Uranium in the Mail

• A question from the UK
• What’s the discrepancy?
• New Plants from Asia
  

There’s nothing better than a well articulated question to get the juices flowing on a Monday morning. To that point, I was glad to see a question from John B. of the UK in my inbox today.

John’s main point: uranium production numbers can be confusing. I agree.

There’s a few main issues that, for the most part, are largely unknown.

John asked,

“Mining Weekly (RSA) has just quoted NEA [Nuclear Energy Agency] DG Luis Echavarri, ‘By 2030, there will not be a very significant change in the number of NPPs [Nuclear Power Plants] in the world’.

You quote WNA [World Nuclear Association] reckoning on 5 times more uranium demand than at present in 2030!

Have you researched the schedule of closures and new build openings? It is all very confusing.”

John, first off, thanks for writing in.  I love getting and responding to reader mail. I also read everything that’s sent my way, although I can’t always respond. If you have a question about uranium, commodities or anything I mention in my articles, please drop me a line at editorial@resourceprospector.com

John raises a good question that certainly merits further research.  It is confusing when two authorities on nuclear power seem to be in disagreement over how many plants will be built in the next 20+ years and how much that might affect demand for uranium. But upon closer inspection, I don’t think they are really disagreeing.

We have the NEA (from this Mining Weekly article) in one corner projecting between 170 and 900 new plants will be built by 2050.

And then in the other corner, we have the WNA projecting a 5-fold increase in uranium demand by 2030 (from their website).

When you look at it that way, it becomes clear that they’re not necessarily disagreeing with each other. An addition of another hundred-plus plants by 2030 could increase demand by 5-fold.

In any event, the important thing is that both the WNA and NEA agree that demand will grow.  The point of confusion is just how much it will grow.  

Why all the confusion?

Part of the problem of knowing exactly how much these new plants will affect uranium demand, is that we don't know for certain the size and scope of each new plant built, or each old plant going offline.  Both the WNA and the NEA are giving us their best educated guess. That might sound like a cop-out, but no one can really be sure.

For instance, I’ll reference Friday’s issue of Resource Prospector where I mentioned the nuclear conundrum present in Vermont, where I currently live.

The problem in our case is no one yet knows if Vermont Yankee will lose its lease and be torn down.  I ask every Vermonter I know if they think the plant will close, and even the most environmentally opinionated can’t say for sure. Granted, it is a small plant, but there's similar uncertainty for other plants around the planet.  The problem is really two-fold in Vermont Yankee’s case. We get over 40% of our electricity generation from Vermont Yankee, and I’ve yet to see a coherent plan to make up the difference in production if Vermont Yankee goes offline. The other problem is: what happens to the plant if it gets closed? Dismantling a nuclear power plant seems like it could be at least as environmentally dangerous as keeping it running.

Okay, so to cut through all of this uncertainty, let’s take a look at some more concrete factors to hang our hat on.

One thing I don't doubt is China's ability to put boots on the ground and build nuclear power plants at will.  They don't have to contend with environmental groups or activists or other problems from civil society gumming up the works.  The central planners there just point to a spot on the map and make it happen.  They do it with cities, they do it with power plants, and I don’t doubt that they’ll do it with nuclear power plants.

According to an article in Business Week just a couple weeks ago, China plans to build at least 28 new nuclear power plants in the next 10 years. That’s not just hot air. They’ve already begun construction on 20 of those plants.

In India, there are similar plans to build up to another 20 plants. That news was revealed just one month ago in an article from The Guardian.

These new plants will require more uranium. That brings me to the biggest, and perhaps, most important factor: uranium production. It’s at least as complicated as the nuclear power plant projections so it will have to wait for tomorrow’s issue. It’s a whole ‘nother ball of wax.

John, I hope that answers your question, although it might have raised more than it settled.

If John or anyone else has an interest in investing in the likelihood that the world will need more nuclear power and, indeed, more power in general, I suggest taking a look at Energy World Profits – our advisory service all about investing in energy stocks. You can take a 90-day test drive to see if the service is for you, and if it’s not, we offer a money back guarantee.

Good investing,

Kevin McElroy
Editor
Resource Prospector