February 21, 2008

Nuclear Power – A Sustainable Future?

It is of interest to note that the new Western Australia Premier, Mr Colin Barnett has lifted bans on uranium mining in the state. Mr Barnett has been well known for declaring that WA’s competitive advantage lies in primary production, ie mining and agriculture. 

As an aside, most developing countries are often characterised in terms of their reliance on primary production, as being a major portion of GDP. The rich state of Western Australia itself has often been characterized as either a farm in a quarry or a quarry on a farm. 

Clearly Colin can see that uranium mining is regaining a shine after twenty years of some neglect. Interest is growing in its use for nuclear power, partly from security considerations, partly concern over oil price hikes and even perhaps as part of the world’s growing demand for forms of electricity generation that may address climate change. 

The president of the Australian Nuclear Science and Technology Organisation, Ziggy Switkowski, says there has already been a shift in perception on the issue of nuclear power, with about half of the Australian population now open to the idea. Dr Switkowski has told ABC2’s News Breakfast the WA Government’s decision to lift a ban on uranium mining is another step in the right direction.

Nuclear energy has also struggled under the shadow of other crucial issues such as the nonproliferation of nuclear weapons and the safe disposal of spent nuclear fuel. This quick overview puts these serious matters aside for the time being to focus on the actual energy potential of the resource

World Supplies of Uranium.

Mr Barnett is obviously attracted by the idea that Australia, with WA as an important mining state, holds a significant portion of the worlds naturally occurring and recoverable uranium. Towards five million tons are considered to constitute this resource. Australia has about one million tons (around 24 percent of the world’s known supply), Kazakhstan runs second, with over 800,000 tons. Canada’s supplies are less than 10 percent of the total, while the United States and South Africa trail that figure, something over 5% each.

The World Nuclear Association, an advocate for the industry states on its website;

“From time to time concerns are raised that the known resources might be insufficient when judged as a multiple of present rate of use. But this is the Limits to Growth fallacy, a major intellectual blunder recycled from the 1970s, which takes no account of the very limited nature of the knowledge we have at any time of what is actually in the Earth’s crust. Our knowledge of geology is such that we can be confident that identified resources of metal minerals are a small fraction of what is there.”

Energy Watch Group, a German energy analyst / think tank logically comments that the grade of uranium ore is more important than the quantity of the resource. Obviously less pure resources will dictate a higher processing cost. Canada has about 20% of its ore above 1 percent. Australia’s resource has a grade of less than 0.06 percent for over 90% of the total. Much of Kazakhstan’s ore is less than 0.1 percent. 

Current World Demand

The World Nuclear Association has reported that demand has remained relatively steady for the last decade, mostly due to process efficiency improvements in reactor operation and demand is projected to grow “slightly” through and past 2010. Currently nuclear power meets about 6% of the world’s power generation needs hence any major inroad into the amount supplied by coal requires about an order of magnitude step up by the nuclear industry. 

New yet still theoretical designs of reactors could increase the utilization dramatically but such technologies face enormous R&D investments, trials and proving up before any commercial application would be possible. For example expert reports suggest that spent fuel can certainly be reprocessed for use in reactors but this is currently “much more costly” than just procuring new fuel.

Around a thousand reactors are now operating worldwide. These are about half constituted by utility power plants with others being research reactors, and military marine vessels. The world currently uses 65,000 to 70,000 tons of uranium a year. About 100 or so new reactors are in the pipeline, with about 25 being built and another seventy in design and planning. 

At current usage rates, this is equal to about sixty five years of supply. If nations around the world accelerate the use of nuclear power using existing technologies and no new cost effective sources become available then this timeframe will shrink rapidly. The world would run out of uranium very fast.

Unusual Markets

The uranium market underwent major changes from the 1980’s. As the cold war gave way enriched uranium was also transformed in a surprising manner. Some 15,000 warheads were scrapped. 500 tons of weapons grade uranium from the old USSR was diluted via blending processes and sold to the USA for power generation purposes. Under this “Megatons to Megawatts” project about 15,000 tons of power station fuel would be delivered to the USA. By 2006 some 50% of the material had been converted and shipped. This supply chain has some way to run yet but when complete the demand will turn to the mining sector.

According to the World Nuclear Association, these ex military materials supply about 50 percent of the USA’s reactor fuel needs or 13 percent of the world’s requirements. “The United States is dependent on Russia for about half of its nuclear energy. I don’t think a lot of Americans know that,” said Robert E. Ebel, a nuclear analyst at the Centre for Strategic and International Studies. To date the USA has paid Russia about $5 billion for this fuel.

But the Russians are not all that happy either. The United States then imposed a 116 percent “anti-dumping” duty on Russian exports of enriched uranium outside the Megatons to Megawatts program. In September 2007, a U.S. trade court ruled that Russian enrichment was a service, not a good, and sent the Russian case back to the U.S. Commerce Department for further review.

New Discoveries

According to the Brinkley Miners report (2004), the uranium mining industry had, by 2000, made no significant uranium discoveries in over a decade. Furthermore a series of events, including a fire at Australia’s Olympic Dam mine, major flooding in Canada’s Cigar Lake mine, gradual reductions in the availability of weapons-grade uranium and the need for further fuel contracts at power plants that had licenses extended were the main factors behind increases in global uranium prices. 

However, some reports and analysts suggest the uranium market is awkward to predict because many opaque deals are conducted by Governments. Also some experts worry that the lagging uranium industry, is in great need of more manpower and infrastructure upgrade causing endemic delays in any expansion of nuclear power. 

Thomas Neff, a nuclear energy expert at MIT’s Centre for International Studies said; 

“Just as large numbers of new reactors are being considered, we are only just realizing the degree of underinvestment in the nuclear industry capacity”.

The question is where will this investment come from? Most worldwide power utilities have been privatized and investors are reluctant to back long term high capital value projects with many political and social risk elements. 

By example, India – critically short of electric power and currently out of the world uranium market (due to its nuclear weapons program) – has shut down six of its seventeen reactors due to a shortage of nuclear fuel. The nuclear deal with the United States, that G W Bush tried to push through Congress would have helped India obtain more nuclear fuel, but this policy remains imperiled by domestic opposition in India.

Current Uranium Mining

Over half the world’s uranium-mining production comes from Australia, Kazakhstan, and Canada. Some commentators suggest that Kazakhstan is on track to becoming the largest producer of uranium in the world. This is mostly due to Russia taking a strategic sovereign state investment role in the sector. Although Australia has the largest supply by volume, a 1982 law limits uranium mining in the country under a restricted license arrangement. Recent increases in uranium prices have sparked debate in Australia, including a national review instigated by John Howard, headed by Mr Ziggy Switkowski, thus pitting the mining and pro nuclear advocates against environmentalists and indigenous activists.  Impediments in Australia, like elsewhere, include the need for specific industry infrastructure, vast capital and a lack of experienced workers.  

Because of the recent spike in uranium prices, some regions are seeing a boom in mining interest. Back in WA Colin Barnett is obviously following the trends and smells money. The US has also undergone a jump in site claims even though almost all of the nation’s identified reserves is of a lower quality with higher processing costs. It is reasonable to expect more global exploration as long as market prices remain high. 

Some U.S. miners have expressed concern about how the market might be affected by uranium released from enriched stockpiles held in various forms by the U.S. Energy Department. But Energy department officials under G W Bush have assured that the agency would “act responsibly” and not be a source of market price fluctuation.


With massive industry investment and higher prices given momentum by political  events and oil cost hikes, uranium mining will be a boon for a State like Western Australia, already one of the richest per capita states in the Western world. 

The worlds population is expected to peak around 10 billion by 2050. These people will want if not demand, a minimum amount of electricity each day. But in the absence of major technology breakthroughs in nuclear reactor design the current supply will all be over in about thirty to forty years.  (In one line, returning to one of the vexed issues of waste storage there is going to be a large quantity of highly toxic waster to be dealt with.)

But underneath it all, the total contribution to the worlds total and growing energy needs would most likely be around or less than today’s meagre contribution of about 5%. 

So much for a sustainable future.