Nuclear Electricity Generation
A number of current trends in the nuclear industry could have a positive impact for uranium explorers and producers. The need for additional electrical energy worldwide and a growing trend to limit fossil fuel consumption has brought about a resurgence of nuclear energy as a viable alternative. Global warming concerns in key western countries, targeted reduction of greenhouse gas emissions, and the security of fossil fuel supplies, are all factors that appear to have moved public opinion in many countries in favour of nuclear power.
In recent years, the nuclear industry has seen significantly increased capacity as a result of fast growing Eastern economies announcing plans for increased nuclear capacity build outs. As of February 1, 2011, the World Nuclear Association reports China with 13 operating reactors, 27 under construction, a further 50 14 planned, and another 110 proposed. Similarly, India has significant expansion plans with 20 operating reactors, 5 under construction, a further 18 planned and another 40 proposed.
On a worldwide basis as of February 1, 2011 there are 443 reactors operating, 62 under construction, a further 156 planned and another 322 proposed.
Uranium Supply and Demand
The amount of uranium required in 2011 is projected at 68,971 tonnes and the World Nuclear Association predicts demand growth of 33 percent in the next decade to correspond with a 27 percent projected growth in nuclear reactor capacity.
Notwithstanding the increasing numbers of new reactors under construction, for many years the primary production of uranium from mining operations has not kept up with demand by the nuclear industry. This was an effect of disinvestment in the uranium sector after the Chernobyl incident in 1986, and a lack of worldwide exploration. In 2009, the most recent year for which information is available, the usage of uranium was 65,405 tonnes, while mining produced 50,772 tonnes.
The shortfall in production has been made up by secondary sources, predominantly from the downblending of Heavy Enriched Uranium (“HEU”) from the decommissioning of nuclear warheads that were stockpiled during the Cold War. The 1993 “Megatons-to-Megawatts” agreement to turn armaments into reactor fuel has expired for USA and will expire for Russia in 2013. After 2013, the nuclear industry will have to rely predominantly on mine supply. Coupled with this situation is the current and growing worldwide concern about greenhouse gas emissions and global warming. Many countries are embracing “green energy” alternatives to fossil fuels, such as wind, solar and nuclear power, however of these choices only nuclear power is reliable on a 24/7 basis and can be easily plugged into existing infrastructure.
The new build out in nuclear that has commenced is very considerable, with most of it within China. China continues to lock up production for their growing fleet of reactors and has recently signed off take agreements with producers Cameco and Areva. The growth in new mine supply depends on new uranium discoveries in stable jurisdictions.
This trend of increasing demand may be one of the key drivers of the steady increase in the spot price of uranium in the past year, which has renewed interest in worldwide uranium exploration. The weekly spot price for U3O8 has risen to US$72.25/lb the week of February 14, 2011 from US$42.50/lb the week of February 15, 2010.
Nuclear Energy in Switzerland
Switzerland presently derives about 40% of its energy needs from five nuclear power plants, with two of them producing district heating in addition to electrical power. Its first commercial nuclear power reactor began operating in 1969. Despite a ten-year moratorium on new plant construction beginning in 1990, antinuclear development proposals, originally put forward in 1998, were rejected in a 2003 national referendum that confirmed nuclear energy as part of Switzerland’s energy future. The Swiss Government announced early in 2007 that the existing five nuclear power reactors should be replaced in due course with new units. All five Swiss reactors have been power uprated, the most recent in January 2009, and all have unlimited-duration operating licences.
Two applications for the construction of new nuclear reactors were accepted in 2008. In November 2010, the Swiss Federal Nuclear Safety Inspectorate (ENSI) confirmed the three proposed sites as suitable and have said that a federal decision on granting general authorisations will probably be made by mid-2012. ENSI’s findings will be open to review as part of a public enquiry in mid-2011. In December 2010, the three Swiss power companies Axpo, Alpiq and BKW, joined forces to form a joint planning company to pursue construction of two identical new nuclear power reactors of up to about 1600 MWe.
According to the World Nuclear Association – Nuclear Power in Switzerland website, the 2003 Swiss energy policy promotes the use of renewable resources, such as hydroelectric generation and deep geothermal development, and encourages energy efficiency and gasfired plants, but relies on nuclear energy as the main contributor to expansion. Hydroelectric continues to be the largest contributor to electricity production. Switzerland has optimized its hydroelectric power generation over many decades and further expansion potential is very limited. Without new investment, a 25% shortfall is predicted by 2020 due to phasing out of electricity imports from France, as well as closure of two small reactors and a 355 MWe hydroelectric plant. In 2005, for the first time, Switzerland imported more electrical energy than it exported. Concerns on foreign natural gas supply developed quickly in January, 2006 when the Russian-Ukrainian gas dispute resulted in the interruption of gas from Russia destined for EU countries, including Switzerland. Continued disputes led to further gas reductions and interruptions through the pipeline in March 2008 and early 2009. Switzerland is highly motivated towards 17 energy self-sufficiency and the planned increase in nuclear generating capacity could promote a desire for a reliable domestic source of uranium.
(Swiss government website www.swissworld.org; and World Nuclear Association website www.worldnuclear.org, January 2011).