GE to expand nuclear fuel services

Making the nuclear fuel cycle more attractive to investors

The nuclear fuel business is a fractured landscape with many separate players in uranium mining, enrichment, and fuel fabrication. For the most part nuclear utilities haven't worried about the supply chain that gets them their fuel, only the price. That's changing with the new ramping up of new nuclear reactor construction in this country, China, and the rest of the world.

While fuel fabrication is very different than making yellowcake or uranium enrichment, the issue of vertical integration of the fuel side of the industry is getting new attention as a result of action taken this month by General Electric. A new business development effort is intended to make the nuclear fuel cycle more attractive to its investors and more profitable for the firm.

General Electric, which competes with Areva and Westinghouse in the reactor business, is developing its nuclear business into a more integrated company with reactors, servicing and fuel supply, following the example set by Areva. That firm's recent mega-deal in China spans the entire fuel cycle from uranium mining, to enrichment, fuel services, and an agreement to build a $15 billion spent fuel reprocessing facility. By comparison, Westinghouse, which has a deal for four reactors, doesn't have other business in China on either the front-or-back end of the fuel cycle.

What GE apparently sees is an opportunity to structure its nuclear business to encompass the entire nuclear fuel cycle. Bloomberg wire service reports that General Electric Co. plans to form partnerships with uranium companies to develop its nuclear business and improve access to the fuel that runs reactors. According to the wire service, GE's nuclear business unit is holding talks with "several miners, millers and converters" to find partners after agreeing last year to use a new technology from Australia's Silex Systems Ltd. The firm is also looking at commercial opportunities to reprocess spent nuclear fuel.

"We're in serious conversations, and I think we will do something in the first half of this year,'' White said in an interview with a Bloomberg reporter in London. He wouldn't name the companies, citing confidentiality agreements. "Obviously, if we're going into enrichment, we need the feedstock."

Nuclear utilities usually buy uranium themselves, and hire others to enrich and process it into fuel. Often the fuel is processed to meet the requirements of a specific reactor design. GE's ability to guarantee supplies would make the company's sales pitch for its reactors more comprehensive, especially for first-time buyers. GE and Hitachi have an approved reactor design with the NRC. According to NRC's list of new reactor licensing applications, GE-Hitachi reactors are slated to be the technology of U.S. several major plants scheduled to submit COL applications in 2008. The first load of nuclear fuel in a new reactor is always the largest single purchase a plant will make.

According to data from Westinghouse published in Fuel Cycle Week on 01/17/08 (subscription only), the initial core loading of a 1,150 MWe AP1000 reactor, requires of 550 kg U each for 264 fuel rod assemblies, or 145,000 kg U (319,000 pounds). At roughly every 18 months about a third of the core, or 48,000 kgU (105,600 pounds) would need replacing (in practice this would depend on the plant’s operating parameters). Over a 30-year lifespan the combination of core loading and refuelling would total some 1.1 million kg U (2.4 million pounds). Comparable numbers are likely for GE-Hitachi reactors. The firm has its own nuclear fuel service in partnership with Hitachi and Toshiba.

GE's White told Bloomberg, "We're getting more involved in the total cycle now than we ever have been. Some of what Areva is doing I think you'll see us do, but we probably won't get into mining ourselves." Unlike GE, Areva has extensive commitments to uranium mining in Canada and Africa.

General Electric's expansion into more of the front end of the nuclear fuel cycle strategy the firm says is a big bet. " White told Bloomberg, "These things are not cheap to develop." A new uranium enrichment plant, like the one Areva is expected to announce for a U.S. location in the first quarter of 2008, can cost up to $2 billion.

Efforts by GE and Areva face competition from Russia which has for many years provided a full fuel service for reactors they sold to other countries. It includes taking the spent fuel back. A new factor in the global nuclear fuel market is Kazatomprom which has a large nuclear fuel pellet plant in Kazakhstan. Earlier this year Toshiba sold 10% of its stake in Westinghouse, a $486 million deal, to that state-owned firm in return for access to uranium supplies for its global reactor market.

GE is headed toward the same business model as its rivals. It is a clear signal that suppliers of reactor technologies want to invest directly in fuel cycle facilities to secure future supplies for their customers.