THE SUPPLY CRUNCH
Although nuclear power growth will continue to be driven by emerging economies like China, India, South Korea and even Saudi Arabia, the biggest consumer of uranium in the world today is still the US. There are some 104 nuclear reactors operating in the US, generating about 20 percent of total US electricity. In terms of uranium consumed by utilities, that translates into 55 million pounds of uranium per year. Currently, however, uranium mining in the US only provides about 3.5-4 million lbs per year.
In the late 1970s, the US was the world's largest uranium producer, yielding over 40 million lbs per year until the Cold War ended in the 1980s and the US signed into the Highly Enriched Uranium (HEU) agreement, now pulling the majority of uranium supplies from dismantled Russian nuclear warheads. However, that agreement is set to expire next year.
The meltdown of the nuclear reactor at Fukushima further hurt the industry, but the world is still very reliant on nuclear power and fast approaching an obvious shortage in the supply of uranium to keep it going. There are still 435 reactors in operation worldwide today that require 175 million pounds of uranium per year. However, current production rates are facing a deficit of about 40 million pounds.
Amir Adnani, CEO of Uranium Energy Corporation (UEC), has been very involved in raising awareness about the importance of these sectors. As the newest uranium producer in North America and the first company to start a new uranium mine in the US in nearly six years, the UEC aims to reach an initial production rate of 1 million pounds per year. Its processing plant in South Texas has the capacity to process up to three times that amount, which could nearly double what US production is today.
“We've come a long way, becoming one of only a handful of North American producers,” says Adnani. “I believe we will be a leading, if not the leading, producer in the US.”
What will that mean for the US?
Geopolitically speaking, it will strengthen the security of supply. As of today, almost half of the US's entire supply of uranium comes from Russia's dismantled warheads while the rest comes from a number of international players and few domestic producers.
“Having more domestic resources of any fuel, particularly uranium, is important, and that's why it's strategic to be a domestic producer when there's so few of us,” says Adnani.
In light of what's going on in the Strait of Hormuz, where 15-20 percent of the US's oil supply chain is at risk for interruption, energy security is one of the most critical issues on the table today. Should something happen to disrupt the supply chain of uranium, the risk is even greater.
“There's more dependency on foreign uranium than there is on foreign oil,” says Adnani. “With about 60 percent or more of all uranium in the world coming from just five mines, the supply chain is extremely limited and fragile.”
BENEFITS OF NUCLEAR
Nuclear power accounts for roughly 20 percent of total US energy and 16 percent of energy worldwide. And although nuclear isn't perfect, it possesses features that no other current energy source has.
“It's the only form of power generation in the world that is low cost, large-scale, reliable and emissions-free,” says Adnani. “There's just no credible alternative to that.”
Additionally, the dangers of dealing with nuclear waste are relatively small and far more manageable than the constant dumping of CO2 into the atmosphere from burning other fossil fuels.
Post-Fukushima, there was a disproportionate reaction to nuclear power in the media. The reality is, no major source of power generation is risk-free, but nuclear power is still one of the best options.
“Even post-Fukushima, if you were to compare the track record of nuclear power to any other major sources of fossil fuel based fuel generation, nuclear power still has one of the best and safest track records,” says Adnani. “What burning coal and other fossil fuels puts out on a daily basis into the environment is far more dramatic in its negative impact than nuclear reactors—despite the intense scrutiny they receive in the event of a meltdown.”
But because of the amount of attention those events receive and its association with nuclear weapons, “nuclear” has always had a negative stigma. “With time and education, those fears will even out and there will be a greater understanding of the sector,” says Adnani. “Of course, that can't happen overnight.”
Some countries, like Germany and Switzerland, have announced plans to phase out nuclear power—a seemingly bold move, but insignificant in the bigger picture.
“We see a lot of noise from countries that are not expected to be major engines of growth in nuclear power,” says Adnani. “Fukushima just gave them a reason to get off the fence.”
Consider the rate at which the world is consuming energy. Over the last three decades, worldwide energy consumption has tripled and will most likely double over the next 20 years.
“In the West, we've become so accustomed to electricity that we almost see it as a constitutional right,” explains Adnani. “But 20 percent of the world's population right now is without electricity.”
Governments and policy makers are going to have to make some tough decisions in order to bring power to those still without it. Do we ruin the environment by burning up more fossil fuels or do we learn from incidents like Fukushima and maintain nuclear power as an important part of our energy mix?
THE YEAR FOR URANIUM
Uranium is one of the most abundant minerals on the Earth's crust, and the U.S. has the largest uranium reserves in the world. “Peak uranium” is not a concern; it's all about economics and establishing the right price to ensure necessary supplies.
“With rising prices and proven sentiment, there will be increased investments in the sector and there's no doubt that we'll see an expansion of mine supply over the next five years, which will help replace the secondary supplies that are going to be disappearing from the market.” say Adnani.
Regardless, this year will be a critical time for the industry, being the first year after Fukushima. The challenges from that incident will either continue to slow down the progress and growth of uranium mining or the industry will move on and continue in its 20 year trend of much needed growth.
By. Carin Hall of Energy Digital