Western lands uranium gopher for May 30, 2008

Mining uranium exploration press releases for useful stuff
(A occasional column of money and mining news items)

The rise of nuclear energy, a second act if ever there was one, has given the price of uranium a shot in the arm.

In western states in the U.S. interest in uranium mining is growing and with it comes another growth industry - the production of press releases about the uranium mining industry.

In an effort to separate the really interesting from the merely informational, I'm posting my running notes on uranium mining in western states.

The choices of the subjects are a combination of what I find in the press release pile and what looks interesting to me and for readers. I'm focusing mostly on western states that are "west" of the 100th meridian, but this isn't hard and fast.

The states of interest are WY, CO, UT, TX, NM, AZ, & NV. For this reason I call this series the "western lands uranium gopher." These are news notes and the content is not to be considered investment advice.

Colorado Governor signs uranium mining bill into law

Colorado Governor Bill Ritter signed HB 1161 May 21 which puts new regulatory requirements on in-situ leach uranium mines. It requires groundwater testing to be conducted by third parties rather than mining companies themselves and imposes new requirements on groundwater restoration of ISR mining fields. The bill was specifically targeted at Powertech’s proposed Centennial ISR mine near Nunn, Colo., 15 miles northeast of Ft. Collins.

Powertech has identified 9.7 million pounds U3O8 under 5,700 acres spread over a 15 square mile area. At $70/lb the resource is worth approximately $680 million.

The bill signed by the governor was sponsored by two state representatives from Ft. Collins. State Rep. Randy Fisher (D-Ft. Collins), one of the sponsors, said, “Having this bill signed today will make sure we protect groundwater and our environment before new mining takes place not after.”

In signing House Bill 1161 into law, Gov. Bill Ritter said the bill "strikes a good balance. It allows for in situ uranium leach mining while taking into consideration the need to protect both ground and surface water supplies."

Powertech CEO Richard Clement had a decidedly different view. He said Colorado has “created a specialized regulatory regime for in-situ uranium recovery that is the most restrictive of any states in the United States."

However, he also said he didn’t think the new law would stop uranium mining in Colorado even though some supporters of the legislation had that goal in mind. He said, “the operational conditions (of the law) can be met by mining companies and will allow continuity of development in Colorado.”

The Colorado Mining Association (CMA) looked beyond the bill signing ceremony and issued a statement aimed at the development of implementing regulations by state agencies. Stuart Sanderson, CMA president, said, “we urge regulatory agencies to use care in drafting regulations under the Act to avoid unrealistic expectations of the mining industry.”

Some mining experts think the legislature and the governor have gone too far and may harm the uranium industry in that state at the very time that prices are at historical highs for the mineral.

The legislation lays out stronger requirements for reclamation notification to adjacent landowners. Also, it requires mining applicants may not have any existing violations to the Colorado Mined Land Reclamation Act or related acts issued by other states or the federal government. This requirement appears to set perfection as a regulatory standard and ignores the reality that all mining operations sooner or later have permit violations of varying degrees. State agencies will have a tough time writing regulations for this section of the Act and not wind up setting unenforceable requirements.

The Act requires there must be a description of at least five such operations that demonstrate that the proposed operation will not contaminate groundwater outside the permit area. This requirement will undoubtedly lead to “cut-and-paste” submissions based on industry technical reports and imposes additional costs on ISR mines documenting the obvious. It appears to add little real protection to the environment and will certainly kill more trees with the resulting paperwork.

The law mandates a baseline site characterization and monitoring plan. This is redundant since ISR mines already have to meet similar requirements from the NRC.

It sets criteria for the Mined Land Reclamation Board to deny or revoke a permit for in situ leach uranium mining. This section is most likely the key target of CMA’s comments.

Also, the expands oversight by the state Division of Reclamation, Mining and Safety during construction. A key issue for miners is whether the legislature, having added new requirements for state regulatory agencies to implement, will now fund new positions and provide related resources to pay for them.

In other legislative news the mining industry in Colorado dodged a bullet when the House Agriculture, Livestock and Natural Resources Committee voted to indefinitely postpone House Bill 08-1165, a bill which would have given local governments the power to override state laws and standards for environmental protection, and enact their own reclamation standards for mining operations.

CMA’s Sanderson said "House Bill 1165 would also have permitted local governments to ban any mining project outright, even if the permit applicant otherwise met all state, federal and local land use requirements," he added. "It further would have established a disturbing precedent for banning other lawfully regulated businesses in Colorado.”

Energy Fuels to form joint venture with Mesa Uranium

Energy Fuels said it has signed an agreement with Mesa Uranium to form a joint venture for exploration to take place on the DAR property in the Lisbon Valley Mining District of San Juan County, Utah. The two firms will share expenses on an equal basis for exploratory drilling on the site where prior exploration in the 1980s indicated a strong potential for uranium. Any subsequent mining on the site will be operated by Energy Fuels. Mesa also has 100% ownership of 46 square miles in the Lisbon Valley.

The boundary of the DAR site is near Energy Fuels’ Energy Queen Mine which is currently being refurbished for production. The DAR property consists of 60 recently staked mining claims over 1,240 acres. A nearby property staked by Vane Minerals reported grades of from 0.14% to 0.22% U3O8. The DAR property is also one mile from the North Alice Mine which reported substantial production prior to 1967 of 3.07 million pounds U3O8 at a grade of 0.275%.

Energy Fuels also reported progress toward a permit for the Whirlwind Mine. BLM has approved a consultant’s environmental assessment and released it for public comment. The comment period closes on June 20. Energy Fuels said in a statement it expects approval of the Whirlwind Mine plan of operations by BLM in July.

Ur Energy Wyoming permit application complete

Ur Energy announced it received notice from the Wyoming Department of Environmental Quality that the agency has found the Lost Creek Project Permit to Mine Application to be complete. Ur-Energy has been authorized to proceed with the formal public notice of the application. Ur-Energy said in a statement the notice is the first of its kind in that state in recent years.

Uranium Resources raises $14.3 million for Texas operations

Uranium Resources said it privately placed 3.3 million shares of common stock to raise $14.3 million or $4.33/share. The stock closed on May 23 at $4.54 which means the offering was placed at a 10% discount. Following the announcement share the price fell to $4.38 on heavy volume.

CEO Dave Clark said the funds will be used to achieve production levels in Texas of up to two million pounds a year by 2011. The company continues to develop properties in its Kingsville permit area. Clark also said funds from the deal would not be used for its planned acquisition of a property in New Mexico now owned by Rio Algom. He said in order to close on that deal the firm must be able to finance the purchase, fund remediation, and meet bond requirements for the NRC license. Additionally, the firm will have to separately raise working capital for operations. (See FCW 253)

The company reported a first quarter 2008 loss of $1.8 million on revenue of $5.7 million. In an SEC filing the company attributed the loss to higher production costs at its Kingsville Dome property at $49.78/ pound compared to $34.44/pound for the same period in 2007. Production at Kingsville was 79,100 pounds for the 1st quarter 2008 compared to 64,900 pounds for the same period 2007.

Uranium Energy plans 2008 Uravan Mineral Belt exploration program

Uranium Energy Corp has received authorization to published two 'Notices of Intent to Conduct Prospecting Operations for Uranium and Vanadium' in the Uravan Mineral Belt in Montrose County, Colo. from state regulatory agencies. The applications are for Uranium Energy Corp's Paradox Project and the Bull Canyon Project west of Naturita, Colo. A summer drilling program is planned for both properties.

Uranium Energy has a near term objective to conduct ISR uranium production on its Colorado properties. The company controls 12,000 acres of mining claims covering the sites of 15 past-producing uranium/vanadium mines. The aggregate production from these mines was approximately 5 million pounds of uranium, and 16 million pounds of vanadium. Grades of production in all cases were similar to the averages of 0.25% uranium and 1.7% vanadium.

The Paradox Project application covers 15 claims (the Gotcha claims) located approximately 10 miles west of Naturita adjacent to the Cotter Open Pit Uranium Mine, presently on standby status.

The Bull Canyon Project covers 13 claims (the Boo claims) in the historic Bull Canyon mining area, about 11 miles west of Naturita.

Thirty drill holes are planned for the Paradox Project to depths averaging 250 feet. In addition, bulk sampling will be performed from previously mined stockpiles at the workings.

Thirty drill holes at depths ranging from 180-220 feet are also planned for the Bull Canyon Project. An existing pile will be stabilized and samples will be taken in the workings for assays.

Uranium Energy Corp has opened a field office in Naturita to facilitate expeditious site development.

Western Uranium begins Nevada drilling program

Western Uranium Corporation announced drilling has started on the regional uranium targets: Bull Basin and Old Man Springs on the Kings Valley Project, Nev.

Currently, approximately 50 holes are planned in this phase, with 25 holes allocated to each respective target. The Company anticipates the program will take three-to-four months to complete with two core rigs drilling 24/7.

The company said in a statement both Old Man Springs and Bull Basin lie along a projected structural trend from the areas of known mineralization hosting 4.8 million pounds at a grade of 0.081% U3O8 (NI 43-101 compliant resource estimate).

A review of the data and drill program was undertaken with Cameco, a partner with Western Uranium, during a technical committee meeting that included an on-site visit in April.

Bayswater Completes Phase 3 Drilling at Elkhorn Project, Wyoming

Bayswater Uranium Corp announced the completion of the Phase 3 drilling program at the Elkhorn Project in Wyoming and the preliminary results from the program. The company drilled 312 holes including 11,073.5 meters (36,321 feet) around the historic Busfield Mine, and the company's NI 43-101 indicated resource. The best hole yielded 0.129% U3O8.

The historic Busfield and Vickers mines produced approximately 69,000 pounds of uranium from near-surface, sandstone hosted deposits that were operated in 1956-57. The company said in a statement its subsidiary, NCA Nuclear Inc. completed Phase I and II drilling programs with 70 holes at the Busfield resource area in 2006, which defined a NI 43-101 compliant indicated uranium resource of 250,000 tonnes at 0.08 % for 397,000 lbs eU3O8.

The Elkhorn project is located in the northeastern Powder River Basin and contains over 16,700 acres of land held under federal, state and fee agreements. Three uranium mines are in production in this region, including the Smith Ranch-Highland uranium project and the Crow Butte mine, owned by Cameco and the Christensen Ranch mine, owned by Cogema. All employ "in-situ recovery" processes to recover uranium mineralization. Operating mines are exploiting uranium mineralization that occurs in concentrations that range from approximately 0.1 - 0.3% U3O8.

KEPCO signs uranium development deal with Colorado miner

Yellowcake Mining Corp. signed a Memorandum of Understanding with Korean Electric Power Corp. (KEPCO) The agreement involves a detailed evaluation of Yellowcake's Uravan-Beck Project in Colorado.

The Beck property has 12 known deposits which have been subject to varying amounts of drilling in the past. The Beck property represents Yellowcake's second major development property after the Juniper Ridge project in Wyoming.

Under the deal KEPCO will secure a 50% interest in the mine which reportedly has proven reserves of 5,000 tonnes U3O8.

Korea has a total of 20 nuclear reactors generating a total of 17.5 GWe electricity. An additional eight new reactors are under construction or on order, making country, per capita, one of the world's most intensive users of nuclear generated electricity.

According to the World Nuclear Association the Korean Atomic Research Institute (KAERI) has developed both PWR and Candu fuel technology. It and Korea Nuclear Fuel Company (KNFC) have supplied PWR fuel since 1990 and Candu PHWR fuel (unenriched) since 1987. KNFC has capacity of 550 t/yr for PWR fuel and 700 t/yr for Candu PHWR fuel.

Uranium for fuel comes from Canada, Australia, and elsewhere - 3100 tU being required in 2008. KEPCO, KNFC, Hanwha and KHNP are together becoming involved with uranium exploration in Canada. The deal with Yellowcake mining is the first in the U.S.

In 2006 enrichment demand was 1.8 million SWU, supplied from overseas. Tenex, Urenco and USEC have previously supplied this, but in mid 2007 KHNP signed a long-term (10+ years) EUR 1 billion contract with Areva NC for enrichment services at the new Georges Besse II plant in France.

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'Eppur si muove' - Italy reverses course on nuclear energy

The government plans to produce it on a vast scale but first it must deal with the legacy of coal [Update June 05, 2008]

Italy's new government announced last week that within five years it plans to start building nuclear power plants. Two decades ago the country's voters banned them and ordered the decommissioning of all its reactors. It represents a dramatic dismount from being hung up on what is now seen as a wrong turn in energy policy. The Italian government is reversing its course from reliance on fossil energy to seek a nuclear future.

Claudio Scajola, minister of economic development, told the New York Times May 23, "By the end of this legislature, we will put down the foundation stone for the construction in our country of a group of new-generation nuclear plants. An action plan to go back to nuclear power cannot be delayed anymore."

Leadership on the nuclear issue comes right from the top. On his first day as Prime Minister, for a third term, Silvio Berlusconni told the upper house of Italian parliament that, "nuclear power . . . is an indispensable option . . .for guaranteeing the energy needed for future development and for safeguarding the environment we live in."

Even the nuclear industry itself was impressed by the change in direction. Ian Hore-Lacey, a spokesman for the World Nuclear Association in London, told the NYT, "Sentiments against nuclear are reversing very quickly across Europe," as a result of Italy's dramatic public turnaround.

These are brave words indeed, and the Italian government will need a lot of courage to proceed down this path. However, the biggest threats to a nuclear energy future for Italy aren't greens or nonproliferation groups.

It seems that Galileo Galilei's famous retort to the inquisition "and yet it moves" in defense of planetary orbital mechanics has acquired new meaning in the 21st century, but the dark side of Italy's energy future isn't ignorance, it's coal.

Sunset for coal in Italy may be a long way off

Right now Italy's energy future is tied to its own massive commitment to coal fired power plants that is already in place. The New York Times reported April 23 that over the next five year the country will increase its reliance on coal for electricity from 14% to 33% and overall power generated by coal will rise to 50% of total capacity.

Italy's decision to go nuclear has been coming for some time. The announcement is significant because it reflects a realization in Europe about the effects of global warming from fossil fuels used to generate electricity.

The destabilizing threats of the effects of global warming are not, so far, deterring Italy from continuing to invest in coal for the near terms. Some of the "advantages" include 200 years of supply, relative low cost compared to oil and natural gas, and many sources of coal so there is no cartel like OPEC to put a stranglehold on prices.

Enormous investments will be needed

The key question for Italy is how it will pay for a new, massive investment in nuclear power plants? Reuters reports that the head of A2A, a major Italian utility thinks risk sharing among electricity producers is the way to go.

"(It will take) enormous investments with considerable sums set aside for decommissioning," A2A Executive Board Chairman Giuliano Zuccoli (right) told reporters.

"That's why we believe it is necessary to create a consortium of producers led by Italy's biggest utilities."

Energy experts told Reuters it will be difficult to find funds for new nuclear plants in Italy with state funding scarce and private investors reluctant to finance capital-intensive and long-term projects which also face strong public opposition. However, Fulvio Conti, chief executive of Italy's biggest utility Enel, which owned all Italian nuclear stations before the ban, said the return to nuclear would cut by 20-30 percent Italians' power bills, among the highest in Europe.

Energy experts also say Italy needs nuclear power capacity of between 8,000 and 15,000 megawatts to reduce dependence on energy imports, cut emissions of carbon dioxide (CO2) and reduce power prices.

An Areva EPR, which is a likely candidate for Italy's nuclear fleet, given the country imports most of its electricity from France, produces 1,600 MWe. The need for new generating capacity would require five-to-nine of the giant reactors.

Roberto Poti, head of development at Italy's second-biggest utility Edison SpA told the wire service Italy would need at least 12 years to build up nuclear plants with a total capacity of 10,000 MWe (six EPRs).

Greens will make it hard for Italy to go nuclear

Reuters reports that green groups plan to mount a major campaign to insure that Italy will keep its ban on nuclear power.

"We say 'No' to nuclear... to construction of plants which would be outdated by the time they are built... the plants which are not secure and create waste problems," said Marcello Saponaro, (right) an attorney and the head of Greens in the northern region of Lombardy.

Italy's Greenpeace, World Wildlife Fund, and environmental group Legambiente said in a joint statement boosting renewable energy generation and energy efficiency were much more immediate, simple and less expensive ways "to stop energy fever" than nuclear energy.

Nonproliferation expert says it is a conspiracy

But greens aren't the only groups opposed to Italy's nuclear renaissance. Henry Sokolski, (left) a noted expert on nonproliferation issues, wrote a scathing OP ED in the Wall Street Journal (sub req.), titled, "Italy's Nuclear Job," on May 30.

Starting with financial considerations he said that Italy's huge debt would prevent it from making the necessary investments in nuclear energy. He wrote,

"Italy and Europe would be wise to stay away from energy investments that no private bank would make without government support. For the moment, that would have to include nuclear."

He said there are three reasons why no new nuclear power plants will be built in Italy.

• Skyrocketing construction costs
• Build times of 10-20 years
• No one in Italy wants one in their backyard

Sokolski also sees a political power play to consolidate power among a few large electric utilities as another reason why Berlusconi's government wants to pursue nuclear power.

"Energy experts, though, suspect something a bit more sinister. The announcement could be part of a long-term effort by the largest European utilities to push out smaller competitors by arranging massive government support for large, expensive nuclear power programs."

Where Sokolski goes wrong is that he says Italy wants to build "4th generation nuclear plants" that haven't been designed yet and that puts their completion two decades into the future. In fact, as noted above, Italy would likely go with Areva EPRs which are third-generation designs. Two of which are under construction. One is in Finland and the other is in France.

Generations come and go

Perhaps one of the reasons that Italy's government is making the move now is that a new generation of Italians have grown up and represent a change in public opinion about nuclear energy. In 2004 Italy enacted new legislation that establishes the basis for joint ventures with foreign companies for nuclear power plants.

World Nuclear News also reported that environment minister Raffaele Ventresca has said that Italy's environment and industry ministries, regional governments and state agencies are in the process of identifying potential radioactive waste storage sites, according to the Corriere della Sera newspaper. The search is focusing on potential sites for an above-ground storage area, the report said. Ventresca said that a site could be identified as early as June.

It will be a tough fight for Italy to make progress with its plans for nuclear energy. Meanwhile, its voters will have to decide whether they like the alternative, which is a massive commitment to more coal fired power plants.

Postscript - Galileo has the last word

The last word on a new nuclear build in Italy belongs to Galileo. While there is no written historical evidence that Galileo uttered his famous expression at his trial, according to later accounts the legend first became widely published in 1761 which is a century and a quarter after he supposedly said it.

Critics of Italy's new nuclear build are faced with a similar reality. Although they want to turn back the clock on energy policy in that country, in fact it has moved into the 21st century.

Four hundred years after the Church put Galileo (left) on trial for heresy the Times of London reports the Vatican is to complete its rehabilitation of the scientist by erecting a statue of him inside the Vatican walls.

The planned statue is to stand in the Vatican gardens near the apartment in which Galileo was incarcerated while awaiting trial in 1633 for advocating heliocentrism, the Copernican doctrine that the Earth revolves around the Sun.

Nicola Cabibbo, head of the Pontifical Academy of Sciences and a nuclear physicist, said: “The Church wants to close the Galileo affair and reach a definitive understanding not only of his great legacy but also of the relationship between science and faith.”

It is not a leap of faith to understand that coal leads to more global warming and nuclear does not. It is a fact of science.

Update June 05, 2008

Italy's minister for economic development Claudio Scajola told Italian newswire Radiocor that the government plans to start construction of a nuclear power plant in 2013. He said, "we can't go backwards. We have to go forwards. Europe and Italy require it of us."

Vermont faces nuclear or fossil futures

It's unlikely that renewable energy will meet needs for electricity

The New York Times has finally noticed the controversy over the Vermont Yankee reactor and positioned it in an article as a contest between "back to the land" Vermonters and the major utilities and large businesses in the state.

The romanticism of the piece is remarkable. It appears to be a case of goat cheese v. computer chips. IBM is one of the state's largest employers and relies on cheap electricity from Vermont Yankee.

Readers unfamiliar with the relationship of Vermont's bucolic landscape to the urban canyons of New York needs to read the Food pages of the NYT. There they will discover a passionate regard for the culinary adventures awaiting jaded New Yorkers in the green hills of Vermont.

This is likely one of the reasons why the newspaper may have finally tumbled to the energy controversy. With some many of its readers, if not also the paper's reporters and editors, being focused "foodies," it should come as no surprise that this story would eventually migrate from the local papers of Vermont to the NYT. Thankfully, today's article appears in the news section.

Here are a few highlights from the NYT article . . .

The NYT reports that anti-nuclear groups are faced with the unpleasant reality that closing Vermont Yankee will require the state to buy more electricity from fossil fuel plants with accompanying increases in greenhouse gases.

"Antinuclear groups that are arguing for closing the plant hope to replace the lost electricity with renewable generation from wind turbines, solar power and the combustion of plant material. Additionally, they cite the potential for cutting electrical demand by making homes and business more efficient.

Even so, some environmental advocates have reluctantly acknowledged that no combination of renewable power and improved efficiency can replace the plant, Vermont Yankee, at least in the near term. Instead, the state would probably have to tap the Northeastern grid — which derives more than half its energy from fossil fuels — for extra power."

. . . and despite being head over heels opposed to nuclear energy, Vermont's citizens are also shooting down the very "renewable" projects they speak so fondly of in testimony about energy futures for the state. The NYT reports,

"Vermont has only one commercial wind farm, 11 turbines along a mountain ridge. They have less than 1 percent of the capacity of Vermont Yankee, a relatively small nuclear plant.

Other proposed projects have been stalled by local opposition. One wind project would infringe on bear habitat. Another won approval from state regulators, but a local group filed a court appeal to block it."

The Times points out that the Vermont legislature is still determined to assert its authority over the plants NRC license renewal. Vermont's governor vetoed that last effort along those lines earlier this year. The state's Democratic legislative leadership has occasionally swerved into wing nut mode over Vermont Yankee which raises the question of whether Vermont voters will want to visit that issue at the polls next November.

State starts real energy planning

In the meantime, Vermont is doing some rational thinking about energy with the publication this week of a draft of long term energy plan.

In Vermont the debate over energy is about electricity supply because of the end of current power contracts which comes in 2012. The most significant milestone is the relicensing of the Vermont Yankee nuclear plant, and then with the massive network of Hydro-Quebec dams.

The first comprehensive energy plan to be drafted since 1998 also deals with issues around other energy needs, including transportation and home heating.

According to the plan half of Vermont's energy use is through the burning of petroleum fuels, including gasoline, diesel and heating oil. About 31 percent of Vermont's energy use - and 25 percent nationally - goes to transportation, the report notes.

Vermont use of energy has grown about 13 percent per capita between 1990 and 2004, while it has increased about 4 percent in New England overall and been stable nationally, according to the report by the Department of Public Service.

A state with energy intensive growth will have to think long and hard whether it wants its economy hobbled by a romantic desire for uncomplicated rural life. Eventually, even if it closes Vermont Yankee, there is always Bruce Power, a nuclear energy utility just over the border in Ontario, which might be interested in wheeling power to make all that goat cheese.

Closing the nuclear fuel cycle

DOE puts GNEP reports online

The U.S. Department of Energy (DOE) has released detailed reports and presentations developed by four industry consortia that provide industry perspectives on closing the nuclear fuel cycle in the US.

The reports and presentations were submitted by EnergySolutions; General Atomics; General Electric-Hitachi; and the International Nuclear Recycling Alliance, led by AREVA and Mitsubishi Heavy Industries. The reports describe conceptual designs, including cost and schedule for an initial nuclear fuel recycling center and advanced recycling reactor.

There is an enormous amount of material including the presentations and full reports. It might take as many nuclear engineers to read the reports as it took to prepare them.

That said anyone interested in a public look, that is without proprietary constraints, at what might be involved in the U.S. in closing the nuclear fuel cycle would benefit from at least paging through the briefings if not the full text of the materials.

Background and Future Work

In May 2007, DOE issued a Funding Opportunity Announcement for studies, providing financial assistance to selected applicants to perform the analyses.

The four industry teams executed cooperative agreements with DOE. They have obtained funding through September 2008. There is a possibility of continued funding through September 2009, to develop conceptual designs, technology development roadmaps, and business plans for potential commercialization of nuclear fuel recycling and related reactor technologies.

On the Net

GNEP nuclear fuel reports

For Mitsubishi size doesn't matter

Firm will start making large forgings and may invest in Pebble Bed

Reuters reports that Mitsubishi Heavy Industries (MHI) plans to get into the business of manufacturing large forgings for nuclear reactors including its own 1,700 MWe PWR. It joins firms in Korea, France, and the U.K. who are seeking to gain market share in this field. The only firm making the components now is Japan Steel Works and it has a three year backlog of orders.

At the same time MHI took a step closer to a decision to invest in South Africa's 200 MWe Pebble Bed reactor design. Work on a demonstration plant is underway. As previously reported here last December MHI was approached by PBMR Inc., the South African firm that is planning to build 200 Mw Pebble Bed reactors for domestic use and export. Bloomberg wire service reported this week MHI may purchase a 10% share for $97 million.

MHI to build super size components

The investment in a factory said to cost $450 million to make large forgings would be part of its strategy to receive orders and build two reactors every year over the next decade, a company spokesman told the wire service.

The plant, to be built next to its Akashi plant in central Japan, will have a production capacity of two reactor vessels and two structures, known as internal cores.

Mitsubishi has been pursuing sales of its own 1,700-megawatt reactor, US APWR. It has won an order to build two reactors from Luminant, a subsidiary of Energy Future Holdings Corp of Dallas, the former TXU Corp. The reactor design was submitted to the NRC for review last winter.

MHI also looks to low end of the market

MHI took a step closer to gaining a foothold in a niche of the nuclear reactor market this week with a formal acknowledgment of the pitch for investment from South Africa.

"The company is considering an offer by the South African government to take a stake,'' Hideo Ikuno of Daiya PR, which handles Mitsubishi Heavy's media relations, said in Tokyo. 'The company has yet to make a decision.''

South Africa's government plans to build 24 compact, 200 Mw nuclear reactors by 2020. MHI is designing and building the core barrel assembly and a helium turbine generator for Pebble Bed Modular Reactor. The plant will use helium to cool the reactor and drive the turbines.

A similar reactor design is being pursued in the U.S. as part of the "Next Generation Nuclear Plant."

Areva signs $2.7B contract for MOX plant at SRS

U.S. Department of Energy is funding the project which has global significance

AREVA announced this week that its joint venture Shaw AREVA MOX Services, LLC and the U.S. Department of Energy (DOE) have signed an agreement for construction of the Mixed Oxide (MOX) Fuel Fabrication Facility at the Savannah River Site (SRS), located in Aiken, South Carolina.

Medieval alchemists who wanted to convert lead into gold would understand the intent if not the physical process of converting weapons grade plutonium into fuel for commercial nuclear reactors. The facility will remove impurities from surplus weapon-grade plutonium and mix it with uranium oxide to form MOX fuel pellets for reactor fuel assemblies. The assemblies will then be used in commercial nuclear power reactors.

Through this $2.7 billion agreement DOE is exercising the construction option that was included in the MOX Fuel Fabrication Facility contract signed in 1999. The agreement’s scope includes the actual construction of the main MOX facility and all support facilities; cold start-up of the MOX plant; and continued support of Nuclear Regulatory Commission (NRC) licensing activities for the project. Work began at the site in August 2007. Fuel fabrication operations are expected to begin at SRS in 2016.

The design of the 600,000-square-foot facility is based on AREVA’s La Hague and Melox fuel treatment facilities in France. MOX fuel has been used for the past several decades in Europe.

Michael A. McMurphy, [left] president and CEO of AREVA Inc., said, “We are proud to sign this agreement with the Department of Energy for the MOX facility, which will be the keystone of one of the most important nonproliferation programs currently underway in the world. Through this program, the Shaw-AREVA team is helping the United States achieve the disposition of 34 metric tons of surplus weapon-grade plutonium by converting it into fuel that will be used to generate electricity.”

SRS contract follows closely a similar deal in Japan

This is the second contract of its kind signed by the French nuclear giant. On April 28th Areva signed a contract to supply MOX fuel in Japan for use in commercial nuclear reactors.

Through this contract with Kansai, a leading utility, AREVA will supply the utility with 16 MOX fuel assemblies for units 3 and 4 of the Takahama nuclear power plant, located in Fukui Prefecture of Japan.

The contract follows the renewal of Japan’s recycling program. In 2006, AREVA signed agreements to supply MOX fuel to three other Japanese utilities: Chubu, Kyushu and Shikoku. According to World Nuclear News Japan's Federation of Electric Power Companies has said that all of its nine members would use plutonium as MOX fuel in 16-18 reactors from 2010 under the pluthermal program. About six tonnes of fissile plutonium per year is expected to be loaded into power reactors.

The plutonium recovered from the treatment of Kansai’s spent fuel at AREVA’s La Hague plant will be recycled at its MELOX facility (briefing) and sent back to Japan in the form of MOX fuel assemblies. AREVA’s MELOX facility, has been fabricating MOX fuel assemblies for nuclear power plants in various countries since 1995.

Political history of the South Carolina plant

The U.S. has an agreement with Russia to convert 34 tons of weapons-grade plutonium into mixed-oxide fuel (MOX). The U.S. plan now plans to go beyond the joint goals of the agreement and take plutonium from dismantled nuclear warheads. The U.S. is providing Russia with $400 million in assistance to help with their part of the program.

Russia plans to use its MOX fuel in fast breeder reactors. According to a report published in World Nuclear News last October, one FBR already operates at Beloyarsk (unit 3), supplying 560 MWe to the grid, while Beloyarsk 4 is under construction now. This 800 MWe FBR should operate from 2012 and is planned to use all 34 tonnes of weapons plutonium during its life.

In November 2007 Energy Secretary Samuel Bodman and Sergey Kiriyenko, director of Russia's Atomic Energy Agency, Rosatom, in a joint statement outlined a "mutual understanding" as to how Russia's plutonium would be disposed of and reiterated both countries' commitment to the program.

The agreement "reflects measurable progress towards disposing of a significant amount of weapons grade plutonium in Russia," Bodman said.

William Tobey, (left) deputy administrator at DOE's National Nuclear Security Administration, said in an interview with the Associated Press that the agreement should resolve some of the key concerns in Congress and keep the U.S. program on track.

"We nailed down some important details," said Tobey.

According to AP, a key part of the deal is a promise from the Russians that the reactors used to dispose of the plutonium will be modified to burn more than they produce and that the plutonium they produce will not be weapons grade.

The plan is positioned as a nonproliferation program, but disposition of the weapons grade plutonium slated for the MOX fuel plants in both countries is expected to take several decades and cover only a fraction of the inventory.

Former Sen. Sam Nunn, co-chairman of the Nuclear Threat Initiative, a nonproliferation advocacy group, called the agreement a "major advance toward achieving the elimination of enough plutonium to make more than 8,000 nuclear bombs."

The agreement calls for 34 metric tons of Russia's excess plutonium to be turned into a mixed oxide, or MOX, fuel and then burned in its existing BN600 fast-neutron reactor and in a larger version, the BN800, once it is built. It also calls for continued U.S. help for Russian development of a more advanced gas-turbine reactor that could speed up the disposition.

Opposition in the Blue Ridge

Not everyone is happy with these developments. Two environmental groups, and the Union of Concerned Scientists (UCS), have vigorously opposed licensing and construction of the MOX fuel plant at SRS.

A group called Nuclear Watch South and another called Blue Ridge Environmental Defense League, tried repeatedly to use court actions to stop the construction agreement. Their expert witness is Edwin Lyman who's hostility to nuclear energy is well known.

What has the two groups particularly spun up are plans by Duke Energy to use MOX fuel in two of its commercial nuclear power plants - McGuire and Catwba near Charlotte, NC.

Ed Lyman, (left) the nuclear expert at UCS, told the news media last Fall use of the relatively small BN600 reactor "will put Russian plutonium disposition on the slow track" because the reactor can burn only about three-tenths of a ton of plutonium a year, and the larger reactor has yet to be completed.

Lyman said "this is a total retreat from the original concept" which would have disposed of the plutonium in larger light-water reactors, an option he says the Russian rejected.

He neglected to mention the Russian reactor is under construction and will begin operation in 2012 four years before the U.S. plant has a hot start-up.

For its part the Department of Energy issued a rare rebuke to the three environmental groups. In a statement from NNSA, which operates SRS, spokesperson Julianne Smith said,

"We are disappointed that this group continues to make frivolous and unsupported claims about this important nonproliferation project that will not only get rid of nuclear waste material but also bring local jobs to the community."

More recently Frank N. von Hippel, a major authority on nuclear nonproliferation, wrote an article published in the April 2008 issue of Scientific American in which he also criticized plans for the MOX fuel plant.

Despite these opponents, the U.S. and Russia see the reduction of the threat of nuclear weapons being used as the primary benefit of the program.

No MOX in U.K.

The Guardian newspaper reported in March 2008 a nuclear plant built at a cost of £470m to provide atomic fuel to be used in foreign power stations has produced almost nothing since it was opened six years ago, the government has admitted. Plant managers have been working in circles trying to fix technical problems

The mixed oxide facility at Sellafield in Cumbria was originally predicted to have an annual throughput of 120 tonnes of fuel.

The energy minister, Malcolm Wicks, has admitted in response to a parliamentary question that it had managed only 2.6 tonnes in any one 12-month period between 2002 and 2006-07.

According to the Guardian the British Nuclear Group has been forced to meet the needs of Swiss and other contracted customers for MOX fuel through buying alternative supplies from France and Belgium.

On the Web

World Nuclear Association - Mixed Oxide Fuel

Scientific American - MOX fuel process

Russ Brown at Idaho Falls City Club May 30th

"Energy, From Prehistoric Cradle to Imminent Grave"

The City Club of Idaho Falls invites the public to a luncheon with Russell A. Brown. He will discuss our future dependence on oil. Topics covered include

• What are our best alternatives?
• What must be sacrificed?
• What decision must be made?
• What actions must be initiated?
• When, who, and how?

In an email note Brown told me . . .

"My presentation has less to do than running "out of gas" than it does with the fundamentals of our impending problems, the rate at which they will occur, and the decisions/actions that we must make/take. All of the latter are made most difficult by the nature and structure of the various parts of our government."

The event will take place Friday, May 30th in Idaho Falls at University Place (map) in ISU's Bennion Student Union building from 12:00 Noon to 1:30 PM. Lunch is $15 and gallery seating is free.

RSVP required via phone 208-227-1702 or email ifcityclub@gmail.com

The event is sponsored by the Idaho Humanities Council and the City Club of Idaho Falls, ID

Russ Brown is a retired chemical engineer who worked at the Idaho National Engineering Laboratory. He is a consultant on energy issues.

NEI tackles "stubborn facts" in Chicago

Nuclear energy trade group meets to assess the winds of climate change

The Nuclear Energy Institute (NEI) has its work cut out for it. With its members operating a fleet of 104 nuclear reactors and the number of new applications planned to be submitted the the NRC increasing every month, the group's annual meeting on May 6th offered a valuable opportunity to hear what's on the mind of the industry's leadership. From speeches given at the Chicago the nuclear renaissance looks a lot more challenging in terms of what it will take to deliver new plants in the U.S.

The theme of the conference, which emerges from what was said there, is that any credible strategy to address climate change and increasing demand for electricity requires nuclear energy to be part of the portfolio of technologies needed to reduce carbon emissions. This stubborn fact is clearly the touchstone of the meeting.

John Adams, the 2nd U.S. President, is famous for among other things a realistic appraisal of his times especially the political and economic winds of change that affected the new republic. His most famous quote on this subject is often cited by people and organizations facing new challenges. Adams said,

“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of the facts and evidence.”

Two speeches addresses the "stubborn facts" of climate change and the role nuclear energy has in facing this global challenge. The first is by NEI CEO Frank Bowman and the second is by NEI Chairman John Rowe who is also the CEO of Chicago-based Exelon. I wasn't at the conference, but the speeches are online. Here are some highlights.

Bowman - the "unmistakable role" for nuclear energy

In his opening address to the conference, NEI CEO Frank L. (Skip) Bowman (right) said it is clear climate change will dominate the national debate over energy and environmental policy in 2009 and beyond. It won't matter who is elected president, Bowman said, nuclear power has an unmistakable role "as a strategic part of the portfolio of technologies required to reduce carbon emissions."

Bowman told the 400+ persons in the audience there are gaps in government policies and public perceptions about nuclear energy which he said "must be filled with facts."

"We have gaps between the scale of investment required to rebuild our electric infrastructure and state and federal policymakers' perception of that scale," Bowman said. "We have gaps between the policy support that will be required to meet electricity demand in a carbon-constrained world and what some federal and state politicians are currently prepared to provide."

Bowman said the nation needs 25-30 new nuclear plants to start to make a dent in the problem of carbon emissions. The problem of climate change will not go away if we ignore it Bowman said. Investment capital is needed to build these plants as well as new electric transmission systems.

Meeting the electric sector's huge investment needs will require a partnership between the private and public sectors, he said. Bowman emphasized the need for government policy and financial support.

"The modest loan guarantee program authorized by the 2005 Energy Policy Act was a step in the right direction, but it does not represent a sufficient response to the urgent need to rebuild our critical electric power infrastructure. We may need something new and different and more expansive," Bowman said. He cited as an example Sen. Pete Domenici's proposal to create a "clean energy bank," a government corporation that would ensure that capital flows to critical infrastructure development in the electric sector.

Rowe - realistic about the "nuclear renaissance"

In his keynote address to the NEI conference, John Rowe, the CEO of Exelon, (left) said he did not come to Chicago to "be a cheerleader." Like Bowman he cites "stubborn facts" about the prospects for building new nuclear power plants.

His "realistic expectations" are that four-to-eight plants will be built by 2016 and if they come in on schedule, within budget, and without major licensing issues, then a second wave of at least an equal number will be under construction by the time the first wave reaches commercial operation.

A key success factor for these two waves of new plants will be investments in the supply chain of nuclear power plant components. He cited Alstom's decision to invest $200 million in a facility in Chattanooga, TN, to build turbines. He also noted that in the last several years enrollment in undergraduate nuclear engineering programs has quadrupled from previous levels.

The long-term outlook for nuclear fuel is positive Rowe said with new uranium resources coming to market, and new enrichment technologies and plants being developed.

However, he cautioned that the industry must acknowledge that new nuclear plants are high-cost, capital-intensive efforts and may exceed the market capitalization of the firms that want to build them.

"These costs are daunting, by any measure, and clearly represent a financing challenge to the electric power industry."

His answer is that the industry must find new ways to share the financial risks. He mentioned that French and Japanese export credit agencies are "keenly interested" in participating in the financing of new nuclear power plants in the U.S.

The bottom line, says Rowe, is that a "stubborn fact" faces the new administration the follows the November elections.

"It is simply not possible for rational policymakers to think we can solve our national goals for economic security, energy security, or environmental security without a large block of new nuclear power plants."

On the Web

NEI 2008 Chicago conference presentations