Sunday, April 7, 2013

Two Years After Fukushima, Nuclear Power Makes a Comeback !

Nuclear energy is not on the wane. In fact, there has been relentless growth in the demand for uranium as China, Russia, India (photo), South Korea and the United States press ahead with their nuclear energy ambitions and Japan looks to restart its reactors next year. But for the Green / Environmentalist dimwits in Germany, that are shutting down their country's nuclear plants, and in Australia there is no ambition to follow the logic of a constant clean energy supply as well. Around the world, 435 nuclear reactors are in operation and another 65 are under construction.

Over the next 30 years, China is expected to add more than 150 gigawatts of nuclear capacity, which is half the U.S. capacity. As depleted weapons-grade uranium from Russia, a relic of nuclear disarmament, plays a diminishing role in the market supply, the emphasis will turn to mining activities and costs of uranium discovery and extraction. Given the very long lead times involved, there is a strong likelihood that the price of uranium over the next 2-3 years will climb much higher than today.

Uranium's availability to supply world energy needs is great both geologically and because of the increased technology to enhance its use. Increased mineral exploration has raided the world's known uranium resources. The OECD Nuclear Energy Agency (NEA) and International Atomic Energy Agency (IAEA) ''Red Book'' on uranium suggests that Australia has the largest resource with around 31% of the world's total uranium (and not one commercial Nuclear power plant!), while Kazakhstan has about 12% and Canada and Russia about 9% each. Current annual usage is around  68,000 metric tons. At this pace, the world's measured resources of uranium are valued at the present spot price and are enough to last for about 80 years. As present resources are used up, with the added reactors coming on-line, higher prices and further exploration are expected to yield further uranium resources.

The spot price for uranium has traded in the region of $51-$53 a pound in recent months. A doubling of price from present levels is expected to create a ten-fold increase in measured economic resources over time. Moreover, if there was widespread use of faster breeder reactors, this could increase the efficiency of uranium use 50-fold or more! This the main reason the Premier of Queensland (Australia), Campbell Newman, has cancelled the previous Bligh Labor government's ass-kissing
arrangement with the Greens to ban uranium mining in north Queensland. He wants his state to share in the largess of this resource, even if the uranium is going overseas for now.

The uranium market is going to be in deficit by 2014 due to the commissioning of new reactors in China-Taiwan (171), India (57), Russia (41), Korea (5), and the U.S. (30). The World Nuclear Association (WNA) estimates that 487 new reactors are proposed or planned to be in operation by 2030, which is a higher count than before Fukushima. There's no holding back China with projects to increase its nuclear power capacity at least five-fold by 2020. Also, India and South Korea are to drive demand for uranium in the coming years. India has had several serious power outages last year, demonstrating the urgent need for power upgrades. They're hoping to reach around 42 reactors by 2032, with South Korea planning to increase capacity by 56% to reach 27.3 GWe by 2020. Construction of two new reactors has already begun.

Looking ahead, the WNA has revised its data to show increased global uranium mine production. In 2011, Kazakhstan was the world's largest producer, yielding 5.04 kilotons of uranium in the second quarter of 2012 (up 9% from the first quarter). In a new project in Namibia, production is projected to rise 20% in 2013, with growth of 12% a year to 2015 due to commissioning of the CGNPC Husab mine, Forsys's Valencia and higher grade access at the Rossing mine. In Canada, production is forecast to rise an average of 13% a year to reach 14.8 kilotons by 2015. A pact was recently signed to allow Canadian uranium producers to export to China and this should support higher production and increased exploration in Canada. Once Queensland comes into production, further access to uranium will become available to those who need it.

The Way I See It....Nuclear power is here to stay. A new generation of nuclear reactors, that have self-contained cooling systems, are missile and earthquake-proof, and much more efficient, will be capable of satisfying the desire for relatively cheap, sustainable and clean energy, is being rolled out in China, India, Russia, South Korea and the U.S.. While there are many uncertainties surrounding the requirement for newly mined uranium, the expectation is that the current surplus of production from all sources will disappear over the next two years, leading to a definite price appreciation. The wild card in the spot uranium market is inventory accumulation. Any threat to the continuity of supply will surely trigger renewed strategic stockpiling and a much sharper price increase. The prospects of uranium appear bullish with the long-term consenus price estimate to 2013 at $63 a pound and is forecast to rise to $80 a pound by 2015. I think it's time to investigate some personal investment in this very important resource.....don't you?

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