Tag Archives: Uranium

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MZConsulting New Year’s Message 2017

By Milt Caplan
President
MZConsulting Inc.

Originally posted at http://mzconsultinginc.com/.

2016 was another tumultuous year for nuclear power. Decisions to close units in the USA early due to economic pressures in deregulated markets and the slow pace of restarting nuclear units in Japan continue to negatively impact the uranium market. However, the tide has now turned as the benefits to the environment and system reliability are being more broadly accepted with both New York and Illinois having taken decisions to keep marginal plants running.

Uranium producers continue to struggle due to low prices

The stock prices of Cameco in Canada, Energy Fuels and Ur-Energy in the US and Paladin in Namibia, along with uranium holder Uranium Participation are once again in negative territory in 2016. That is symptomatic of a current supply-anddemand imbalance. However, some Juniors such as Forsys, Mega and UEX, with highly prospective properties not in production, have done better in 2016. This is perhaps indicative that, while the immediate problem is falling uranium prices, the market recognized that new supply will be required in the longer term.

The spot price of uranium continued to fall throughout 2016 going as low as $18/lb in November before ending the year at $20.25/lb. Has the price finally hit bottom? Probably yes. The long-term price, only at around $30/lb, is finally in a place where even the low-cost producers are slowing production as they focus on cost cutting to remain viable. While more positive trends for the longer term continue, prices are likely to stay soft in the short to medium term until demand recovers.

Production in 2015 shows that of 19 producing countries, Kazakhstan (39%) is by far the largest uranium producer followed by Canada (22%) and Australia (9%). These three countries produce over two-thirds of the world’s uranium. Cameco’s McArthur River (12%) and Cigar Lake (7%) in Saskatchewan are the two largest uranium mines in the world, supplying some 19% of world production while eleven companies marketed 89% of the world’s uranium production with Cameco ranking second behind KazAtomProm.

Crisis creates clarity in the role of nuclear power

Economic pressures in dysfunctional US electricity markets as a result of very low gas prices and subsidized renewables, have put some 15 to 20 nuclear plants at risk of early closure. This has forced reluctant law makers to address the issue with many coming out in support of maintaining the nuclear fleet as an essential part of the mix based on nuclear’s low carbon footprint and its contribution to system reliability.

The result was an agreement in New York and in Illinois to keep struggling nuclear plants afloat. That being said, there is still more work to be done to solve the larger problem of markets that need reform. It was a pivotal year in the US, as the country’s first new nuclear plant in more than two decades, Watts Bar 2, came into service. Four more units are under construction, and NuScale has recently submitted the first application for design certification for an SMR. While support for nuclear is expected to continue, uncertainty remains as the new administration shows little interest in climate change and embraces fossil fuel development.

In Switzerland, the early closure for their nuclear plants was strongly rejected in a referendum while in Britain, there was a final commitment to the Hinkley Point C project with more new units to follow.

On the other hand, as another plant closed in Germany its carbon emissions continued to rise in 2016 as this plant was replaced with a combination of coal and gas. This was in spite of another 10% increase in new wind capacity and 2.5% of new solar capacity; and shows that trying to manage carbon while removing nuclear from the mix is extremely challenging.

Supply is finally responding to prices

One of the biggest issues facing the uranium market actually stems from the 2011 tsunami that resulted in the Fukushima reactor meltdown in Japan. That event caused Japan to shut all of its nuclear power plants and led Germany to accelerate its plan to shift away from the nuclear option. The swift shutdown of so many units pushed supply and demand way out of balance.

While it remains Japan’s intention to restart many of its shuttered nuclear facilities, progress continues to be very slow so that demand will be impacted for some time to come.

As a result, major producers like Cameco have been directing their efforts to cost-cutting and refocusing around its best mines. For example, the company reduced its capital spending projections for 2016 by around 10% and plans to cut operating costs further in 2017. Despite the downturn, it has continued to invest in its Cigar Lake mine because it’s relatively low cost to operate. The recent opening of that mine helped to cut Cameco’s cash costs of producing uranium by more than 20% through the first nine months of 2016.

Kazakhstan, the world’s largest producer, has been continuing to increase production year over year but now has announced it will cut production by 10% in 2017.

However, China will be entering the big leagues in uranium supply this year as the Husab mine in Namibia ramps up production. This elephant is expected to add about 15 million lbs to the market each year once it reaches full production. With mining costs above the current uranium prices and the world in oversupply, it will be interesting to see how China chooses to move forward.

Nuclear sector growth

In spite of all this apparent gloom and doom, the nuclear industry remains strong. 10 new units were completed in 2016, while three were closed. Of interest, only half of these completions were in China with the other half coming from Korea, India, Pakistan, Russia and the USA. With 60 reactors under construction world-wide; led by China, this is the largest nuclear new build construction in more than a quarter century. As China continues to meet their stated objective of 58GW by 2020, this period of weak uranium prices presents an opportunity to further build strong inventories for the future.

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There’s Uranium in Seawater. And it’s Renewable.

According to Natural Resources Canada, “renewable energy is energy obtained from natural resources that can be naturally replenished or renewed within a human lifespan.” This typically includes sunlight, wind and rain. Uranium has never made this list, as it is generally believed that uranium resources are finite. However this is not the case.

Researchers at the Pacific Northwest National Laboratory exposed this special uranium-adsorbing fiber developed at ORNL to Pseudomonas fluorescens and used the Advanced Photon Source at Argonne National Laboratory to create a 3-D X-ray microtomograph to determine microstructure and the effects of interactions with organisms and seawater. Courtesy of Pacific Northwest National Laboratory
Researchers at Pacific Northwest National Laboratory exposed this special uranium-adsorbing fiber developed at ORNL to pseudomonas fluorescens and used the Advanced Photon Source at Argonne National Laboratory to create a 3D x-ray microtomograph to determine microstructure and the effects of interactions with organisms and seawater. Source: Pacific Northwest National Laboratory.

While terrestrial uranium (the uranium we currently mine) is indeed limited in quantity, with known resources that will last another 100 years or so, there is uranium in seawater that naturally replenishes itself.

The uranium in seawater is controlled by steady-state chemical reactions between the water and rocks that contain uranium, such that whenever uranium is extracted from seawater, the same amount is leached from the rocks to replace it.

In fact, according to a Forbes Magazine article by James Conca, a scientist in the field of earth and environmental sciences, “it is impossible for humans to extract enough uranium to lower the overall seawater concentrations faster than it is replenished.”

Scientists envision anchoring hundreds of lengths of U-extracting fibers in the sea for a month or so until they fill with uranium. Then a wireless signal would release them to float to the surface where the uranium could be recovered and the fibers reused. It doesn’t matter where in the world the fibers are floating. Source: Andy Sproles at ORNL.
Scientists envision anchoring hundreds of lengths of uranium-extracting fibers in the sea for a month or so until they fill with uranium. Then a wireless signal would release them to float to the surface where the uranium could be recovered and the fibers reused. It doesn’t matter where in the world the fibers are floating. Source: Andy Sproles at ORNL.

Though the uranium concentration in seawater is only about 3 milligrams per cubic meter, the total volume of the ocean is about 1.37 billion cubic kilometers, which means there are about 4.5 billion tons of uranium in seawater at any given time.

There is currently a considerable amount of research being done on extracting uranium from seawater, most notably in Japan, China, and the United States. The latest technologies, which have emerged from Department of Energy’s (DOE) Pacific Northwest (PNNL) and Oak Ridge National Laboratories (ORNL), use polyethylene fibers coated with amidoxime to attract and bind uranium dioxide from seawater. These fiber braids are about 15 centimeters in diameter and can be several meters in length depending on where they are installed.

After a month or so, the fibers are brought to the surface, where they undergo an acid treatment that recovers the uranium and regenerates the fibers so that they can be reused.

“Finding alternatives to uranium ore mining is a necessary step in planning for the future of nuclear energy,” explained Stephen Kung at the DOE’s Office of Nuclear Energy to Forbes Magazine. But making the process economical is equally important.

The advances by PNNL and ORNL have reduced the cost of extraction by a factor of four in just 5 years, but the cost is still about $200/lb compared to traditional uranium mining which ranges between $10 and $120/lb.

Fortunately, the cost of uranium is a very small percentage of the cost of nuclear power. Therefore even at $200/lb, the cost of nuclear power would not increase dramatically.

Researchers continue to seek more efficient and economic ways to extract uranium from seawater, because the amount of uranium is truly unlimited. It is renewable energy in every sense of the word, and should be considered alongside solar, wind and hydro.

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Partnering for the Future

Northern Saskatchewan; remote and rugged, this part of the prairies is known for its pristine lakes, tall arching trees and outdoor adventures.

It is also home to the largest high-grade uranium deposits in the world.

Approximately five hours north of Saskatoon is where you will find the community of Pinehouse Lake, Saskatchewan. The Kineepik Metis village of almost 1,500 is nestled on the Churchill River system.pinehouse

For practically three decades, this community has had a close relationship with Cameco Corporation; the largest private employer in Canada of First Nations and Metis people.

“More or less our community can have a future. Because of our young populations we need to be more sustaining and more certain, and this is one of the things that industry has brought to us, a lot of hope,” states Mike Natomagnan, the mayor of Pinehouse Lake and a former Cameco worker.

For him, hope has translated into real change, including more involvement with the environment, and better educational opportunities for young people. Community dollars have been invested into education through scholarships and partnerships with local schools.

“We want our kids to have a better opportunity to see the world,” Natomagan states, “Push education on top of everything else. It makes for better outcomes.”

Those outcomes can already be seen in the halls of the local high school which boasts a high graduation rate including 37 people pursuing post-secondary studies. For Natomagan it’s a big deal.

The knowledge of elders to provide the community with a better understanding of where they have been and where their world is going through the promotion of culture and language is another key component to educational investment.

Thanks to their partnership with Cameco, Pinehouse Lake has been able to address some health challenges.  Concerned over the rates of diabetes in young people, they invested in a breakfast program and the construction of a community arena to help promote a healthy lifestyle.

He believes in long-term collaborations based on open dialogue and participation. Working closely with industry means more involvement with the environment including visiting the mine site, holding public meetings and providing reports on activities in the area.

Economics is critical to the future of Pinehouse Lake for Natomagan. The mayor sees investments today as the cornerstone of tomorrow.

“Collaborate with industry that wants to be there for a long time. Work with us,” he says. “I hope (Cameco) will be here for a long time. They have stepped up to the table for us.”

In early June, Cameco and First Nations and Metis leaders from across northern Saskatchewan will converge in Ottawa to “celebrate 25 years of partnerships between company and communities.”

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India and Canada: Opportunities for Nuclear Growth

It’s a storied history and one that dates back to the 1960s. Today, India and Canada are entering a new chapter in nuclear development. They are the two largest countries that rely on CANDU technology, a reactor that uses heavy water. Heavy water is water that contains an extra amount of deuterium.

This provides huge opportunities for collaboration and innovation between the two countries to advance and improve upon current technologies according to Justin Hannah, director, external relations for CANDU/SNC Lavalin.

“India has 18 power reactors based on CANDU designs, meaning Canada is well positioned to service the fleet, help with life extension and work with India to develop the next generation of reactors together.”

It’s an important step. According to a recent report from the World Bank, “about 300 million people still do not have access to electricity, and even those who have access to electricity do not get reliable supply, particularly in rural areas.”

Electrification is key to bring people out of poverty and the two countries working together to develop parallel technology, means the production of more efficient reactors and the elimination of blackouts while providing more CO2 free power.

“Every megawatt of nuclear displaces coal,” says Hannah.

A developing middle class and a booming population have put further strains on the current power grid. A grid that is heavily reliant on coal.uraniumrocks

According to the World Nuclear Association (WNA), energy consumption in India more than doubled between 1990 and 2011. In order to further reduce GHG emissions and meet power demands, India is forecast to grow nuclear power in the next 35 years. This will allow India to meet a quarter of its power demands through nuclear, which means global opportunities to take safety, design and economics to the next level.

December 2015 marked the first shipment of Canadian uranium to India. Under the deal, Canada will supply over 7 million pounds of uranium to India valued at over a quarter of a billion dollars.

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World’s Leading Uranium Source?

In less than 15 years, a country that borders China and Russia has grown to become the world’s leading producer of uranium. According to the World Nuclear Association, Kazakhstan provides 41 percent of the global supply. (Canada is the second-largest source, at 16 percent.)Uranium ore

Kazakhstan’s uranium production increased almost seven fold between 2004 and 2011 from just less than 4,000 tons in 2004 to close to 20,000 tons by 2011. Its uranium mines directly employ about 9,000 people (source: NEA).

Kazakhstan exports all its uranium production, because it doesn’t have any nuclear power plants. But that may soon change. In 2002 the government adopted a resolution to develop a national nuclear power strategy, including determining the feasibility and safety of reactors. The goal is to provide the country with high-tech energy to increase prosperity.

In July, Kazakhstan joined the World Trade Organization. That was a major accomplishment for President Nursultan Nazarbayev, who launched the WTO membership effort almost 20 years ago. We work (hard) to become a part of the global community,” he said as he signed Kazakhstan into the WTO.

Kazakhstan recently agreed to supply India with 5,000 tonnes of uranium over the next four years.

The economic potential of the mining industry hasn’t gone unnoticed by Canada. Cameco has partnered with the Kazakh government as part of a four hundred million dollar mining investment. Started seven years ago, the operations have provided financial and employment benefits for both countries, and improvements to the Kazakh mining industry’s environmental record.

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Uranium Mining Safety

Uranium Mining Safety Infographic - English