market for Technology Development and Efficiency

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Written by Richard Finlayson, International Correspondent for Industrial Info Resources (Sugar Land, Texas). The price of uranium has quadrupled in the three years since May 2003, when it stood at $10.95 a pound (lb). The price on May 15, 2006, was running over $43/lb and uranium miners and dealers expect it to move to $50/lb in the near future. Some sector watchers are forecasting a massive climb in price in the medium term to $300/lb. The last time the price hit $43/lb was in 1979, when a shortage scare hit the market and the nuclear weapons competition of the Cold War was hot. The 1979 price equates to something over $120/lb in current terms. For related news item see May 27, 2005 – Kazakhstan Set for Top Uranium Spot with 275% Increase to 15,000 tons by 2010 – NEI Provides Supporting Nuclear Power Scenario

The nuclear power industry is alive with headlines of long-cycle plans for power station construction. China currently has nine operational reactors, but has plans to increase its nuclear capacity to 40,000 megawatts by 2020, with a possible investment value of $60 billion. China has plans to construct 30 nuclear power stations to become operational by 2025, and the intent to build an additional 100,000 megawatts of nuclear power capacity.

The minimum level of nuclear power station construction in Russia is set at 40,000 megawatts of extra capacity by 2030, and Sergei Kiriyenko, head of the Russian Atomic Energy Agency, is targeting the sale and construction of 40 to 60 nuclear power reactors abroad over the next 25 years.

Earlier this year, he estimated that there was a global market for 600,000 megawatts of nuclear energy and 50% of that total exists in countries that are not in a position to build their own nuclear plants. Vladimir Servetnik, deputy general director of Techsnabexport, has reported that Russia’s current demand for uranium is 8,300 tons per annum (tpa) and will rise to 18,000 tpa by 2020. Global production of uranium increased by 5% in 2005 to 108.4 million lbs, facing a total global demand of 168 million lbs. For related news item see January 6, 2006 – Uranium Yellow Cake is Making a Comeback

India is planning to add 40,000 megawatts of nuclear power to its total generating capacity by 2020, which represents 25 to 28 reactors, with an investment value of around $40 billion. Its local industry cannot cope with these demands and it is hoping for final clearance of sanctions against imports of enriched uranium supplies to be bundled in the reactor construction contracts with international companies.

Although the above industry statistics may seem broad brush strokes, on account of their size and value, they are, in fact, backed by full planning processes and, in many cases, identified sites and potential fuel supply contracts. In addition to the gigantic Russian, Chinese and Indian nuclear programs, there are very few countries with an industrial base that are not actively planning or considering (or among some western countries ‘re-considering’) near-term nuclear power projects.

Even Australia, which for some years has been disdainful of nuclear power, is now entering into an internal debate about the possibilities spurred on by the fact that they hold nearly 40% of the world’s uranium reserve and supplies of yellowcake ore. Industry minister Ian Macfarlane said that the debate should be on the merits of nuclear power, uranium enrichment and storing nuclear waste. Finance Minister Nick Minchin said that nuclear power was economically unviable for the country, which has abundant coal and gas reserves. “You’d have to tax them out of existence to make nuclear power viable,” he said.

Macfarlane agrees that the economics don’t add up as the price of nuclear energy at the moment is almost double that of base load coal. But he sees the environmental pressures on coal making the availability of future options advisable. Prime Minister John Howard has backed the debate and recently he told U.S. Energy Secretary Sam Bodman that Australia wanted to be fully consulted over plans for the big six nuclear countries – U.S., France, China, Britain, Russia and Japan – to forge a new economic block.

The global nature and the nuancing of the motivations in the nuclear game are well-illustrated by an exclusive agreement signed between Silex Systems (Sydney), an Australian-based technology innovator, and GE Energy (NYSE:GE ) (Fairfield, Connecticut), whereby GE will license the Australian technology and develop the next generation low enriched manufacturing process in the U.S.

The transaction is subject to government approvals and regulatory controls on the design construction and operation of the process.

The Silex technology represents a new third generation, laser-based ‘isotope separation’ process for enriching uranium solely for the use in civilian nuclear power plants. It has efficiency advantages over existing civilian fuel enrichment processes like gas diffusion or gas centrifuge plants. The low-grade enriched uranium will be used for industrial purposes.

In addition to helping Silex complete the process development and commercial deployment of the technology, the agreement represents an expansion by GE into the global uranium enrichment sector, which is valued at about $5 billion per annum.

“The transaction,” said Dr. Michael Goldsworthy, CEO and founder of Silex, “demonstrates GE’s commitment to the nuclear industry, and enables us to expand our current capabilities into adjacent and complementary technologies.”

The ‘clean’ nuclear industry is changing its profile from distanced and monolithic to a broad-based source of power and industrial niches, which breed technology and industrial solutions. There are many more market nuances in uranium enrichment than the two dimensional standoff currently centered on Iran.

Industrial Info Resources (IIR) is a Marketing Information Service company that has been doing business for over 23 years. IIR is respected as the leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.