By John C. Zink, Ph.D., P.E., Contributing Editor
With an expected uptick in the nuclear power industry on the horizon, many observers are concerned whether the U.S. will have the infrastructure needed to support the anticipated renaissance. Non-U.S. entities now control the traditional domestic reactor manufacturers. That may be good news, as international demand supports the remaining domestic design and manufacturing capability. However, the industry still must address concerns about both the near-term manpower to construct and operate the next round of plants, and the nuclear fuel supplies to meet the anticipated plant schedules. The manpower issues are critical ones that I have discussed several times over the past five years, and I plan to update that discussion in the near future. My purpose here is to review current nuclear fuel issues.
As I mentioned in an earlier column, uranium prices have increased from about $7 a pound to more than $36 a pound over the past five years. Although this price increase does not make a significant difference in the cost of generating electricity, it does speak to the condition of the nuclear fuel business. In short, uranium prices peaked at about $43 a pound in the early 1980s, consistent with the need to fuel the many nuclear plants which were begun in the 1970s, and which were coming online in the 1980s. The subsequent hiatus in building new U.S. nuclear plants created a period when there was no demand, so old uranium mines closed and no new ones came online. To exacerbate this situation, the U.S.-Russian “Megatons to Megawatts” program flooded the market with already-enriched uranium from dismantled nuclear weapons. In short, the uranium business is just beginning to recover from a lousy 20 years.
A recent article in Nuclear News noted the historically long time lag between uranium exploration and production. In the three main producing countries - Australia, Canada and the United States - that time lag can be from 10 to 30 years. In other words, when a mining company gains enough confidence in future demand to begin the search for new uranium resources, there will be a significant period before it can begin to fill that demand. Uranium producers expect the usual technical, financial and regulatory hurdles. But now, thanks to the long nuclear hiatus, uranium producers are also facing manpower problems. Uranium geologists are in short supply because there have been no employment opportunities to attract people to that discipline. The Nuclear News article dramatically illustrates this with a graph that shows a peak of about 4,500 man-years dedicated to uranium exploration in 1978 versus essentially none today.
There are two pieces of good news, however. The first is that nobody doubts that the earth holds a lot of uranium that just needs to be discovered. The second piece of good news is that nuclear plant operators have recognized the uranium supply problem and have begun to contract for their fuel supplies on a long-term basis: up to 10-year contracts. This is a dramatic turnaround from recent years when, thanks to the glut of uranium available on the spot market, most companies did not feel the need for such long-term commitments. With the future demand thus assured, mining companies now should be more likely to invest in exploration and new mine development. For the next 15 to 20 years, however, much of the increased supply will have to come from increasing the production levels at existing mines. Naturally, any mine expansion plans will meet with environmental opposition. But much current production comes from underground mines, from in-situ production, or from co-production with other minerals, so the environmental impact of increasing production at these facilities will be small.
The U.S. Department of Energy (DOE) is addressing the long-term nuclear fuel supply problem. DOE has earmarked $250 million of its 2007 budget for the Global Nuclear Energy Partnership initiative. This program would overturn the U.S. moratorium on nuclear fuel reprocessing put in place 30 years ago by the Carter Administration, and would develop and commercialize proliferation-resistant spent-fuel reprocessing technologies. Such technologies would allow recovery of most of the 90 percent of the energy that is wasted in the current once-through fuel cycle, while also dramatically reducing both the amount and the toxicity of the nuclear waste that requires permanent disposal. This additional material entering the market will not be helpful to uranium miners, however.
Uranium supply is not the only fuel issue the industry must address. An adequate fuel supply also requires sufficient capacity to carry out the uranium processing steps of conversion and enrichment. Increasing capacities in these areas will also require substantial capital investments that will be made only if companies have confidence in future demand. No doubt, any such expansion will also encounter environmental opposition. In these cases, however, the expansion process is more straightforward because it is only a matter of constructing facilities rather than having to first find a uranium deposit, then exploit it.