Sunday, February 8, 2009

Sweden soars to center of new nuclear movement in Europe

The country will overturn a three-decade ban on new plants

Lightning bolt clear skyIn a stunning reversal, over the objections of left-wing green legislators, Sweden has determined it will overturn its long standing ban on new nuclear power plants. The unexpected news hit like a bolt of lightning from a clear blue sky.

The Wall Street Journal reports the impetus for the change is the European gas crisis which took place in January. The unprecedented change in policy came as the country’s political leadership realized the security of its energy supply was at risk.

Sweden has ten nuclear power plants (map) producing 9 GWe of power. It had 12, but closed two after voting in 1980 to eliminate all of them. Now Sweden will replace the plants as they come to the end of their useful life. The country’s political leadership realized it had no viable alternative to replacing them with other fuel sources. Getting natural gas from Russia seemed the least likely of its available alternatives.

According to a report in the New York Times, Ola Altera, state secretary for enterprise and energy said, “It’s quite a big step for us. Everyone has move their preferred positions to reach this compromise.”

Minority party tips the balance

maud0olofssonThe Associated Press reported that the agreement was made possible after a compromise by the Center Party, a minority group in the current ruling coalition, which has long opposed new nuclear power plants.

Party leader Maud Olofsson (right) said, “I’m doing this for the sake of my children and grandchildren. I can live with the fact that nuclear power will be part of our electricity supply system.”

Energy security is the key issue

The New York Times also points out that both Sweden and the U.K. are in similar positions. Their aging nuclear power plants provide base load demand. Only new nuclear plants can fill the need for electricity generation capacity.

Luis EchavarriLuis Echavarri, (right) Director General of the Organization for Cooperation and Development (OECD) Nuclear Energy Agency, told the WSJ, the “spat” over natural gas supplies between Russia and the Ukraine, which affected much of Europe, “helped people understand what security of supply means . . . and how risky it is to be dependent on imports for your energy needs.”

He told the New York Times the similarities between Sweden and the U.K.are that they “have had to face a situation the electricity they generate from existing reactors would be extremely difficult to substitute for anything else but nuclear.”

Political fight not over yet

Mona_SahlinSweden’s powerful Social Democrats oppose the move. Party leader Mona Sahlin (right) told the Swedish news media the decision is “short-sighted.” She added, “I am not convinced the future of nuclear energy policy calls for nuclear power.” She vowed to make it a campaign issue when elections are held in September 2010.

However, she may have a tough fight on her hands. Swedish public opinion polls have shown rising support for nuclear energy due to the lack of viable alternatives. World Nuclear News reports a majority of Swedes responding to public opinion polls favor nuclear energy.

Renewables can’t fill the gap

Sweden gets about 40% of its electricity from hydropower, but renewables have dropped 10% in the past decade as a factor in the overall energy mix. At OECD Luis Echavarri cited the ”huge technical challenges” that might make it impossible for Sweden to provide the same quantities of power (9 GWe) using renewable sources. He added that using coal or natural gas would make it much harder for Sweden to meet its goals to reduce greenhouse gas emissions.

He said that his agency predicts that share of nuclear power in the global power mix will rise from 16% today to 22% by 2050.

natural_gasElsewhere in Europe, Italy is moving towards replacing some of its planned new coal-fired power plants with nuclear energy. The situation in Germany is less certain, but Chancellor Andrea Merkel returned from the G-8 meeting in Tokyo in July 2008 with a new determination to change her country’s planned phase out of its 17 nuclear power plants. Both countries import about one-third of their natural gas from Russia which has turned out to be an unreliable fuel supplier.

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China sets nuclear energy goal of 70 GWe by 2020

It is a 30 GWe increase over previous targets

Yangijang nuclear under constructionAccording to World Nuclear News and the Guardian in London, China plans to spend $85 billion to increase the share of its energy mix to 5% nuclear in just 12 years. China is reported have plans to break ground for 16 new reactors in the next three years. According to a news report from China Central Television (CCTV), China currently has a total of 8.4 GWe of new nuclear plants already under construction.

Currently, China has 11 operating nuclear power plants that provide 9 GWe of electricity or 1% of the country’s energy needs. To put that number in perspective on a per-capita basis, it is the same amount of nuclear energy generation capacity as Sweden which has a population of 9 million. China’s estimated population is 1.33 billion.

China has become one of the world’s most energetic developers of atomic energy inking deals for eight new reactors in the past two years with Westinghouse, Areva, and Atomstroiexport. The country is also building an indigenous version of a 1,200 MW reactor.

Zhang GuobaoAccording to a January 2009 report on atomic energy in China, published by the World Nuclear Association, the country aims to become self-sufficient in reactor design and construction, as well as other aspects of the fuel cycle. Also, electricity demand is growing very rapidly. China is starting to rely heavily on imported uranium to fuel its nuclear power program.

The rapid increase in the size of the nuclear energy plan is part of a central government infrastructure spending drive that amounts to $586 billion. Zhang Guobao, (right) director of China's National Energy Administration, is reported to be the source of the news on the new levels of investment in atomic energy.

According to English language version of the China Daily, an official Chinese news outlet, Fu Manchang, (right) secretary-general of the Chinese Nuclear Society, said, “China is in dire need of more nuclear power plants, especially in the southern provinces that are more economically developed.”

Fu ManchangHe added that the country’s need to control carbon emissions means it has to increase its nuclear generation capacity. He cited the deal made last year to build four Westinghouse AP1000 reactors as an example of the new energy investments.

According to the China Daily, officials did not comment on the specific locations of the new nuclear energy projects, but they may involve Sanmen of Zhejiang province, Yaogu in Guangdong province and Haiyang and Rongcheng in Shandong province, as indicated by Zhang.

Hat tip to Brian Wang at Next Big Future

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India opens doors for nuclear energy

French and Russian firms are in with major deals

ElephantAreva, the world’s biggest manufacturer of nuclear reactors, has signed a deal with India to sell at least two and possibly six 1,600 MWe EPR nuclear reactors according to a report by Bloomberg wire service.

The reactor deal is worth an estimated at $6-9 billion for the first two reactors. They will be built at Jaitapur in the western state of Maharashtra. Significantly, deal for the Areva EPRs comes with a side agreement for supply of nuclear fuel for the lifetime of the plants, perhaps as long as 60 years. Separately, Areva has signed an initial deal with NPCIL to supply 300 tonnes of uranium to India to use in its civilian nuclear reactors.

At the same time the Press Trust of India reports that Russian firm TVEL will sign a $780 million deal for nuclear fuel for atomic energy plants. Russia will supply 2,000 metric tons of fabricated nuclear fuel pellets.

Currently, Russia is building two 1,000 MW VVER reactors at Kudankulam. India has signed a deal to have Russia build four more for an additional 4,400 MW at the same location following a state visit last December by Russian President Dmitry Medvedev.

India has also signed an agreement with Kazakhstan on supply of uranium and is planning to ink a pact with Canada’s AECL for resumption of nuclear commerce.

India signs IAEA inspection agreement

IAEA_logoIndia this past week signed a key safeguards agreement with IAEA to allow inspection of additional civilian reactors according to a report in the Hindu and the Press Trust of India.

The pact between India and the U.N. atomic watchdog was inked in Vienna by IAEA Director General Mohamed ElBaradei and Indian Ambassador Saurabh Kumar. India currently allows inspection by the IAEA in six civilian nuclear reactors under safeguards agreements concluded between 1971 and 1994.

The agreement with the IAEA was a pre-condition for the implementation of the India-U.S. civil nuclear deal and allows the 45-member NSG to supply material and technology for India's ambitious nuclear power program.

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Exelon’s hostile takeover of NRG stalling out?

A big NRG shareholder says the all-stock deal isn’t worth it

hostile-takeoverA major shareholder of NRG (NYSE:NRG), Solus Alternative Asset Management LP, based in New York, has balked at selling its stake in NRG to Exelon (NYSE:EXC) as part of that firm’s all-stock effort to take over the utility. It will likely slow down Exelon’s efforts to take over NRG.

According to a report in the Chicago Tribune, Solus, which owns 6% of NRG’s stock, Christopher Pucillo, president of Solus Asset Management LP, sent a letter to NRG Chairman Howard Cosgrove saying the Exelon offer does not maximize shareholder value. He called Exelon’s bid “highly conditional and undervalues NRG.”

Solus also rejected Exelon’s claim that its ownership of 45.6% (106 million shares worth $2.67 billion) of NRG’s stock was a sign of support for the deal. Solus said Jan 29 that a significant number of the stockholders in NRG also have substantial holdings in Exelon.

“To the extent that NRG holders who have tendered into the current offer have more invested in Exelon, their decision to tender may well represent a judgment that the offer is favorable to Exelon, rather than NRG.”

More corporate intrigue

exelon logoAccording a Jan 31 report in the Chicago Tribune, Exelon has named nine candidates for the NRG board. The plan is a new set of directors will pressure NRG to accept its $6.1 billion takeover bid. At the NRG annual meeting in May, Exelon plans to nominate four directors and propose enlarging the board to 19 from 12.

It would then nominate five candidates to the expanded board, but this more would still leave Exelon without a majority on the NRG board. However, the Chicago Tribune pointed out that strategy would prevent Exelon from triggering a change-of-control requirement that NRG repay a significant amount of its nearly $8 billion in debt.

The NRG board responded in a statement that Exelon "is attempting to dilute NRG's board of directors and NRG stockholder value, while attempting to take all the value for Exelon's stockholders."

In November NRG turned down Exelon’s offer of 0.485 shares for each share of NRG stock saying it undervalued the company. Exelon then directly approached NRG’s shareholders.

On Feb 4 shares of Exelon were up $1.14, to $57.91, in afternoon trading, while shares of NRG were up 47 cents, to $24.79.

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Western lands uranium gopher for 02/08/09

Ship's telegraph indicates all stop

gopher[This blog post is an edited version of an article published in Fuel Cycle Week, V8;N311 01/21/09 by International Nuclear Associates, Washington, DC]

There has been virtually no movement in the stock prices of nine uranium companies being followed in an informal collection of listings. The data show that if a hypothetical investor had 100,000 shares of stock in each of the nine firms, the total value of the portfolio would have increased by a very small amount of 0.8% or just $3,000, against $397,000 in holdings, over the past two weeks.

A broad generalization from these data indicates an investor with $400,000 could find much better returns in bank bonds or U.S. Treasury bills than by investing in uranium stocks. According to the New York Times, two-year corporate bonds from Morgan Stanley and Goldman Sachs closed at 3.25% on Jan 30. Five-year U.S. Treasury Bonds were at 1.87.%

Western Lands Uranium 20090130

There was some good news. Three of the nine stocks (TSE:PWE; AMEX:URZ, and TSE:URE) moved well above 20% of the value of their 52-week high, but this movement is mitigated by the fact that 52-week highs are descending across-the-board for U.S. and Canadian exchanges as the early effects of the current recession on stock prices becomes visible in the data.

Paradoxically, two of the firms (AMEX:URZ; AMEX:UEC) which had good news to report, and are traded on AMEX, then lost ground over the past two weeks. However, these loses can't be attributed to general market conditions. According to the New York Times, the AMEX composite index moved above 1,400 over the past two weeks and closed at 1,420 on Jan 30. Maybe it was an unusual display of northern lights over Toronto?

Overall, none of the firms tracked in this informal portfolio have stocks worth more than $1.00 which limits their ability to raise funds via public offerings. Private placements will still likely be the path in for new investors willing to take a chance on uranium firms nearing production or in production in western states.

Uranium isn't the only mining metal commodity affected by the global economic downturn. The Houston Chronicle reported Jan 20 that unwanted copper, gold, bauxite (aluminum), and iron ore are piling up or being left in the ground.

"Expect inventories to get bigger and expect a series of cutbacks," said Andrew Martyn, a portfolio manager who works the mining industry from Toronto-based Davis-Rea Ltd. He said manufacturing processes for steel and other products, that use these minerals in China, which was a key center of demand, "have come to a grinding halt."

Grijalva's Grand Canyon bill is back

The uranium industry is also under attack from the environmental community newly emboldened by the inauguration of a President who has made significant campaign promises to green groups. In Arizona Rep. Raul Grijalva (D-Ariz.), who tried mightily but failed to leverage his campaign against uranium mining near the Grand Canyon into an appointment as Secretary of Interior, has re-introduced legislation prohibiting new mining claims, exploration, and mining, across one million acres of public land adjacent to the park. The bill focuses on the Tusayan Ranger District in the Kaibab National Forest.

“We have a responsibility to protect the Grand Canyon,” said Grijalva. “The federal government and mining companies should not propose new mining when they still have not adequately dealt with the cleanup of old uranium mine sites on tribal lands and other lands around Northern Arizona that are causing ongoing health problems.”

“Congress has been asleep at the wheel in failing to address this issue by reforming the out-dated mining law from the 19th century that still allows people to stake claims and mine without paying any fees for the minerals they extract or cleaning up the land after they’ve mined. Those of us supporting reform will try again this year to pass meaningful changes to the mining law. In the meantime, it’s critical that this bill to protect the Grand Canyon move forward,” said Grijalva.

Since 2005, approximately 2,100 new uranium claims and dozens of exploratory drilling projects have been started in this area which is a historic mining district. One project is only a few miles from the Grand Canyon Park visitor center.

Last July the House Committee on Natural Resources passed a resolution directing then Secretary of the Interior Dirk Kempthorne to withdraw the one million acres of public land. The action took place under the authority of a little used section of the Federal Lands Management & Policy Act. Kempthorne refused to acknowledge the legal standing of the congressional action and continued to authorize uranium exploration activities in the region. Subsequently, three environmental groups filed a lawsuit in federal district court seeking legal relief. Former Arizona Governor Janet Napolitano, now the head of homeland security for the Obama administration, weighed in at one point with a letter to Kempthorne in March 2008 citing threats to water quality in the Colorado River due to "the current uranium boom."

The Sierra Club says it is looking for action from the new Secretary of Interior Ken Salazar, a former Democratic senator from Colorado, who they want to enact an emergency withdrawal of public lands in the region. Taylor McKinnon of the Center for Biological Diversity, one the groups involved in the litigation, said, "We are looking for permanent protection for the Grand Canyon."

So far there has been no word from Salazar about the issue

Uranium Energy Corp (AMEX:UEC) has announced Inferred Resources of 1.3 million lbs U3O8 at Nichols Project in South Texas. The company has received an independent N I 43-101 technical report for the Nichols Project, Karnes County, Texas, that estimates an inferred mineral resource of approximately 900,000 tons of U3O8, at an average grade of 0.07% or 1,307,000 lbs. Assuming further drilling confirms the resource, the company said it will proceed to develop an ISR mine at the site.

The Nichols property consists of 1,041 acres of contiguous leases located about six miles south of the town of Falls City, Tex. The Nichols lease is approximately 50 miles from the company's Goliad ISR Uranium Project. The firm said that any uranium extracted at Nichols would be processed at the Goliad plant.

Energy Fuels (TSE:EFR) has amended and re-filed five NI 43-101 reports for its properties in western Colorado including the Whirlwind and Energy Queen mines. The impetus for the change is a random audit of the reports by the Ontario Securities Commission (OSC). The principal impact of the changes is to reduce the total "Inferred Resoruce" category by 1.2 million lbs U308 and by 5.4 million lbs V2O5 from the values originally reported. The Measured and Indicated Resources remain unchanged by the audit.

In its audit, the OSC raised a number of material objections to the 43-101 reports filed by Energy Fuels. Topics requiring correction included Energy Fuels justification for various cut-off grades used in the reports and definition of "grade thickness." The OSC also objected to the use of the term "geologically inferred resource" which is a term that is prohibited under 43-101. OSC wrote in the audit that it was "skeptical" of the validity of much of the inferred resource as reported by Energy Fuels.

As a result of changes to all five 43-101 reports, Energy Fuels now says it has a combined 2.34 lbs U3O8 and 7.88 million pounds V2O5 for all five of its properties covered by the audited reports.

Strathmore (CVE:STM) said it is on schedule to submit a permit application in Fall 2009 for the Roca Honda mine in the Grants mining district of New Mexico. The mine is a joint venture between Strathmore and Japanese conglomerate Sumitomo. Strathmore completed a NI 43-101 resource calculation for the mine with an estimated a Measured and Indicated mineral resource of 17,512,000 lbs. U3O8 contained within 3,782,000 tons at an average grade of .23% U3O8. An additional 15,832,000 lbs. at an average grade of .17% U3O8 are estimated as an Inferred mineral resource. Strathmore is also developing alternatives for a new uranium mill at the site as part of the joint venture.

Cameco (NYSE: CCJ) has more headaches with the proposed expansion of its Crowe Butte mine near Chadron in the far northwest corner of Nebraska. The Nuclear Regulatory Commission's Atomic Safety and Licensing Board issued a 55-page ruling on Jan 27 that Native American groups have standing to intervene in the license proceedings. The board ruled that new allegations with respect to issues related to contamination of groundwater with arsenic, and related health effects alleged to be related to current mine operations, may be litigated by outside parties.

The board said the issue of foreign ownership of the mine by Cameco, a Canadian firm, was material to the hearing. Cameco disputed this issue, but the Board said that the firm had not fully disclosed foreign ownership on its application. The board also agreed with interveners that the issue of enforcement of U.S. uranium mining regulations on a foreign-owned mine was material to the license proceedings. However, the board did not write a conclusion about the issue. Cameco operates a U.S. subsidiary that is listed on the New York Stock Exchange (NYSE:CCJ).

Finally, the board said it would hold future hearings with the objective of having greater transparency to allow for participation of all interested parties. The Western Nebraska Resource Council, an environmental group, is also raising similar issues about expansion of the mine.

According to Cameco, the Crowe Butte mine has proven reserves of 5.9 million pounds U3O8 and annual capacity of 1 million pounds U3O8; production was 0.7 million pounds in 2007. It employs about 65 people.