The Uranium Story - Junior Stock Review · MOX fuel plants use a high energy process to combine the...

JUNIOR STOCK REVIEW

The Uranium Story Politics Population and Environment

Brian Leni PEng

[2016]

ldquoUpshot is simple to achieve superior investment results you have to hold non-consensus views regarding value and they have to be accurate Thatrsquos not easyrdquo ~ Howard Marks The Most Important Thing Illuminated 7

All Rights Reserved - Copyright 2016 - Junior Stock Review

Speculating in the Resource Sector

Whats the most prudent way to make money in the junior resource sector Play the cycle and buy stocks when the commodity that youre interested in is out of favour but truly has the potential to rebound via supply destruction or demand increase

Money is made on the delta between value and price ~ Rick Rule Natural Resource Symposium July 2016

The latest resource sector example of this is gold Since hitting an all time high in 2011 gold and the gold stocks were hit with a vicious bear market dropping the stocks down over 90 in nominal terms Speculating in gold stocks in 2014 and 2015 was a very lonely place For me personally I kept going over my gold thesis unprecedentedly low interest rates throughout the world plus quantitative easing (money printing) equals bad news for moneyrsquos purchasing power and ultimately major trouble for the world economy In my mind it made sense to turn to gold and although my reasoning was much more complex I believed that the gold market would turn around for a variety of reasons Even though a lot of people thought I was crazy I had to put my money into things that I could buy at 90 off their highs of the last bull market

The purpose of this report is to review my thesis on uranium and why I believe it may very well be the next resource to come out of its bear market The report will be broken down into 4 parts Part 1 ndashIntroduction to the Nuclear Fuel Cycle Part 2 ndash Uranium Supply ndash Factors Affecting Exploration and Production Capabilities (Open Pit Underground In Situ Leach (ISL) Mining) Part 3 ndash Uranium Demand ndash Factors Affecting Environmental Safety Energy Needs War and Politics and Part 4 ndash How to Speculate in the Uranium Sector ndash Company Reviews


Introduction to the Nuclear Fuel Cycle

Discussion of the nuclear fuel cycle is integral to understanding how and why the world demands uranium For most of the world its not just a matter of having a uranium resource within their borders The mined natural uranium has to be first converted into Uranium Hexafloride and then shipped to enrichment plants to be prepared for use within the reactors This whole process is highly regulated and there are few countries that are actually able to enrich uranium The enrichment process in particular brings trepidation because of the threat of nuclear weapons I believe this fact alone makes the uranium supply and demand discussion a lot different from normal commodities In part 3 of this report series I will dig deeper into this line of thinking

Lets start with the nuclear fuel cycle and a few definitions and explanations of each of the parts of this cycle The explanations will be high level overviews for the investor or speculator I think this is all thats required unless you have technical interest in how the individual process works in which case I suggest doing some research on your own or you can send me an email and Ill answer what I can or will send you to someone who can provide the information youre after


Natural Uranium

U3O8 (Yellow Cake or Uranium Oxide) contains 07 of U-235 isotope (this is fissile material) and 993 U-238 isotope The mining of uranium is much like the other metals its removed from the ground as an ore using one of two main mine types Open Pit or Underground More recently the In-Situ Leach (ISL) process has gained popularity in places where it can be applied and it gives miners a low cost method of extracting uranium from the ground For the uranium ore thats removed using traditional mining techniques - open pit and underground - the uranium must be removed via a milling process The uranium ore is crushed and made into a slurry by mixing it with water The ore is then mixed with acid where like the In-Situ process the uranium is separated from the other materials in tanks The now separated uranium can be dried and takes the common form of Uranium oxide or Yellowcake

Candu Reactors

The Candu Reactor was developed by Atomic Energy Canada Limited (AECL) Ontario Hydro and Canadian General Electric Company in 1954 The first electricity producing reactor came online 8 years later producing 20 MWe into the Canadian electricity grid There are 31 Candu Reactors worldwide with 19 in Canada The remaining 12 reactors are located in Argentina China South Korea Romania India and Pakistan In total Candu Reactors have a worldwide net capacity of 23159 MWe

Why use Candu Primarily countries that did not produce nuclear weapons and did not want to rely on another nation for uranium enrichment have installed the Candu design within their electrical grids Countries such as the USA and Russia who produced the majority of the worlds nuclear arsenal already had the enrichment equipment in use and therefore did not pursue the Candu Reactor

Whats the downside of the Candu design The use of heavy water or deuterium is expensive and evens out the cost differential with having to enrich the uranium A question that I have but have yet to research is the availability of deuterium For perspective I have read on Quora (Online Information Bank and Message Forum) that a 55 gal drum of Deuterium costs around $100000 but I dont have a reliable source to quote


Uranium Conversion

The Uranium Conversion Process turns U3O8 (Yellow Cake or Uranium Oxide) into UF6 (Uranium Hexafloride) The centrifugal enrichment process requires a gaseous uranium because UF6 is gaseous at low temperatures the conversion process is required Also the conversion process produces Uranium Dioxide as a bi-product which can be used in fuel fabrication for reactors that dont require uranium enrichment Currently this is only the Candu Reactor

Source World Nuclear Association

Centrifugal Enrichment

The centrifugal enrichment process requires a gaseous uranium and therefore uses Uranium Hexafloride (which is a gas at low temperatures) to concentrate the U-235 (the fissile material) to a concentration of 3 to 5

The difference in atomic weight of U-235 versus U-238 is what allows it to be separated centrifugally Atomic weight is calculated by summing up the amount of protons and neutrons in the uranium isotopes nucleus

The enrichment process capacity is measured in Separative Work Units (SWU) which outlines the amount of uranium (1 SWU = 1 kg SW) that can be enriched through the process ( 1 SWU requires 50 kWh of energy)


ldquoA large nuclear power station with a net electrical capacity of 1300 MW requires annually about 25 t of enriched uranium with a concentration of 375 U235 This quantity is produced from about 210 t of natural uranium using about 120 t separative work An enrichment plant with a capacity of 1000 tSWa is therefore able to enrich the uranium needed to fuel about eight large nuclear power stations ~(Urenco)

SourceWorld Nuclear Association

Demand for uranium enrichment by 2020 is expected to reach 57456 SWUyr (as per WNA reference scenario) giving the world a surplus of 9244 SWUyr At face value this may seem like a great position to be in however the enrichment process is only one cog in the overall process and doesnrsquot necessarily mean that there isnrsquot a bottleneck somewhere else Also I believe its prudent to recognize that the enrichment process is tightly controlled by a handful of countries and in reality even though theres a governing body when push comes to shove a country such as Russia can remove 43 of the worldrsquos capacity in an instant (World Nuclear Association)


Nuclear Fuel Fabrication

The enriched UF6 is now sent to the nuclear fuel fabrication site Here the UF6 is converted into uranium dioxide powder It should be noted that this same fuel fabrication process can be used with non-enriched UF6 for the Candu reactors The powder is then collected and used to form uranium dioxide pellets which are baked or sintered to form hardened stronger and denser pellets Cameco cites ldquoeach pellet weighs only about 10 grams but can release as much energy as about 17000 cubic feet of natural gasrdquo (Cameco)

At this point the hardened uranium dioxide pellets can be loaded into tubes (typically made of zirconium alloys) which are commonly known as fuel rods A bundle of fuel rods is referred to as a fuel assembly In total this fuel fabrication process typically represents a little less than 20 of the total cost of the nuclear reactor fuel

Each reactor type requires different fuel assembly configurations and depletes a different amount of fuel assemblies each year The two most common reactor types are light water and heavy water For perspective the Pressurized Water Reactor (PWR) which is a light water reactor and the most popular reactor type in the world will typically use from 121 to 193 fuel assemblies each year Each fuel assembly can have 179 to 264 fuel rods (World Nuclear Association)


Fuel fabrication is much more common than the enrichment process with multiple countries having their own facilities Check out the table below to see how it breaks down


SourceWorld Nuclear Assoication


MOX

MOX fuel = Uranium Oxide + Plutonium Oxide

The enrichment process creates waste or tailings in the form of uranium oxide These tailings have a typical concentration of 02 U-235 (fissile material) rendering them useless to nuclear reactors However when combined with Plutonium oxide a product of the nuclear waste reprocessing plants it creates a nuclear reactor fuel referred to as MOX fuel or (U Pu)O2 MOX fuel plants use a high energy process to combine the two oxides together When complete the MOX fuel has around a 7 reactor grade plutonium mix giving it very similar characteristics to the regular enriched uranium

Once combined the MOX fuel goes through an almost identical pelletizing process as uranium dioxide The hardened pellets are then assembled into fuel rods and finally fuel assemblies ready to be used in light water reactors (LWR)



Reactor Types

As I stated earlier each reactor requires a different configuration for their fuel assemblies Heres a quick look at the reactor distribution across the world and note that there are currently 61 more nuclear power plants being built In Part 3 of this series I will delve deeper into where these power plants are being built and how that may affect world uranium demand in the future


Conclusion

The nuclear fuel cycle is complicated with a number of different steps in the process of converting uranium ore to its final product uranium fuel assemblies Not only is this process highly involved but its arguably the most politically charged of all the commodities which presents a number of different issues for the supply and demand equation that dictates the price of this very precious commodity


The Uranium Supply Story - Part 2

The uranium supply story is very interesting because of the relative abundance of uranium in the world Of course the word abundance needs to be used with caution because not all of the uranium in the earthrsquos crust or the oceans can be removed cost-effectively


The uranium spot price is affected by the electrical demands of the world population as well as world events Black swan events such as war or natural disasters can either drive uranium prices up or crash them The first section of this report on uranium supply is dedicated to the factors affecting uranium or more importantly its exploration

Fukushima

Black swan events make such a big impact because theyre unexpected In some cases these black swan events are even anticipated by the people whose job it is to think up the worst case scenarios and to design systems and infrastructure that are capable of withstanding calamities of all shapes and sizes A great but tragic example of this is the World Trade Center The building was designed to withstand the impact of an airplane and on September 11 2001 this was tested The consequences were horrific not only to the people who were directly affected by the event but for the entire world as our everyday lives would be forever changed


On March 11 2011 a somewhat similar black swan event occurred in Japan An earthquake with a 90 magnitude on the Richter scale hit 130 km off the east coast The designers of the Japanese nuclear reactors had anticipated this possibility and built the plants on bed rock so that they could withstand an earthquake of this magnitude - and they did They also considered tsunamis using an event that occurred in Chile in 1960 (Tsunami measured 31m) as their example and so the Fukushima Daiichi reactors were built 10m above sea level to keep them out of the reach of a similar sized wave The seawater cooling pumps however were located only 4m above sea level

Unfortunately the tsunami that resulted from the 90 quake was 15m high a truly massive wave It knocked out power in the surrounding area and disabled 12 of the 13 backup generators along with flooding the seawater cooling pumps which sat well below the height of the wave Without the cooling pumps circulating water through the reactor Fukushima was headed for a meltdown The first tsunami hit at 342pm and by 703pm a nuclear emergency was declared The first evacuation forced people within a 2km radius of the plant to be evacuated By 544am however this was extended to 10km

In all the Fukushima reactor meltdown didnt cause any deaths but left 100000 people homeless The Tsunami death toll however was around 19000 along with the destruction of infrastructure and thousands of homes in an area that stretched 560 square kilometres


What Did the Events at Fukushima Mean for Uranium

The uranium price and uranium company share prices plummeted sending the entire sector down further from its high in 2007 solidifying the bear market Was this meltdown the precursor for nuclear power elimination around the world

To many this was the perception The incident did force Japan to start searching for alternatives to nuclear power such as liquefied natural gas (LNG) and renewable power sources namely solar and wind This transition however isnrsquot and hasnrsquot been easy as the Japanese people have had to reduce their power consumption to compensate for the reduced available power Is LNG and renewable power the future for Japanese power requirements That has yet to be determined but in my opinion the world is at least a few years away from having renewable energy as a primary source especially for those countries with latitudes well north of the equator This reality may be finally hitting the Japanese government as they have started stress-testing their nuclear plants for start up This will have a major impact on the demand for uranium in the world

After Fukushima other countries most notably the Germans unveiled plans to aggressively reduce or eliminate nuclear power with 2022 being the date for a complete phase out Time will tell if this is going to be possible

There are a ton of factors that affect uranium world events like the Fukushima disaster or war drive the price up and down In the next section I would like to review a couple of the uranium exploration cycles that have occurred in last 70 years


Major Exploration Cycles of Uranium

The first major uranium exploration cycle occurred after the end of World War 2 (1945 to 1958) WW2 set the stage for the Cold War pitting the worldrsquos two main nuclear powers the United States and Soviet Union against each otherThe implications of a growing communist agenda was outlined by the ambassador to the Soviet Union at the time George Keenan In 1946 he wrote his famous Long-Telegram in which he discussed a number of different topics involving the Soviet Union In particular he states

ldquoIn summary we have here a political force committed fanatically to the belief that with US there can be no permanent modus vivendi that it is desirable and necessary that the internal harmony of our society be disrupted our traditional way of life be destroyed the international authority of our state be broken if Soviet power is to be securerdquo ~George Keenan

Using this intelligence American presidents Harry S Truman and Dwight Eisenhower started and propagated the Cold War Their main objective was to contain communism and to prevent the Soviet Union from advancing this political theory throughout the world using economic and political interventions and by creating an arsenal of nuclear weapons in case plan A didnrsquot work Uraniumrsquos start in the mining business was predicated on political agendas and still today its greatly affected by political events around the world

Fast forward to the early 2000s when the most funded uranium exploration cycle in history occurred and as the World Nuclear Association states

ldquoFrom 2003 to the end of 2009 about US$ 575 billion was spent on uranium exploration and deposit delineation in over 600 projects In this period over 400 new junior companies were formed or changed their orientation to raise over US$ 2 billion for uranium explorationrdquo~ World Nuclear Association

To note for those who havenrsquot seen this before as referenced in the World Nuclear Association quotation theres always a portion of issuers on the various exchanges that will change their commodity orientation according to whats most popular or easiest to fund In some cases the commodity orientation switch makes sense but more often than not this is a huge red flag and a warning to stay away

In particular its estimated that between 2005 and 2006 the worldrsquos known uranium resources increased by 15 This is an incredible increase in known resources for any commodity and most certainly is partially to blame for the approaching end to this major uranium exploration cycle


World Primary Supplies of Uranium

How much mineable uranium exists Thats a great question and the answer is that it all depends on the spot price of uranium The higher the spot price the more uranium there is available to mine The following uranium resources figures are based on values found in the Uranium 2014 Resources Production and Demand which is published jointly by the International Atomic Energy Agency (IAEA) and OECD Nuclear Energy Agency (NEA) This report is commonly referred to as the Red Book The Red Book doesnt appear to be published every year

The uranium resources laid out in the table below are defined as Identified Resources which are the combination of Reasonably Assured Resources (RAR) and Inferred Resources (IR) RARs are defined as uranium that occurs in a known mineral deposit of a delineated size grade configuration and could be mined at a certain cost of production The following table lists the top ten countries according to their uranium resources Interestingly the top ten countries account for 90 of the total world uranium supply under the USD 260kg cost category

SourceURANIUM 2014 RESOURCES PRODUCTION AND DEMAND NEA No 7209 (Red Book) ndash pg 18

Australia doesnt release their low cost uranium resource numbers but Im sure they are part of this group of countries - Canada Kazakhstan and Brazil - which really stands out as far as low cost uranium is concerned The cost range table gives us a good glimpse of where we stand with our current approximately 25 USD$lbs uranium We will have to see how these low cost uranium supplies stack up against demand in Part 3 of this report - so stay tuned

Before looking at current mining production lets take one quick look at the change in resource numbers from 2011 to 2013 As you can see while the upper cost categories grew the lower end stagnated and even regressed This is definitely the trend we see with most commodities these days the higher grades are getting harder and harder to find


SourceURANIUM 2014 RESOURCES PRODUCTION AND DEMAND NEA No 7209 (Red Book) ndash

Summarized from pg 20

Remembering back to Part 1 of this series the nuclear fuel cycle has many steps before the commodity can become useful Therefore resources in the ground are great but we need to know how much of it is being produced right now to be able to gauge where we stand when it comes to supply being above or below demand


Current Mine Production

Having a uranium resource in the ground is one thing but in terms of available supply I believe we need to look at what is actually coming out of the ground right now - producing mines After looking at mine supply well touch on secondary sources of nuclear power such as MOX As you can see from the bottom line of the table mined uranium makes up 90 of current demand Can this supply factor change Maybe



Who are the largest uranium miners in the world and where are they situated


Top Uranium Miners in More Detail

Knowing who owns and operates the uranium industrys largest companies is imperative to the uranium supply story Lets take a quick look at the top 9 uranium producing companies which control around 89 of the worldrsquos production

1 KazAtomProm or National Atomic Company of the Republic of Kazakhstan

- State-owned through a sovereign wealth fund Samruk-Kazyna

- The 1 producer in the world operating solely in Kazakhstan

- Main customers China USA EU countries South Korea Japan and India

- 2016 planned production of natural uranium 24000 tonnes


2 Cameco - Offices in Canada USA Switzerland Kazakhstan and Australia - Largest publicly-traded and owned uranium company in the world listed on the TSX and NYSE - Operates the two largest uranium mines in the world McArthur River and Cigar Lake both located in Saskatchewanrsquos Athabasca Basin - Involved in all parts of the nuclear fuel cycle miningmilling conversion and a 24 interest in the experimental Global Laser Enrichment facility in the USA (with GE and Hitachi) and fuel assembly manufacturer - 2016 planned production 258 million lbs

3 Areva - Operates across the globe but mainly in France where 39 of total company revenues and 68 of total company employment are accounted for - Third largest uranium company in the world listed on Euronext Paris - Involved in all parts of the nuclear fuel cycle miningmilling conversion and enrichment and fuel assembly manufacturing

4 ARMZ ndash Mining Arm of ROSATOM State Atomic Energy Corp - State owned by JSC Atomenergoprom 8257 JSC TVEL 1614 and ROSATOM 129 - Controls Russian Federation uranium resource assets - Active in uranium acquisitions In 2010 they bought 51 of Uranium One 100 of Mantra Resources in 2011 985 of JSC First Mining Company in 2012

5 China National Nuclear Corp (CNNC) - State-owned and under direct management of central government - Involved in all aspects of the nuclear fuel cycle

6 BHP Billiton - Headquartered in Australia but owns various resource deposits around the world - Publicly-traded and listed on the ASX LSE JSE and NYSE - Uranium production is actually a by-product of a large copper deposit Olympic Dam in Australia - One of the worldrsquos largest miners

7 Rio Tinto - Headquartered in the United Kingdom - Publicly-traded and listed on the LSE ASX and NYSE - One of the worldrsquos largest miners

8 Navoi Mining amp Metallurgical Combinatt (NMMC) - State-owned and operated by Uzbekistan - Focused on uranium and gold mining


9 Paladin Energy - Headquartered in Australia with operations in Australia and two mines located in Namibia and Malawi - Publicly-traded and listed on ASX and TSX

A quick tally of the companies leaves us with 4 out of the 9 miners being state-controlled Plus it should be noted that these state-owned and operated uranium mines make up approximately 43 of the yearly production While the other companies arenrsquot state-controlled having all of your operating mines in one country at least makes you in my opinion more susceptible to state influence An example of this is Areva which is a global company but the majority of its revenue and employees are in France The reality is that for any minable commodity its hard to move a mine Next to oil Im not sure if theres another commodity thats this politically controlled Political influence in the sector sets up perfectly for speculators its not a matter of if but when


Largest Producing Uranium Mines

For your information heres a list of the 15 largest operating uranium mines around the world Pay particular attention to how much of the total uranium production these 15 mines represent as far as global supply is concerned



Deposit Type and Mining Methods

Now the method of mining alone doesnrsquot tell the whole story its a mix of the geology of the area and the mining method together that dictates how economical the deposit is going to be As you will see there are certain uranium mining methods that lend themselves to achieving low uranium recovery costs Which in effect could lead us to the mines that if or when the uranium price goes lower would be the lone survivors when it comes to making profit

NOTE Even before we get into the demand story let me reiterate that because so much of the commodity is state-controlled as the World Nuclear Association says a low uranium price doesnt mean production is cut






Secondary Supply of Uranium ndash Low-Enriched Uranium MOX and Depleted Uranium

In 1993 a truly momentous step was taken between the USA and Russia as the nuclear weapon disarmament program Mega-Tons to Mega-Watts was launched As representatives of their countries US Enrichment Corp (USEC) and Techsnabexport (TENEX) negotiated a commercial agreement that would last 20 years and total $8 billion for down blended weapons grade uranium commonly referred to as low-enriched uranium (LEU) and plutonium which can be combined with uranium oxide to form MOX fuel As of 2013 500 tonnes of Russian warhead uranium has been down blended into 14446 tonnes of LEU (The 500 tonnes of HEU is the equivalent of 20000 warheads)


FYI - Weapons grade uranium is enriched to over 90 U-235 while weapons grade plutonium is enriched to over 93 Pu-239

This new supply of reactor-ready uranium has a definite affect on world demand as the World Nuclear Association states

ldquoHighly-enriched uranium from weapons stockpiles has been displacing some 8850 tonnes of U3O8 production from mines each year and met about 13 to 19 of world reactor requirements through to 2013rdquo

The World Nuclear Association estimates Highly-enriched uranium (HEU) in US and Russian weapons stockpiles amounts to about 1500 tonnes Its estimated that world supply of weapons grade plutonium sits at 260 tonnes This is an estimate however as information like this is super sensitive The World Nuclear Association puts the burn rate of this resource at 8 to 10 tonnes a year As can be expected theres a huge number of skeptics who are concerned that this weapons grade material thats headed for down blending will find its way into the black market This is a fear thats never going away as long as weapons grade uranium is around to be used civilly Also I would contend that all uranium resources would be affected by war but theres no doubt in my mind that this market supply dries up if we are hit with the black swan of war

ldquoAs of January 2013 there were 35 reactors or about 8 of the worldrsquos operating fleet licensed to use MOX fuel including reactors in France Germany and India Reprocessing and MOX fuel fabrication facilities exist or are under construction in China France India Japan the Russian Federation the United Kingdom and the United States However in 2011 it was announced that the Sellafield MOX plant in the United Kingdom would be closed owing to reduced demand for services in Japan following the Fukushima Daiichi accidentrdquo ~ URANIUM 2014 RESOURCES PRODUCTION AND DEMAND NEA No 7209 (Red Book) ndash pg115

Not only is there a licensing requirement but only certain nuclear reactors are even capable of using MOX fuel As you will see in the tables its a select group of countries that participate in MOX fuel and the reprocessing of uranium production





Summarized from pg116

Depleted Uranium

Depleted uranium is tailings or waste from the nuclear reactor with a typical 025 to 035 U-235 (fissile material) As seen in the Nuclear Fuel Cycle these tailings can be re-enriched and brought back into the supply chain As cited in the Red Book however

ldquoDepleted uranium (DU) stocks represent a significant source of uranium that could displace primary production However the re-enrichment of depleted uranium has been limited since it is only economic in centrifuge enrichment plants with spare capacity and low operating costsldquo~


URANIUM 2014 RESOURCES PRODUCTION AND DEMAND NEA No 7209 (Red Book) ndash Summarized from pg117

There is an estimated 16 million tonnes of depleted uranium in the world There is roughly 90 waste after the fission of the uranium within the reactor With current consumption it is estimated that the world tailings supply increases at a rate of 60000 tonnes per year As stated at the beginning of the report the only thing standing between a uranium resource and its use in reactors is the cost of removing it from the earth or in this case the enrichment cost

Concluding Remarks for Supply

The worlds uranium supplies can be broken down into two main categories Primary Supplies ndash In the ground resources and mine production and Secondary Supplies ndash Low-Enriched Uranium (Down blended HEU) MOX and Depleted Uranium

How do you actually determine the worlds current supply of uranium

This is convoluted as it all depends on price but even that is skewed because of the political control of a good portion of the worldrsquos operating mines Instead of looking at hard numbers and saying this is the supply number and this is the demand number I believe the best course of action is to review data in scenarios and from there you can be the judge of where you see this uranium story going

In part 3 we will look at the hard uranium demand data and then break that down into scenarios From there you will have a clear picture of where we stand in the cycle and can invest or speculate accordingly


Uranium Demand - Politics Population and Environment - Part

3A

Uraniumrsquos primary demand source is world electricity production As the world economy and population grows so does the need for electricity The worldrsquos demand for electrical energy is seemingly unwavering because throughout the last four decades electrical energy output has continually increased even though we have experienced major economic black swans across the globe

Summarized from International Energy Agency

NOTE In the graph World Energy Output by Source and Decade Renewables includes hydro geothermal solar wind tidal and bio-fuels Fossil Fuels includes coal peat oil shale oil and natural gas

While world total electrical demand has gone up in the face of economic and political turmoil the same canrsquot be said for the fuels that generate the electricity Specifically I am referring to nuclear power and its fall from grace after Fukushima In the World Energy Output by Source and Decade graph you can clearly see that nuclear power usage has gone down while renewables has seen a dramatic uptick in their contribution to the electrical grid

As discussed in Part 2 The Uranium Supply Story Fukushima had a dramatic effect on the worlds nuclear power usage Whether it be concern of a nuclear meltdown or storage of


depleted uranium a common consensus amongst select few is that nuclear power may not be the best choice for future energy production

Politics amp How They Influence Uranium Demand

Nuclear Weapon Super Powers

As discussed in Part 2 of this series the first major uranium exploration cycle was military driven The cold war propelled the worldrsquos nuclear super powers to find and control as much uranium as possible and to convert it into weapons Fast forwarding to the last few decades when Mega Tons to Mega Watts was introduced and Russian nuclear weapons are being converted into Low Enriched Uranium (LEU) and down blended plutonium for use in nuclear power plants If you tune into the news however you will know that this has already changed I speculate that its only the beginning and that the good will is set to disintegrate further in the future

On October 3 2016 the BBC published an article about the Russians suspending the agreement they had made with the United States (US) regarding plutonium down blending for civil use Check it out BBC article To summarize from the article where Vladimir Putin states that Russia had to take ldquourgent measures to defend the security of the Russian federationwe fulfilled our duties we built that enterprise But our American partners did notrdquo

Is this the beginning of a new aged Cold War My thought is that we have to at least contemplate it when looking at uranium demand because statements like this feel like the beginning of something much larger

Who Controls the Uranium Supply

Going back to our notes in The Uranium Supply Story who are the countries producing the most uranium Secondly who are the end users Now this is further complicated as outlined in Introduction to the Nuclear Fuel Cycle remember there are multiple steps before Yellowcake can be turned into usable nuclear fuel assemblies



Source International Energy Agency - 2016 Key World Energy Statistics ndash pg17


Case Study ndash The United States

The United States is the number one generator of nuclear power in the world Also it is the 9th largest producer of uranium The following case study will show that the US is consuming much more uranium than it produces which depending on perspective could be an issue in the future

Nuclear Power Generation Calculation

I used the Nuclear Fuel Material Balance Calculator found on WISE Uranium Project to calculate nuclear power generation from an input of milled tonnes of uranium

NOTE Please donrsquot take this calculation as an absolute The inputs for the process parameters were taken and supported from a few sources World Nuclear Association International Atomic Energy Agency and WISE Uranium Project If you feel my calculation is not adequate please reproduce with your own process input parameters


As you can see from the above case study the US mined production represents a very small percentage of their uranium power generating needs Detailed in the following table is the USA Energy Information Agencyrsquos breakdown of the purchased uranium in years 2011 to 2015 Specifically refer to the data in purchased from foreign suppliers and you will see that the US purchased 68 of their uranium in 2015 from foreign entities

Source US Energy Information Administration


US Energy Information Administration

In a reverse calculation using the same input process parameters but inputting the final power generation of 831000 GWh the calculator shows us that the US would need to produce 1964845 tU or 231703 tU3O8 which translates into 51081767 lbs U3O8 to cover their nuclear power needs This calculation is right in line with what the US actually purchased in 2015 The variation between the two numbers most likely has to do with the enrichment grade of the UF6 which has a dramatic effect on the numbers The reverse calculation is a check item for me that the calculator is in the ball park of what was actually purchased Im satisfied that the calculator is accurate

The Rest of the Nuclear Fuel Cycle

How does the USA do after they get their imported uranium Actually quite well They have enough conversion and enrichment (both operational and in construction) capacity to support their current fuel assembly needs




The interesting part about the USA case study is that it reflects the state of most of the top nuclear power generators It appears that Canada is the only top 10 nuclear power generating nation (108000GWh 2016) to have surplus uranium production (2015 - 13325 tU translates into 5635598 GWh) Is there potential for political strife We will tackle this later in the scenarios

Now lets review who actually can convert their uranium into UF6 then enrich to 35 to 5 U-235 and finally fabricate fuel assemblies The conversion and enrichment processes are very concerning for a major portion of our top ten generators as they rely on someone else to convert and enrich their uranium The fuel assembly portion of the cycle however seems to be more universal as the majority of the top users have facilities



Source World Nuclear Assoication


The main reason for the lack of conversion and enrichment capability Fear The fear of nuclear weapons production has kept these two integral parts of the nuclear fuel cycle restricted to a lucky few For some the answer to this issue is the Candu reactor As explained in Part 1 of this series the Candu reactor does not require the enrichment of the uranium which eliminates the enrichment cog in the cycle

Future Construction of Nuclear Reactors

Source World Nuclear Association- World Nuclear Performance Report 2016 ndash pg14

Examining the table you can see that Asia as a continent has 43 reactors or 65 of the total reactors under construction in the world Referring back to the table of uranium producers other than China India and Pakistan there arenrsquot any other producers in Asia (excluding Russia and Kazakhstan) As of 2015 the annual production of the three Asian nations was 2046 tU which is enough uranium to produce 8696717 GWh (value calculated with same inputs parameters as previous) China alone produced 133 000 GWh of nuclear generated electricity The influx of new reactors is going to swing a lot of resources in Asiarsquos direction

Besides reactors under construction the World Nuclear Association states In all over 160 power reactors with a total net capacity of some 182000 MWe are planned and over 300 more are proposed Currently a new reactor that was started in 2015 is estimated to take 73 months to complete This is a huge time lag between breaking ground and connecting to the electrical grid Its something that pundits say is a negative for adopting nuclear power for the future Is the time lag the problem or is it the slow decision making process I tend to think its the latter


The Emergence of the Millennials

Source United Nations

The worldrsquos population has been steadily growing as can be seen in the graph illustrating world population since 1950 Its said that the oldest trend in motion is the ascension of man which from a population standpoint I definitely believe to be true

Today we live in the so-called information age where the communication of ideas and facts is only a click of a mouse away This new age has given birth to a new generation of workers and consumers the Millennials The Millennials represent a group of people born between 1982 and 2002 (give or take a couple of years depending on the source of the age group) who were brought up with the most technology of any prior generation With the oldest Millennials in their mid-30s technology is a major source of transportation entertainment and comfort

From a world demographic standpoint the Millennials are currently the dominant (by size) demographic in the world Take a look at the table below



The Millennial generational dominance isnrsquot one that is limited to just one area of the globe in the graph below you will see that each area has a strong percentage of people in the Millennial generation In fact Europe is the only area that currently has another generation thats larger

I believe that even without this generations dominance like Ray Kurzweilrsquos Singularity Theory we are headed towards a further integration of technology into our everyday lives - not away from it An increase in tech equals an increase in the populations electrical needs and this is supported further by the Millennialrsquos daily habits and aspirations If demographics interest you and you want to dig further into this fascinating topic you need to check out William Strauss and Neil Howersquos The Fourth Turning

Environment ndash Direct and Indirect Emissions

Arguably the strongest current trend in motion is the world environmental movement The fight against global warming has become an international topic with the introduction of carbon credits and the Kyoto Accord as just two examples Organizations around the world are banding together to reduce carbon emissions What is undisputable in my mind is that the world is warming Now the reason why its warming is up for debate and for the purpose of this report it really doesnt matter other than the vast majority of environmental groups attribute a warming climate to CO2 emissions

Go back to the first graph in this report our use of fossil fuels has never been so high Its integration in our infrastructure resource availability and its knack for providing consistent and constant base load power has maintained fossil fuels as our go-to energy source I do believe that this is going to change as nations like China move toward improving the air quality in their cities How are the Chinese going to do it Right now a major proportion of that future clean energy production will come from nuclear


In my fourth year of university I took a course on energy sources and how our society uses them For me one of the biggest takeaways was the reminder that carbon emissions arent just a by-product of the fuel being consumed they also occur when the fuel is being grown and harvested (biofuels such as ethanol) or being manufactured (solar panels or wind turbines) To truly understand an energy sources carbon impact you need to review the direct and indirect sources of emissions The following table was summarized from the World Energy Councilrsquos (WEC) report on the Comparison of Energy Systems using Life Cycle Assessment

Source World Energy Council - Comparison of Energy Systems using Life Cycles

Assessment - 2004 pg 4


The WECrsquos report shows the direct and indirect effects of implementing the various energy sources Also it uses a range of highs and lows for the energy source which I think is good as it shows that they took a number of experimental readings not just one kick at the can Surprising to me and maybe you nuclear power is right at the bottom with the lowest range of carbon equivalent emissions Even with all of the fear and push to get away from nuclear energy I think that this fact is what pushes nuclear power into a bigger role in world electrical energy production

Positives and Negatives of Nuclear Power

Positive 1 ndash 450 Scenario Goals

As discussed earlier in this report the direct and indirect emissions from nuclear power are small in comparison to its fossil fuel generating cousins Emission reduction policy such as the 450 scenario which is based on pledges announced in association with the Copenhagen Accord and Cancun Agreement are calling for dramatic reductions in CO2 emissions across all of the contributing sectors The 450 scenario proposes a reduction from current totals or the 2014 total 32381 Mt CO2 to a maximum 18777 Mt CO2 in 2040

Source International Energy Agency - Key World Statistics 2016 - pg44 amp US Energy

Information Administration


Reducing 13604 Mt of CO2 is equivalent to removing 178 million GWh from the current world energy consumption To really get an idea of how much energy 178 million GWh is we can compare it to World electricity output which was 238 million GWh in 2014 The 450 scenario goal is a massive reduction in emissions one that is in my opinion only achievable if nuclear power is used to make up for the removal of fossil fuels

Sample Calculation

Input ndash 761 t CO2GWh (average of tonnes of CO2GWh across the 3 fossil fuels) 32381 ndash 18777 = 13604 Mt 13604 Mt = 13604000000 t 13604000000 t x 1761 GWht = 17876478 GWh

Positive 2 ndash Nuclear Power Safety

How safe is nuclear power Statistically speaking very safe In comparison to other electricity generating processes nuclear power has a good track record

Source Energy and Health 2 article Electricity Generation and Health authors Anil

Markandya and Paul Wilkinson - pg981

This table does not include any information from Fukushima as the rates are taken from European data As noted in The Uranium Supply Story however there were no deaths directly linked to the reactor meltdown The deaths in this tragic event were attributed to the tsunami In the article Electricity Generation and Health which is found in the publication Energy and Health 2 authors Anil Markandya and Paul Wilkinson put nuclear power safety into perspective when they give an example of a French plant


ldquoThe datashow occupational deaths of around 0bull019 per TWh largely at the mining milling and generation stages These numbers are small in the context of normal operations For example a normal reactor of the kind in operation in France would produce 5bull7 TWh a year Hence more than 10 years of operations would be needed before a single occupational death could be attributed to the plantrdquo ~Anil Markandya and Paul Wilkinson - Electricity Generation and Health pg 982

To note the Chernobyl disaster accounted for 49 deaths directly and the UN believes that 4000 other premature deaths in the area can be attributed to the radiation poisoning From an historical standpoint its clear that nuclear power is safe especially when compared with the other energy generating mediums

Positive 3 ndash Cost per KWh


Nuclear power is cheaper per kWh than coal and natural gas by a comfortable margin Even in comparison to onshore wind its cheaper in most countries As a consumer of energy this is a plus for the nuclear power case Its hard to argue against clean and cheap energy


Negative 1 ndash Meltdown

Even though comparatively nuclear reactor meltdowns have caused far fewer deaths than other electricity generating fuels the general public is fearful The ldquowhat ifrdquo scenarios of the reactor process are generally used by pundits who are against the use of nuclear power ldquoWhat ifsrdquo are hard to argue against because they usually have some validity - they could occur In reality though history doesnrsquot lie the deaths and illnesses related to nuclear accidents are very low I understand the fear to an extent but I donrsquot think its rational

Negative 2 ndash Construction Time

Currently the WNA says that nuclear power plants constructed in 2015 have a 73 month construction timeline This long period of time is another negative for pundits who are against nuclear power They claim that because it takes so long to construct a nuclear power plant we end up burning more fossil fuels in the meantime which means were still contributing to carbon emissions

Personally I donrsquot fully understand this as a constructive criticism of nuclear power It definitely isnrsquot a plus for nuclear power but how do you discount all of the positives because it takes a long time to construct I think its more of an issue in navigating the bureaucracy of government and the decision to move forward with these projects that causes delays for construction To be clear Im not a fan of communism but look how effective the Chinese have been in their pursuit of clean energy 20+ reactors are currently under construction

Negative 3 ndashDepleted Uranium Storage

Radioactive waste storage is another hot topic for those against nuclear power A great debate that I watched from the TED talks video series on youtubecom matches Stewart Brand and Mark Z Jacobson against one another debating on the pros and cons of nuclear power

TED Talks Nuclear Debate

Stewart Brand starts the debate off with the pros of nuclear power and presents a lot of great information especially his comparisons of waste storage One comparison to note


ldquoNuclear waste ndash 1GW-year = 20 tons or 2 casks versus Coal Waste ndash 1 GW-year = 8000000 tons CO2rdquo ~Stewart Brand time-340

When comparing waste volumes andor CO2 emissions the other fuels dont come close to matching nuclear power In the cons portion of the debate which Mark Z Jacobson leads the association of nuclear waste and terrorism are combined as a concern or a point against nuclear power It looks like a ldquowhat ifrdquo and its hard to dispute but historically it hasnrsquot been an issue Citing terrorism is an extremely effective way to bring out the ldquowhat ifrdquo argument something thats been used heavily by governments near and far

Final Remarks on Part 3A

World uranium demand is complicated and there are many different factors that affect how much of it is needed I believe the main factors currently affecting uranium demand are the following politics population amp technology growth and the clean energy movement

In the demand analysis uranium miningmilling production and current electrical demand were examined with some estimations of current consumption These estimations are very hard to make as they require many assumptions such as enrichment of U-235 which is not the same for every reactor

Although there is error in assumptions the uranium supply and demand numbers do appear to balance fairly well with the error pointing to there being an over-supply I donrsquot however believe that the uranium demand story is told from a straight numerical view Its about who controls the uranium supply in peace and at war how air can be made cleaner by way of lower CO2 emissions and what energy source can provide a growing world population with the base load power required to run its insatiable thirst for electrical energy

I believe the most effective way to complete this analysis is to construct a few scenarios and apply what was covered in Parts 1 to 3A


Uranium Scenarios - Part 3B

Uranium is like any commodity its price is dictated by supply and demand There is however always a narrative that goes along with the quantitative analysis that needs to be explored Numbers are great but in this highly politicized world economy the numbers donrsquot tell the whole story

The basic uranium supply and demand figures were covered in the previous 2 reports The focus of this report therefore will be to outline 3 different scenarios that are affected by 6 situations that I will outline

For perspective on the potential outcomes of these situations I believe its necessary to represent the effect that each situation has on uranium demand in terms of +- U3O8 tonnes

Before we can proceed we need to calculate the average amount of uranium consumed by one of the worlds nuclear reactors Considering there are so many different operational parameters for the various reactor types I believe this calculation is the simplest way to compute their average uranium consumption regardless of reactor type



From Part 2 of the series The Uranium Supply Story the World Nuclear Association states that in 2015 71343 tonnes of U3O8 was produced by the worldrsquos mines (World Nuclear Association)

This U3O8 represents 90 of the worldrsquos demand therefore the total nuclear fuel needs expressed in-terms U3O8 can be calculated

Total U3O8 tonnes = 71343 09 = 79270 tonnes

The World Nuclear Association says that there are currently 447 operable nuclear reactors in the world (see The Uranium Supply Story for the reactor table) (World Nuclear Association)

Therefore a rough calculation of the amount of U3O8 consumed by the average reactor in the world is

Average Reactor Consumption = 79270 447 = 1773 tonnes U3O8

Japan ndash Post Fukushima

On March 11 2011 an earthquake struck 130 km off the east coast of Japan registering 90 on the Richter scale The quake set the stage for a massive 15m high tsunami that engulfed Japanrsquos coastline The water flooded the Fukushima Daiichi nuclear reactors that sat a paltry 4m above sea level The flooding led to the over-heating of the reactors and a nuclear emergency was declared for the region While the reactor meltdown didnt account for any deaths the tsunami death toll was close to 19000 people and infrastructure and thousands of homes were destroyed in an area that stretched 560 square kilometres

This disaster forced the Japanese government to suspend operation in their remaining nuclear reactors and as of November 2016 its still somewhat up in the air As reported by Reuters on October 16 2016 Ryuichi Yoneyamas win as Niigata Governor is thought to be a ldquosetback for Prime Minister Shinzo Abersquos energy policy which relies on rebooting reactors that once met about 30 percent of the nationrsquos needsrdquo

In the same Reuters article Yoneyama states As I have promised all of you under current circumstances where we cant protect your lives and your way of life I declare clearly that I cant approve a restart in reference to the nuclear reactor restarts

Outside of this political wrinkle the Japanese have applied to the Nuclear Regulation Authority (NRA) for the re-start of their nuclear reactors When operable Japanrsquos reactors account for close to 30 of their electricity needs In total there are 42 reactors with 2 currently under construction (World Nuclear Association)


Using the worldrsquos average reactor consumption therefore re-starting the Japanese reactors should have a positive uranium demand impact of

1773 tonnes x 42 = 7448 tonnes U3O8 If in 2015 the world total U308 demand was 71343 tonnes the 7448 t of Japanese

demand represents an increase of 104

Nuclear Reactors Under Construction


Currently there are 66 nuclear reactors under construction around the world The Asian nations lead the pack with 65 or 43 of the reactors under construction The Chinese possess 20 of these reactors as they work to achieve cleaner air in their mega cities while maintaining a reliable supply of base load electricity


These reactors wont come online simultaneously but for the sake of this situation Im going to go with Cameco and say that 23 of the reactors (Cameco Corporate Presentation) will come online in the next 2 to 3 years Reviewing data from the last 65 years in the World Nuclear Associationrsquos reactor database its also pretty typical for plants to close 160 reactors have been permanently shut down or put into long-term shutdown On average therefore 25 reactors are shut down each year

Using the worldrsquos average reactor consumption new reactor demand should have a positive uranium demand impact of

1773 tonnes x 66 = 117018 tonnes U3O8 117018 x 23 = 7801 tonnes U3O8 Shutdown plant negative impact = 25 (3 years) x 1777 tonnes = 1329 tonnes U3O8 Therefore 7801 ndash 1329 = 6472 t U3O8 If in 2015 the world total U3O8 production was 71343 tonnes 6472 t of new reactor


World Electricity Demand

Summarized from International Energy Agency (IEA)


As you can see from the graph the worldrsquos demand for electricity continues to rise even in the face of global economic turmoil World nuclear reactors generated 2535 TWh of electricity in 2014 which was 106 of the worldrsquos electricity production The 2535 TWh of power translated into a global U3O8 demand of 66089 tonnes in 2014

Hypothetical Situation - Electricity demand grows nuclear powerrsquos contribution remains the same

o From 2009 to 2014 world electricity output grew on average by 732 TWh or 34 each year (IEA)

o We will use a 34 Compound Annual Growth Rate (CAGR) in electricity demand from 2015 to 2019

Source Investopedia

Global Electrical Demand in 2017 = 26329 TWh



Finally 106 of 26329 TWh is 2791 TWh which means that using the relation of power generation to U3O8 demand laid out in 2014 2017rsquos U3O8 demand would be 72754 t

2017 demand = (2791 x 66081)2535 = 72754 t

Using the same relation 2018 and 2019 U3O8 demand would be 75223 t and 77785 t respectively


Therefore using the 2014 relationship between U3O8 production to nuclear power output and provided that a 34 CAGR in global electricity output is achieved the following differential is found

o Comparing the calculated U3O8 demand to 2015 production each year 2017 = 1411 t 2018 = 3880 t and 2019 = 6442 t

o Cumulative over the 3 years = 11733 t U3O8

MOX Fuel

World Nuclear Association outlines MOX fuel creation what is easily one of the most contested stages of the nuclear fuel cycle as ldquoprovides almost 5 of the new nuclear fuel used todayrdquo The reason for the worry Critics believe that if weapons grade plutonium and highly enriched uranium (HEU) are being delivered around the world it could fall into the wrong hands and be used in an act of terrorism While this concern may have some validity it hasnrsquot been an issue thus far


Alternatively I believe the biggest threat to MOX fuel production is the risk of war In recent weeks as outlined in Uranium Demand ndash Part 3A the relationship between the Russians and Americans continues to be rocky Russian President Vladamir Putins comments may just be posturing but I think that for the purposes of this report we should consider that Russia will no longer be converting nuclear weapons through down blending

For countries like France this will have a major impact as MOX fuel makes up approximately 30 of their nuclear fuel consumption As can be seen in the tables below France really is the major consumer of weapons grade plutonium


Source Uranium 2014 RESOURCES PRODUCTION AND DEMAND NEA No 7209 (Red Book)

Currently the Americans are constructing a MOX fuel fabrication facility (MFFF) in Savannah River South Carolina This site however isnrsquot slated for production until 2019 and is designed to process 35 tyr of weapons grade plutonium

NOTE Plutonium is a by-product of the nuclear reactor process making the weapons grade materials not the only source for MOX fuel

For this calculation weapons grade plutonium and HEU are removed from the uranium market and MOX fuel production is cut in half

o If the total 2015 uranium market demand was 79270 t U3O8 and we will assume that MOX fuel makes up 45 its contribution is equal to 3567 t U3O8

o Removing half of the MOX fuel contribution leaves uranium mine production to make up the other half which would be 1784 t U3O8


The Trump Effect for America and the Rest of the World

Time will tell how Donald Trump US president elect executes the platform he presented during the presidential campaign For good or ill politicians have a reputation of not following through on what they promise so in Trumprsquos case well have to wait and see

In my mind the uranium market could be affected in a few ways Firstly I think that Trumprsquos position on nuclear weapons could create tension around the world Most notably given the stance that Putin has already taken claiming that America has failed to hold up their end of the nuclear weapons disarmament agreement (BBC) Trumps bravado could aggravate him further

The New York Timersquos article Obama Rebukes Donald Trumprsquos Comments on Nuclear Weapons published on April 1 2016 reveals a few interesting comments from Trump

The New York Times summarized and quoted Trumps comments in reference to Japan and South Korea possessing nuclear weapons and the possible use of nuclear weapons in a military conflict in Europe

ldquoMr Trump said he was open to allowing Japan and South Korea to acquire nuclear weapons to deter their rogue neighbor North Korea He also declined to rule out using nuclear weapons in a military conflict in Europe saying You donrsquot want to say take everything off the table ~ New York Timersquos article

In my mind this could solidify Russiarsquos suspension of weapons graded plutonium and HEU down blending Going a step further growing tensions with Russia could lead to issues with former Soviet States Kazakhstan and Uzbekistan who collectively produced 26185 t uranium in 2015 - this represents more than 40 of the worldrsquos production Removing or placing restrictions on this production would have a MAJOR impact on U3O8 demand throughout the world leaving more than a handful of nations scrambling for nuclear fuel

Im not going to put an impact number on this You can be the judge of how probable this scenario with Russia could be In my mind though if these Commonwealth of Independent States (CIS) decide to align with Russia in a future dispute the uranium market will be turned upside down

Secondly Trump says his focus is to make America great again In an interview with The Economist Trump is summarized and quoted as saying

[Trump] would crush Islamic State[s] and send American troops to take the oil He would Make America great again both militarily and economically by being a better negotiator than all the dummies who represent the country today [E]very single country that does business


with us is ripping America off he says The money [China] took out of the United States is the greatest theft in the history of our country

What these comments mean for the future of Americarsquos economy isnt clear in my opinion Further in an interview with the Washington Post Trump outlines his theory for the economy and how he will fix it

ldquoI think wersquore sitting on an economic bubble A financial bubble Wersquore not at 5 percent unemployment Wersquore at a number thatrsquos probably into the 20s if you look at the real number That was a number that was devised statistically devised to make politicians ndash and in particular presidents ndash look good And I wouldnrsquot be getting the kind of massive crowds that Irsquom getting if the number was a real numberrdquo

ldquoI can fix it I can fix it pretty quickly I would do a tax cut You have to do a tax cut Because wersquore the highest-taxed nation in the world But I would start I would immediately start renegotiating our trade deals with Mexico China Japan and all of these countries that are just absolutely destroying usrdquo

Trump does go into more detail with his plan citing tax cuts and the renegotiating of treaties with certain countries but that kind of thing certainly doesnrsquot happen overnight If he turns the ship correctly however and the US economy begins to boom this would be a major plus to electricity demand and in my opinion great news for uranium


The Rise of Green Energy

The threat of climate change and fear of nuclear power could lead governments to pursue wind andor solar power generation as a primary source of energy These alternative sources of energy are not without their detractors but if this does indeed end up being the direction for energy production in the future (which at this point I donrsquot agree that it should be) it isnrsquot going to happen right away because both fossil fuel and nuclear facilities would have to shut down over time

In an article posted on the Massachusetts Institute of Technology (MIT) School of Engineering website an author discusses the question ldquoHow many wind turbines would it take to power all of New York City (NYC)

According to Paul Sclavounos Professor of Mechanical Engineering and Naval Architecture around 4000 five megawatt turbines would be required to power NYC This number is apparently not as big as it could be as NYC citizens are some of the ldquogreenest Americans with households averaging 4200 KWhyear

Some physical perspective is given

ldquoSclavounos calculates that a windfarm sufficient to power all of New York City would spread over 4000 square kilometers of offshore terrain mdash 40 by 40 miles or a land area roughly equivalent to half of Yellowstone National Parkrdquo

In Ontario Canada where I live wind turbines are a hotly contested topic because a lot of people dont want to live right next to them Why Ive heard a number of arguments one of which is that the turbines are purported to emit a low frequency sound that can apparently have negative health effects Another is their impact on wildlife an argument which has been successfully used to stop wind turbine installations in at least one region in Ontario Now Im not sure about the validity of these arguments but I do know that this sentiment has negatively affected real estate prices in the regions where the turbines have been proposed

Regardless of these concerns let us calculate a possible impact of replacing nuclear reactors with wind turbines In the MIT article in reference to NYC it stated that

ldquoThe cityrsquos five boroughs plus Westchester consumed around 60 thousand gigawatt-hours of electricity last yearrdquo


I dont believe nuclear power would be completely singled out as the only power source eliminated during the transition to green energy but for the sake of this calculation we will assume that nuclear will be replaced with a quarter of that 60000 GWh or 15000 GWh

World Nuclear Power Generation - 2535000 GWh of reactors worldwide - 447 reactors = 5671 GWh per reactor

15000 GWh 5671 GWhreactor = 26 reactors 26 reactors x 1773 t U3O8reactor = 461 t U3O8

The negative yearly impact to global uranium demand however would be 461 t of U3O8

In all I have reviewed 6 situations that will have an impact on the future demand of uranium The following section will summarize these situations into 3 scenarios each with a different outcome


Scenario 1

This scenario most closely reflects the world that we currently live in If you believe that things will stay the same Im betting this is what uranium demand looks like in the future Remember that the uranium demand I have calculated for each situation is along a 1 to 3 year timeline

Japan re-starts its nuclear reactors New reactors come online World economy remains flat

o Trump effect on America and the world is null o No change in electrical demand

World politics remain the same o MOX fuel production remains the same

Green energy moves forward removing some fossil fuel and nuclear capacity in certain countries


Scenario 2

This scenario reflects a world that is seeing growth due to a boom in the United States but has come at a price increased tensions amongst the world powers The effect on uranium demand and Im borrowing from Trump is gonna be HUGE

Japan re-starts its nuclear reactors New reactors come online World economy grows

o Electrical demand grows at 34 o Trump effect is felt worldwide

American economy is boosted but tensions have risen with Russia and many others as Trump looks to make America great again

MOX fuel production is cut by 50 as nuclear weapons are once again the military conflict deterrents of choice



Scenario 3

This scenario reflects a world that is in a state of chaos as the Trump effect has blown up - in a bad way Tensions have hit a peak and it looks like we are headed for war Former Soviet nations have banned together some by choice and some not to remove their uranium producing resources from the open market Global uranium producers such as Cameco are scrambling and more importantly many countries are scrambling for a source of nuclear fuel

Japan re-starts its nuclear reactors New reactor construction is paused World economy stagnates

o Electrical demand which was initially boosted by the US economy has since fallen because the world faces war

o Trump effect is felt worldwide

Tensions have hit their peaks


Green energy moves forward but its rate of inclusion jumps 3 fold as countries are terrified of quickly diminishing stock piles of fossil fuels and uranium

Interestingly through all of the problems that arise from peak tension uranium demand is up and the price in my mind at least could be up MASSIVELY


To conclude Ive presented 3 scenarios that I believe outline possible directions for uranium demand in the years ahead In all of the situations almost regardless of what is happening in the world I see a bright future for uranium In reality I think that if people can move past their fear of nuclear power and embrace what are currently incomparable positives the picture Ive described for uranium is actually conservative No emissions safe and reliable an energy source worthy of the worldrsquos clean air future

Watch your inbox for Part 4 which will be released as a series of articles on individual uranium companies

Until next time

Brian Leni PEng

Founder - Junior Stock Review


Sources and Links

Here are some additional links to support your own due diligence

International Atomic Energy Agnecy

Japan Atomic Industrial Forum

George Keenans The Charge in the Soviet Union (Kennan) to the Secretary of State

Nuclear Industry Association

Nuclear Energy Agency

TradeTech

United Nations Scientific Community on the Effects of Atomic Radiation

The Ux Consulting Company

World Nuclear Association

Disclaimer The companies mentioned in this article are not investment recommendations I am not an investment professional Please perform your own due diligence to decide whether or not they are a good fit for your personal investment criteria I do own shares in one or more of the companies mentioned


Speculating in the Resource Sector

Whats the most prudent way to make money in the junior resource sector Play the cycle and buy stocks when the commodity that youre interested in is out of favour but truly has the potential to rebound via supply destruction or demand increase

Money is made on the delta between value and price ~ Rick Rule Natural Resource Symposium July 2016

The latest resource sector example of this is gold Since hitting an all time high in 2011 gold and the gold stocks were hit with a vicious bear market dropping the stocks down over 90 in nominal terms Speculating in gold stocks in 2014 and 2015 was a very lonely place For me personally I kept going over my gold thesis unprecedentedly low interest rates throughout the world plus quantitative easing (money printing) equals bad news for moneyrsquos purchasing power and ultimately major trouble for the world economy In my mind it made sense to turn to gold and although my reasoning was much more complex I believed that the gold market would turn around for a variety of reasons Even though a lot of people thought I was crazy I had to put my money into things that I could buy at 90 off their highs of the last bull market

The purpose of this report is to review my thesis on uranium and why I believe it may very well be the next resource to come out of its bear market The report will be broken down into 4 parts Part 1 ndashIntroduction to the Nuclear Fuel Cycle Part 2 ndash Uranium Supply ndash Factors Affecting Exploration and Production Capabilities (Open Pit Underground In Situ Leach (ISL) Mining) Part 3 ndash Uranium Demand ndash Factors Affecting Environmental Safety Energy Needs War and Politics and Part 4 ndash How to Speculate in the Uranium Sector ndash Company Reviews






Natural Uranium


Candu Reactors





Uranium Conversion





















MOX






Reactor Types



Conclusion







Fukushima




















































































Depleted Uranium













3A








































































Sample Calculation





































































Source Investopedia





2017 demand = (2791 x 66081)2535 = 72754 t






MOX Fuel














































Scenario 1







Scenario 2








Scenario 3












Until next time

Brian Leni PEng



Sources and Links







TradeTech










Natural Uranium


Candu Reactors





Uranium Conversion





















MOX






Reactor Types



Conclusion







Fukushima




















































































Depleted Uranium













3A








































































Sample Calculation





































































Source Investopedia





2017 demand = (2791 x 66081)2535 = 72754 t






MOX Fuel














































Scenario 1







Scenario 2








Scenario 3












Until next time

Brian Leni PEng



Sources and Links







TradeTech






Uranium Conversion





















MOX






Reactor Types



Conclusion







Fukushima




















































































Depleted Uranium













3A








































































Sample Calculation





































































Source Investopedia





2017 demand = (2791 x 66081)2535 = 72754 t






MOX Fuel














































Scenario 1







Scenario 2








Scenario 3












Until next time

Brian Leni PEng



Sources and Links







TradeTech



















MOX






Reactor Types



Conclusion







Fukushima




















































































Depleted Uranium













3A








































































Sample Calculation





































































Source Investopedia





2017 demand = (2791 x 66081)2535 = 72754 t






MOX Fuel














































Scenario 1







Scenario 2








Scenario 3












Until next time

Brian Leni PEng



Sources and Links







TradeTech






Reactor Types



Conclusion







Fukushima




















































































Depleted Uranium













3A








































































Sample Calculation





































































Source Investopedia





2017 demand = (2791 x 66081)2535 = 72754 t






MOX Fuel














































Scenario 1







Scenario 2








Scenario 3












Until next time

Brian Leni PEng



Sources and Links







TradeTech










Fukushima




















































































Depleted Uranium













3A








































































Sample Calculation





































































Source Investopedia





2017 demand = (2791 x 66081)2535 = 72754 t






MOX Fuel














































Scenario 1







Scenario 2








Scenario 3












Until next time

Brian Leni PEng



Sources and Links







TradeTech























































































Depleted Uranium













3A








































































Sample Calculation





































































Source Investopedia





2017 demand = (2791 x 66081)2535 = 72754 t






MOX Fuel














































Scenario 1







Scenario 2








Scenario 3












Until next time

Brian Leni PEng



Sources and Links







TradeTech















3A








































































Sample Calculation





































































Source Investopedia





2017 demand = (2791 x 66081)2535 = 72754 t






MOX Fuel














































Scenario 1







Scenario 2








Scenario 3












Until next time

Brian Leni PEng



Sources and Links







TradeTech







































































Sample Calculation





































































Source Investopedia





2017 demand = (2791 x 66081)2535 = 72754 t






MOX Fuel














































Scenario 1







Scenario 2








Scenario 3












Until next time

Brian Leni PEng



Sources and Links







TradeTech



































































Source Investopedia





2017 demand = (2791 x 66081)2535 = 72754 t






MOX Fuel














































Scenario 1







Scenario 2








Scenario 3












Until next time

Brian Leni PEng



Sources and Links







TradeTech









MOX Fuel














































Scenario 1







Scenario 2








Scenario 3












Until next time

Brian Leni PEng



Sources and Links







TradeTech














































Scenario 1







Scenario 2








Scenario 3












Until next time

Brian Leni PEng



Sources and Links







TradeTech






Scenario 2








Scenario 3












Until next time

Brian Leni PEng



Sources and Links







TradeTech






Scenario 3












Until next time

Brian Leni PEng



Sources and Links







TradeTech








Until next time

Brian Leni PEng



Sources and Links







TradeTech






Sources and Links







TradeTech





The Uranium Story - Junior Stock Review · MOX fuel plants use a high energy process to combine the...

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Transcript of The Uranium Story - Junior Stock Review · MOX fuel plants use a high energy process to combine the...