Thursday, August 14, 2008

Fourth Generation Nuclear Technology?


World renown climate expert Dr. James Hanson of the NASA Goddard Institute for Space Studies was on the Charlie Rose show a couple of days ago (click here to watch the interview). Dr. Hanson is sounding the alarm on depleting fossil fuels and says it is time we develop alternative energy sources.

Dr. Hanson thinks that renewable energy sources like wind and solar offer tremendous potential but he stressed the point that we should not throw in the towel on nuclear. Interestingly, he thinks that fourth generation nuclear technology merits serious consideration. He believes that nuclear technology has been wrongly demonized and there is enough nuclear waste to meet our energy needs for the next two hundred years.

I quote from the article above:

Current global uranium resources will provide for 200 years of nuclear power generation at 2005 consumption levels, but this figure could shrink rapidly if there was a big drive for this technology around the world, an expert said on Tuesday.

International Nuclear Energy Academy chairperson Bertrand Barre said if there was, however, a more sluggish reemergence of nuclear power, there would be no questions around uranium supplies.

He told a breakfast function in Johannesburg that conventional global uranium resource stood at 15-million tons

"If there is a big renaissance, those two centuries [of supply] will shrink pretty quickly," he stated.

But Barre, who is also scientific adviser to French nuclear firm Areva, said that new generation technology, which would likely be commercialised by around 2040, would make redundant the question of uranium supplies running out.

"If there is a big renaissance, those two centuries [of supply] will shrink pretty quickly," he stated.

But Barre, who is also scientific adviser to French nuclear firm Areva, said that new generation technology, which would likely be commercialised by around 2040, would make redundant the question of uranium supplies running out.

"Present day pressure water reactors use less than 1% of the total energy contained in the uranium ore that has been extracted. It's pitifully low," he stated.

"But the 99% is still there in the huge supplies of depleted uranium, and we know of the technology that can use that as a fuel."

Barre was referring to what was called fourth-generation nuclear technology, which would likely be able to utilize far more of the potential energy in nuclear fuel.

"Generation four will be able to use 80% probably of the potential energy in uranium, as well as the already depleted uranium inventory, which makes a lot of centuries," he said, adding that uranium resources were no longer a limitation to nuclear power generation.

I am not an expert on nuclear technology but a buddy of mine who knows a lot about power generation thinks nuclear is the way of the future. Along with renewable energy sources, fourth generation nuclear technology might be the key to meeting our future energy needs.

One thing that strikes me is that if these fourth generation plants use depleted uranium inventory, then why mine new uranium? An article in the Financial Post yesterday discussed how investors pounced on uranium stocks following Cameco's (CCO/TSX) announcement that a shaft at its Cigar Lake project in Saskatchewan re-flooded. Cameco is currently trading at two year lows.

I am wondering how this new technology will impact uranium mining stocks like Cameco (CCJ), BHP Billington (BHP), Rio Tinto (RTP), as well as smaller companies like Denison Mines (DNN) and Uranium Resources (URRE). In the short run, probably not much but if we can harness depleted uranium inventory, then spot uranium prices will fall and so will the profits from these companies.

I do not know what will happen to uranium prices longer term, but I am keeping an eye on these stocks and on any new developments in nuclear technology. Along with renewable energy sources, nuclear will likely be the future of power generation.

Update: This morning I noticed that Energyandcapital.com are extremely bullish on uranium stocks (but bear in mind that their assessment of supply shortages and how they will impact uranium stocks might be overstated given the new technology mentioned above):

August 15th, 2008
We're on the verge of the world's last energy bull market. And just as uranium's momentum seemed to peak . . .

In October 2006, disaster struck at one of the world's largest uranium mines--Cameco's Cigar Lake project. The underground uranium mine was completely flooded . . . and Cameco was forced to cease all production. This mine had been expected to supply 17% of the world's uranium demand. While Cameco hopes to resume production at Cigar Lake again in 2011, the outlook is grim. They're having a serious problem repairing the damage and may have lost the mine completely.

Fact is, uranium production today is so tight, it can only satisfy 60% of global demand--with no relief in sight. This shortage has propelled uranium prices to a record of $138/lb. last June . . . jumping 575% in just two years!

In the wake of "yellowcake" uranium's dramatic rise, a multitude of uranium companies were started. But most of these companies don't even plan to bring their mines into production . . . and are doomed to fail. Yet here's the rub for investors looking to invest in uranium stocks and funds. . . a few small uranium companies are on their way to triple-digit gains.

To get the full details in our new uranium stock report, simply sign up for the free Energy and Capital e-Letter, a daily advisory on the fast-moving profits in the energy stock sector, written and edited by energy and natural resources investing experts Chris Nelder and Keith Kohl.

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