Saturday, June 30, 2007

Thorium Power adds former ambassador to board

The alternative to MOX fuel has some challenges ahead

Thorium Power, a nuclear R&D outfit based in McLean, VA, has appointed former US ambassador Thomas Graham, Jr. as executive chairman of its board of directors. He will take up his post in August.

Graham is an expert on nuclear nonproliferation having been involved in most of the major US negotiations to stop the spread of weapons of mass destruction. For the arms control wonks reading this, the treaties include NPT, SALT, START, and CTBT. He served for 15 years as the general counsel for the US Arms Control and Disarmament Agency.

Seth Grae, CEO of Thorium Power, stated in a press release, "We are pleased that Tom, who has served as Thorium Power's Non-Executive Chairman of the Board of Directors since April 2006, has been appointed Executive Chairman of the Board of Directors to reflect his added responsibilities and full-time involvement in the Company. As our discussions with governments of other countries and leading companies in the nuclear power industry continue to evolve, Ambassador Graham's contribution as a knowledgeable and experienced expert in nuclear negotiations has been exemplary. We look forward to his continued support and guidance."

Thorium nuclear fuel R&D

Thorium Power is a nuclear energy developer of thorium-based nuclear fuel designs. The Company's technologies are intended to address key concerns about traditional nuclear power, including nuclear proliferation and nuclear waste.

Thorium Power plans to license its technologies to commercial and government owned reactor operators; and, nuclear fuel fabricators who want to benefit from thorium-based fuels. The Company is targeting new reactors in countries without a nuclear industry, as well as currently operating and new reactors in countries with an established nuclear energy industry including Russia.

Russian partners are the key

The Company maintains long-standing relationships with leading Russian nuclear entities, providing experts and facilities for its nuclear fuel development activities. The company announced a plan in 2006 to turn aging Russian nuclear warheads into thorium-based fuel that will run in exist reactors.

In April 2007 Thorium Power Ltd and Red Star (Krasnaya Zvezda), a Russian government-owned entity announced agreement on a contract with Thorium Power. It's seed and blanket fuel designs will undergo irradiation testing. The goal is deployment within full-sized commercial reactors. The contract is under the supervision of the Russian Federal Agency for Atomic Energy (RosAtom). Testing at the Kurchatov Institute, Russia's leading research and development institution in the field of nuclear energy, will take place starting in summer 2007.

RosAtom is no lightweight R&D outfit. It is the Soviet Union's vertically integrated nuclear power complex organized by President Vladimir Putin in February 2007. It integrates all stages of nuclear energy generation: uranium extraction and enrichment, fuel production, and generation, as well as all related industries, including nuclear and non-nuclear machine-building, science, engineering, and construction. This makes Thorium Power's alliance with RosAtom a big deal.

Vladimir S. Vasilkovsky, General Director of Red Star, and also an official with RosAtom, stated in a joint press release, "This new contract includes a technical scope of work that includes a continuation of the testing program in a live research reactor. The later phases will lead to commercial deployment of thorium-based fuel, bringing many benefits to the world's nuclear power plants, including less waste and enhanced proliferation resistance, facilitating the expansion of the use of nuclear power to generate clean energy."

It appears that when the Russians issue a press release everyone gets a word in. Evgeny Strakhov, Deputy Director of Department of Red Star, also noted, "The additional work that will be performed is a necessary step towards demonstrating Thorium Power's fuel designs in a commercial reactor. Ultimately, our collaboration will lead to wide-scale use of Thorium Power's technology in the nuclear power industry."

So there you have it. The top nuclear agency in Russia wants thorium fuel for its reactors. Things are not going so well back in the states.

NNSA has other ideas like MOX fuel

Thorium Power may need the Russian nuclear agency's credibility because, according to CNN,Thorium Power faces a stiff challenge from a rival process called MOX (for mixed oxides), developed by subsidiaries of Areva, a French government-owned firm. The struggle has landed Thorium Power in the middle of a Beltway battle that pits a powerful office within the Department of Energy against senior members of Congress. Areva is no lightweight either and is deeply involved in the government's MOX fuel programs.

The Energy Department's National Nuclear Safety Administration (NNSA) has already selected MOX to dispose of plutonium in surplus U.S. warheads. NNSA officials will also fund and oversee the Russian plutonium-disposal program, and they take a dim view of rival technologies. NNSA claims that Thorium Power relies on "immature technologies" and insists that the Russians will eventually choose MOX too. That's pretty tough resistance from an entrenched bureaucratic opponent. It raises the question of whether NNSA is objecting to the Thorium technology or the competition from RosAtom?

MOX fuel and Thorium fuel have similar objectives, but the MOX "market," if you can call it that, has a more visible track record. MOX also provides a means of burning weapons-grade plutonium (from military sources) to produce electricity, though using thorium is essentially positioned as an equally feasible means to achieve this outcome.

Opposition to Yucca Mountain may play in the mix

CNN reports that Thorium backers on Capitol Hill include Senate Majority Leader Harry Reid (D-NV) and Representative Jim Gibbons (R-NV), both of whom are concerned about safe nuclear-waste disposal because of the federal government's plan to build a central waste repository underneath Nevada's Yucca Mountain. Reid is so completely up in arms about Yucca Mountain that he explores every possible avenue to prevent it from opening and that includes technical solutions. (Check out Energy from Thorium for the basics)

Other prominent boosters are Senator John Warner (R-VA) and Representative Curt Weldon, a Pennsylvania Republican and a member of the House Armed Services Committee. Thorium Power Seth Grae thinks this kind of congressional sponsorship will bring federal money to the thorium power R&D effort despite NNSA's objections.

Penny stocks are not a magnet for deep pocket investors

The financial problem for Thorium Power are that it has no products and no income despite being traded as an over the counter stock. (THPW.OB) With a stock price of less than a dollar, its ability to attract large, risk-adverse investors is limited. In its quarterly SEC filing on May 10, 2007, Thorium describes itself as follows.

We are a development stage company. We are primarily engaged in the development of proprietary nuclear fuel designs which we intend ultimately to introduce for sale into three markets: (1) nuclear fuel designs for use in commercial nuclear power plants, (2) nuclear fuel designs for reactor-grade plutonium disposition, and (3) nuclear fuel designs for weapons-grade plutonium disposition. These fuel designs are primarily for use in existing or future VVER-1000 light water reactors. We have also been conducting research and development relating to a variant of these nuclear fuel designs for use in existing pressurized water reactors (PWR).

The future of the company has to emerge from its current penny stock status if it is going to be successful. Only two of the company's executives actually receive salaries. The rest hold stock which trades briskly at prices well under $1.00 and in volumes of from 250,000 to over 2,000,000 shares daily. In 2007 the company says it plans to strengthen its management team with a full time CFO and position itself to license intellectual property that will result from its R&D efforts with its Russian partners

Nonproliferation advantages may prove out over time

Opponents of the increased use of nuclear power have raised the issue of proliferation of weapons grade plutonium as a result of using conventional enriched uranium in current reactor designs. Proponents of increased nuclear power may do well to look more closely at alternative nuclear fuel designs that could put a technology-based cork in the bottle that contains the weapons proliferation menace.

Thorium Power obviously has something going for it else it would not have attracted Ambassador Graham to its board. Thorium is an abundant element. Time will tell whether the company or anyone else can profit from it.

Brazil ramps up its nuclear industry

Brazil and India announce trade deals with uranium and aircraft in the mix

The BBC reports that Brazil will re-start work on a long stalled nuclear reactor and simultaneously begin enriching uranium possibly for export to India.

Brazil signs up to help India's nuclear program

India has been shut out of a wide ranging nuclear technology deal with the US over its insistence that it be allowed to continue reprocessing of spent nuclear fuel. India also wants to keep open the option of underground nuclear weapons testing as a deterrent to its next door nuclear rival Pakistan. As a predictable consequence of its failed negotiations with the US, India has seen the door swing shut on buying uranium from Australia which objected in June to India's diplomatic challenges to nuclear nonproliferation regimes.

Brazil is a member of the 45-nation Nuclear Suppliers Group. India is not, but wants to join so it can buy nuclear fuel from member states. Officially, Brazil has told India it needs to sign up for nonproliferation programs. The deal with Brazil will provide India with an opportunity to step up its diplomacy with the 45-nation Nuclear Suppliers Group (NSG) of which Brazil is an influential member. A diplomatic spokesman for Brazil told the Indian news media, Brazil will help India in civilian uses of nuclear energy. "We understand India's growing need for energy and appreciate its emergence as an important world power," said the envoy.

In the same breath, he added that Brazil will take a formal position on this issue after India's bilateral 123 pact with the US and New Delhi's safeguards agreement with the International Atomic Energy Agency (IAEA) is in place. It's a clear case of carrot and stick and perhaps the unseen hand of US diplomatic and IAEA pressure on Brazil.

Secretary of State Condoleezza Rice on June 28th acknowledged difficulties in negotiations on a US-India nuclear cooperation deal, but said the accord could be settled by the end of the year. This means US envoy to the negotiations, Nicholas Burns, kicked the issue upstairs to be addressed by Rice and perhaps President Bush.

Interestingly, trade issues have entered the mix as bargaining chips. Brazil and India have criticized the United States for its failure to offer deep enough cuts in the billions of dollars of subsidies it pays annually to American farmers. The European Union and the United States say the two emerging economic powers refuse to offer new market opportunities for manufacturing exports. Clearly, India is looking for leverage outside of the bilateral negotiations over its nuclear policies as a way to close the deal with the US. Is trade, with new partner Brazil also at the table, one of them?

India isn't the only potential customer for Brazil's enriched uranium. China has taken notice. Brazil has the world's sixth largest reserves of uranium and currently ships it abroad to Canada to be enriched, so it can be used at its two nuclear energy plants near Rio de Janeiro. That may change making Brazil an exporter of enriched uranium. China is a member of the Nuclear Suppliers Group and can buy fuel from any exporter.

Brazil's deal with India is being sweetened by a promise that India's Paramount Airways was set to order 40 planes from Brazilian maker Embraer in a deal worth about $2B. So what will China offer to buy as an offset to get Brazil's enriched uranium?

Brazil to re-start third reactor project

Brazil's national energy council has recommended restarting a stalled and troubled project to build the country's third nuclear reactor. Brazil currently has two nuclear energy plants, located at Angra dos Reis some 150km (100 miles) from Rio de Janeiro. Work on the third stopped two decades ago in the 1980s over security fears, poor management, and lack of funds. The plants has been considered by some to be a white elephant that would never be finished. Brazil currently gets about 4% of its electricity from nuclear energy.

Angra 3 would require an investment of about US$3.6 billion according to the Mines and Energy Ministry. Late last year, Brazil announced plans to build four new nuclear plants, each with a generating capacity of 1,000 megawatts, starting in 2013 in the country's northeast and southeast. Brazil has signed the Nuclear Nonproliferation Treaty, and its constitution bans the military use of nuclear energy.

Brazil to enrich uranium

Brazil has announced it will begin enriching uranium officially, saying it has received the approval of the United Nations' nuclear watchdog. International Atomic Energy Agency (IAEA) inspectors paid a "successful" visit to the Resende enrichment plant in October, a Brazilian minister told reporters. Science and Technology Minister Eduardo Campos said production of enriched uranium would start within months. However, an IAEA official told the BBC no final agreement had been reached. The spokesman told the BBC the IAEA was still completing its assessment of Resende.

Privately, agency officials say a deal with Brazil is close and could be announced in the next month. Apparently, in its excitement the Brazilian government jumped the gun. They added it could be eight months before production of fuel for nuclear reactors would begin.

The government had been refusing to show all of its centrifuge technology responsible for enrichment. This had led to protracted negotiations with the IAEA over the past few years. Apparently, Brazil decided that the value of the uranium enrichment plant was enough to overcome their political fears of IAEA inspections.

Brazil is a party to the Nuclear Non-Proliferation Treaty, the cornerstone of global efforts to stop the spread of nuclear weapons, and as such could not operate the plant without approval from the IAEA.

Will carbon emissions trades pay for nuclear plants

Are politicians serving up another shell game to avoid government support for nuclear energy?

European governments looking for an escape hatch from providing direct subsidies for construction of new nuclear power plants are latching on to carbon emissions trading as the answer. At the head of the pack is the British government which earlier this month drew a line in the sand on spending even a six pence on nuclear energy subsidies.

Industry is falling right in line according to Paul Golby, CEO of E.ON, a leading oil and gas producer. At an energy conference last week he even named the price at which nuclear power plants would benefit from carbon emissions trading. Golby said that a new generation of British nuclear energy plants could be built without government support if carbon emissions permits start to trade above 20 euros ($27 USD) a ton.

In January 2005 the European Union introduced a carbon emissions trading system. Rather than imposing a carbon tax, the EU launched the world's first carbon trading scheme. Its aim is to force down industrial emissions of greenhouse gases and so moderate global warming, while preserving the competitiveness of European companies.

Under the scheme, companies are issued with pieces of paper that grant them permission to emit a certain quantity of CO2 the atmosphere in a particular year. Companies that do not have enough permissions to cover their emissions will have to buy them in from someone who does. The program does not cover mobile sources.

The UK intends to go further than other major industrialized economies by forcing many other businesses to participate in a trading scheme for the first time. Gordon Brown, the new UK prime minister, believes emissions trading, rather than higher taxes, is the best way to tackle global warming.

Carbon trading creates winners and losers. Gas-fired generation emits 0.40 tons of CO2 per megawatt of generation, compared to coal fired's 0.90 tons, the cost of carbon per megawatt hour will always be less for gas,” says Nikki Wilson, analyst at John Hall Associates.

A 1,500 Mw coal-fired power plant produces 600 tons of CO2 emissions which at $27/ton yields a paltry $162,000 as the value of the carbon emissions it has to trade, if it were to trade all of them, relative to the billions needed to support construction of a nuclear power plant.

I'm not going to do the rest of the math here, but my intuition is that you are going to need a lot of carbon emissions trading to support construction of nuclear power plants on the scale necessary to impact global warming. Even more to the point mobile sources would need to be in the mix to even out the economic impact.

Governments still have their heads in the sand about nuclear energy despite lots of political rhetoric to the contrary. Running for the cover of carbon emissions trading buys time until it becomes clear the numbers may not work. I'm not ready to buy it.

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Wednesday, June 27, 2007

Toshiba claims win for Texas nuclear plant

Bloomberg reports Toshiba Corp. will get a $4.9 billion order for nuclear equipment in the U.S., beating General Electric Co. and Hitachi Ltd.

The Associated Press also reported Toshiba is to build two 1350 Mw advanced boiling-water reactors in Houston, Texas, in a project that had been expected to go to Hitachi Ltd. and General Electric Co., Japanese business daily Nikkei reported.

The wire service said NRG Energy Inc. chose Toshiba's reactors, based on the Nikkei published report. The Japanese paper did not say where it got the information. The companies are in talks Toshiba spokesman Keisuke Ohmori said in Tokyo, declining to give details. NRG spokesman David Knox wouldn't comment. (Reuters)

The contract to install two reactors near Houston, Texas, would mark the first success since Toshiba paid $4.16 billion for 77 percent of Westinghouse Electric Co., a nuclear supplier. Toshiba has targeted the U.S. and China to more than triple nuclear sales by 2015.

Tuesday, June 26, 2007

AEHI says it has $3.5B for Idaho nuclear plant (2 updates)

Awaiting confirmation from reported funding source

Alternate Energy Holdings (AEHI PK) announced on June 26th that Cobblestone Financial Group, Inc. -- reportedly representing numerous investors and funding sources -- has provided the company with a letter of intent to fund 100% of AEHI's proposed Idaho Energy Complex (IEC), estimated at $3.5 billion.

The financing package is said to include a construction to permanent conversion option upon construction completion, as well as the option to be structured in phases -- the first phase beginning with the NRC combined operating and construction license (COL) application, estimated at $100 million. AEHI says the first phase is expected to begin early fall 2007.

There is no confirming statement in the press release from Cobblestone. I've put an inquiry in to the firm leaving a message for the company's CEO. I'll update this post if I get an answer. Or you can contact them yourself (below)

UPDATE 06/27/07

The Idaho Statesman reports that Cobblestone Financial's CEO did not respond to a reporter's inquiry yesterday about the reported funding commitment for AEHI. No one else from the company would make a statement for press attribution. Ken Dey, the Idaho Statesman reporter who wrote the story, told me in a phone conversation he still has unanswered questions about the project.

The Statesman also reports Alternate Energy Holding won’t qualify for the first round of loans, which is $100 million, until it receives local approval for the project. The company needs a conditional-use permit from Owyhee County to change the zoning of the proposed site from agricultural to industrial. A conditional use permit gives the county wide discretion to set conditions for the plant. A hearing is reportedly scheduled for mid-July. That hearing could be delayed according to wire service reports. "We sent them an application, but nothing has been submitted to our offices," said Mary Huff, Owyhee County's planning and zoning administrator.

Don Gillispie, AEHI CEO, told the Statesman the company plans to submit the application this summer. The first $100 million would be used to start the process of filing an application to the Nuclear Regulatory Commission for a combined operating and construction license.

If the company gains local approval, Gillispie said it could start the licensing process this fall. If everything goes as planned, he said the plant could be operating by the third quarter of 2015.

UPDATE 06/28/07

The Associated Press reports that Cobblestone Financial, of Erie, NY, which is said to be the source of funding for AEHI's 1,600 Mw nuclear power plant proposed for southwestern Idaho, has a track record of specializing in loans to bed and breakfasts, mini-warehouses, bars and gas stations.

Somehow the financial horsepower to fund a nuclear power plant and that investment profile don't add up. A profitable convenience store nets its owner maybe $75K/year. AEHI needs $75M, a factor of 1,000, just to apply for the license from the NRC. I always knew that chowing down a beer and twinkies was bad for the body, but I never knew you could get hallucinations with this combination.

The NRC which regulates about 100 U.S. nuclear power plants, keeps a list of expected new applications to build a nuclear plant. The list now numbers 17 companies, including Duke Energy, with $15 billion in annual revenue. Alternate Energy Holdings isn't on the list.

The wire service says Don Gillispie, AEHI's CEO, concedes he hasn't met personally with Cobblestone executives to arrange the loan promise. Still, Gillispie told AP he trusts them because he says he knows one of them "through a family friend." Gillispie declined to give the AP a copy of Cobblestone's letter of intent for the loan.

Still have questions about the funding? Contact info for Cobblestone is below.

Cobblestone Financial Group
140 Cedarwood Office Park
6800 Pittsford-Palmyra Road
Fairport, NY 14450

585-223-1000 Phone
585-223-1011 Fax

M. Lyndon Matteson III
President & CEO
Lyn@cobblestonefinancialgroup.com
Cell 585-738-4181

Robert Jackson
Vice President
Bob@cobblestonefinancialgroup.com
Cell 585-703-7414

Info@cobblestonefinancialgroup.com

1-800-817-1012