Friday, July 2, 2010

Vietnam plans to build 13 reactors by 2030

The government seeks nuclear energy capacity of 15 GWe

vietnam-map[4]The Wall Street Journal reports that Vietnam plans to have 13 nuclear reactors online by 2030 which will account for 10% of the country’s total generation capacity. The announcement came as part of the publication of a development plan signed by Prime Minister Nguyen Tan Dung.

According to the plan, the reactors will be built in eight locations in the central provinces of Ninh Thuan, Binh Dinh, Phu Yen, Ha Tinh and Quang Ngai. According to the plan, the first two reactors will enter revenue service in 2021.

The government estimates demand for electricity is growing by 16% a year. By 2025 the government plans to have half of the planned nuclear energy capacity online. Currently, about 30% of the country’s electricity comes from hydropower, which has a finite ability to expand to meet growth.

One of the reasons the country is placing its reactor in the central provinces is bauxite, the raw ore of aluminum. An April 2009 report in the Economist indicates View Nam has the world’s third largest reserve of it. Rather than just export a basic commodity to China, Viet Nam wants to move up the value chain and launch an aluminum smelting and manufacturing industry to export finished goods to global markets. Huge amounts of electricity are needed to run the basic aluminum smelters and nuclear reactors can supply it.

China will be the country’s first and largest customer for Vietnam’s aluminum products. Also, it will be the source of mining and engineering expertise to develop the bauxite deposits.

The Chinese do not currently export their nuclear reactor designs to other countries which opens the door to the Russians who aggressively market their designs for export.

Russians to build first two reactors

Vietnam inked a deal last December with Russia’s nuclear energy export agency to build the first two 1,000 MW units. Construction is expected to break ground in 2014. AFP reported June 22 the cost estimate for 2,000 MW is pegged at $8 billion.

Vietnam currently has no nuclear component manufacturing capacity nor a trained nuclear engineering workforce to build the reactors. These gaps mean everything needed for construction of the plants has to be imported by the Russians. The WSJ reported that 30-40% of the construction work will be done by domestic firms.

Nuclear safety developments

Nikolay Kutin in VietnamVietnam does not have a mature nuclear safety regulatory body within the government. Vietnam news media reported June 17 that Nikolay Kutin, a Russian nuclear safety expert, said he will lead an effort to strengthen the capabilities of the Vietnam Agency for Radiation and Nuclear Safety and the Vietnam Atomic Energy Institute. Photo: Prime Minister Nguyen Tan Dung (right) welcomes Nikolay Georgievich Kutin in Hanoi on June 17 (Photo: SGGP)

Kutin also said the country must develop its own cadre of nuclear engineers and safety experts to run the plants. He stressed the need to include public access to review of nuclear safety documents, which may be a challenge as the Vietnamese government imposes restrictions on the news media and the Internet.

U.S. prospects depend on diplomacy first then salesmanship

The Financial Times (FT) reported June 18 that Westinghouse and GE-Hitachi had made strong bids to be the first to build reactors in Vietnam. Though they lost that round, the newspaper reported they are in the running for future projects. Before either company can sell reactors to Vietnam, the U.S. must sign a bilateral agreement for nuclear technology exports.

Michael_W_Michalak_State_DeptThe FT reported that U.S. Ambassador to Vietnam Michael Michalak (right) said that such an agreement could be in place by the end of 2010. However, Dr. Ngo Dang Nhan, a Vietnamese government nuclear energy official, complained progress on the agreement was slow going and he said it would hinder the prospects of U.S. firms being able to do business in his country.

The Russians inked their deal with Vietnam, Nhan told the FT, by agreeing to help with nuclear safety after they had a contract to build the reactors. Nhan said the Americans essentially put the cart before the horse with ineffective salesmanship by wanting to set up the regulatory structure first and then offering to build the reactors.

Vietnam’s nuclear energy establishment may have had a predisposition for Russian reactors. While U.S. trade with Vietnam vastly exceeds bilateral trade with Russia, Vietnam remains a socialist country with communist hammer and sickle political orthodoxy retaining a central role in government policy despite its booming market economy and robust commercial relations with the rest of the world.

Prior coverage on this blog

# # #

Milestone – the 1,000th blog post

A nuclear energy blog is a work in progress

Pole_vault_(PSF)When this blog started publication more than four years ago, the nuclear renaissance wasn’t going anywhere fast. There was talk that new license applications would come into the NRC, but it would take until late 2007 for NRG to be the first mover with two reactors for the South Texas Project. It was like an Olympic pole vault jump signifying that nuclear energy was on the comeback trail.

The biggest change in four years is, that despite continued opposition by environmental groups, the Obama Administration is awarding loan guarantees for new reactors and pushing for more. Southern is the first utility to agree to accept one. Three more are expected to follow in its footsteps this year.

In the world of realistic expectations, the first-of-a-kind reactor at the OL3 site in Finland is taking more time and costing more, and neither impact was unexpected since no new reactors have been built in nearly three decades. Lessons learned from that project will speed up construction time and lower costs for new reactors worldwide.

pancakes Meanwhile, China is building new reactors as fast as a short order cook flips pancakes. Four of them are under construction by Westinghouse, which though owned by Japan’s Toshiba, is responsible for many new American jobs.

Small reactors are popping up with backing from venture capital firms. Designs include well-known light water reactor configurations and new, fast reactors with 14-19% enriched fuel and liquid metal cooling systems.

The front-and-back ends of the fuel cycle are getting attention with four new uranium enrichment plants for the U.S. One of the, Urenoc’s Eunice, NM, facility, has a green light from the NRC to start operations.

There is the possibility of management instead of politics as a paradigm for spent nuclear fuel. The nuclear supply chain is ramping up with new component manufacturing plants being built in Louisiana, Virginia, Ohio, and elsewhere.

Demand for new nuclear engineers has sparked a revival of university programs to produce the graduates needed by industry.

blogging The nuclear energy blogsphere has expanded as well during the past four years.

  • See the blog roll in the left panel for a list of nuclear energy blogs and news sources.
  • There are more free information services like World Nuclear News and NEI Smartbriefs.
  • Nuclear blog news is being aggregated by NuclearStreet and the Energy Collective along with interesting dialog about energy technologies and climate change.
  • Social media is having a positive impact on the nuclear industry through instant messages on Twitter, harnessing pop culture on Facebook, and making professional associations on Linkedin and other services.
  • Nuclear bloggers are talking to each other and to the industry about how to tell the industry’s story in a way that makes sense to the public.

I’d like to thank the over 100,000 readers a year who read my blog posts here or through syndication. I owe you a lot for your interest, comments, and ideas. It has been an exciting four years. I am looking forward to continued publication of this blog.

# # #

Thursday, July 1, 2010

Finland approves plan for two more reactors

The country is serious about energy independence and dealing with climate change

parliament_house_helsinki_finland_photo_finland_tourist_boardThe BBC reports Finland's parliament approved the construction of two new nuclear power stations by a vote of 120-72, which indicates the ruling coalition holds a majority on the issue in the 200 member chamber. The bill was opposed by Green League and the Left Alliance. The vote was briefly delayed due to a crowd of several hundred anti-nuclear demonstrators who entered the building.

The two new units will support the country's objective of achieving energy independence from natural gas supplies from Russia. The government said it expects license applications for the reactors by 2014. The two new units could start-up by 2020. The two new reactors, if built, would bring the total fleet to seven units. Finland has four nuclear units in commercial operation that produce about 30% of its electricity.

Parliament's vote referenced proposals by Finnish utility Teollisuuden Voima Oyj (TVO) and by Finland’s Fennovoima Oy to build the two new units. A decision on reactor designs was not on the table. The New York Times reported that the prosposals are for light water reactors to produce 3,200 MW of electricity. According to a report by NucNet, the municipalities of both Simo and Pyhäjoki have said they are willing to host the new plants.

TVO president and chief executive officer Jarmo Tanhua said the vote was “an important milestone towards the EU vision of CO2 neutral energy production”. He added: “Placing greater emphasis on nuclear power and renewable energy sources will help us achieve significant cuts in emissions in electricity production.”

The Bloomberg wire service reported that the government promoted the measure based on its impact on the Finnish economy.

Mauri Pekkarinen“This is a big step for the Finnish economy,” Economy Minister Mauri Pekkarinen (right) said after the decision. “It is clear stimulus that will help jolt the economy out of the apathy that’s been plaguing Finland and the rest of Europe.”

He told the New York Times there would be no public subsidy for the two new reactors which could cost $10 billion. He said the private sector would handle financing of the project.

Finland also depends on biomass (wood) and hydropower for its energy needs. The country is among Europe’s highest per-capita users of electricity due to bitter arctic cold that sweeps across the country in winter.

OL3 status update

The action in Finland comes as schedule delays and cost over runs for the first-of-a-kind reactor at Olkiluoto-3 (OL3) push the start of revenue service to 2013.

Delays and cost over runs at OL3 have hit hard in Areva’s balance sheet. The firm said June 23 it expects to report a loss for the first half of 2010 and will make a [euro]400 million provision for additional costs associated with the Finnish reactor project.

There was some progress at OL3 with the installation of the reactor pressure vessel on June 21. The 420 ton unit was the first of series of actions to install heavy components of the plant. Areva said in a press release steam generators will be installed by the end of 2010.

Areva’s U.S. plans updated

Anne LauvergeonMeanwhile, Areva CEO Anne Lauvergeon (right) told Forbes Magazine in an interview Areva expects Constellation Energy to get a federal loan guarantee in 2010 for a planned U.S. version of the 1,650 MW EPR reactor at Calvert Cliffs, MD. The project is expected to get an NRC license and break ground in 2012.

She also said the company is serious about a long-shot reactor project in Fesno, CA. The state has a three-decade old ban on new reactors in place, but depends on nuclear energy from reactors in Arizona for electricity to power the southern third of the state. The ban says that as long as there is no solution to dealing with spent nuclear fuel, no new reactors can be built in the state.

Lauvergeon visited the farming region in late March of this year. She said if a reactor is built there, the spent fuel will be taken back to France where it will be recycled thus bypassing the core element of California’s ban on new plants.

# # #

Utah’s Blue Castle Project gets $30 million

New York private investment firm stake in nuclear energy project

LeadDogBlue Castle Holdings, the developer of a planned nuclear power plant in Green River, Utah, announced an agreement with LeadDog Capital, a specialist in microcap companies, for private equity funding of $30 million in exchange for common stock in the project. 

The IPO has not yet been scheduled by Blue Castle.  LeadDog has previously made investments in biofuels companies.

The funding will be made available to Blue Castle in a series of transactions over a three-year period. 

Aaron Tilton, CEO of Blue Castle, said in a statement the agreement provides “flexible financing that is tied to our licensing schedule.”

NRC licensing schedule

Blue Castle plans to submit an Early Site Permit Application to the NRC in 2011 and a combined construction and operating license application (COL) about 18 months later.  The cost of preparing and paying for NRC review of these actions could easily cost as much as the entire $30 million. 

Blue Castle has not chosen a reactor design.  By the time the firm files a COL in 2012 or 2013, all of the pending reactor design certifications at the NRC for large units will be done. This gives Blue Castle a wide range of choices.  However, given the time it takes to prepare a COL, it is likely Blue Castle is already having exploratory discussions with reactor vendors. 

Seeking investors a share at a time

raising_capitalTilton has told this blog in prior interviews his plan is to develop a power station with 3,000 MW of power. He’s said elsewhere he has expressions of interest for another 1,500 MW.  Available water supplies in Green River for cooling systems, and economies of scale, suggest a possible tilt toward two of the larger designs rather than three of the smaller units.

Additional financing Tilton has told industry sources, includes selling shares of the new reactors to power utilities in equity stakes of 4-7% of the construction costs. At $3,500/KW, a 3,000 MW power station will cost $10.5 billion making a 3-7% stake worth $315-735 million. 

Blue Castle’s strategy is that by limiting the risk of firms to this level of investment, they are more likely to get them to sign up.  Some investors are also likely to sign power agreements.  Investor interest in the firm will likely ramp up if the firm gets its NRC license.

Tilton said in a statement the firm will “retain a long-term equity position” as a merchant developer of a nuclear power station.

# # #

Tuesday, June 29, 2010

Canadian Uranium – Stalled price tanks stocks

Uranium price likely to remain flat for next few years

falling pricesThis blog post is an edited version of an article published June 17, 2010, V9:N341, in Fuel Cycle Week by International Nuclear Associates, Washington, DC.

It is an axiom in the uranium mining business that a company's stock price is in part a function of the amount of uranium it is capable of producing, now or in the future, and the expected price of that uranium. Canadian uranium miners have learned the truth of that axiom all too well in the past six months. A review of 12 Canadian uranium mining stocks – three producers and nine juniors – show a dismaying trend since December 2009.

Every quarter FCW compiles tracking information on stock prices across a selected list of producers and juniors. The trends for these companies as of June 11, 2010, is an unmistakable dive from prior values. Of the 12 stocks on our list [spreadsheet], seven have seen their prices drop by more than 20% and three have seen their stock prices drop by more than 10%. Only Denison (TSE:DML) managed to keep its stock price steady at CDN$1.35, and one junior, Fission (CVE:FIS), saw a huge leap in its stock price from CDN$0.16 to CDN$0.49.

If you held one million shares of Fission, you picked up a gain of CDN$330,00 just by watching the stock ticker. On the other hand, if you held one million shares of Cameco (TSE:CCO), you suffered a loss of CDN$9.6 million for the same period of December 2009 to June 2010.

Dramatic slide in prices

slide-and-splash The dramatic slide in stock prices over the past six months isn't due to any catastrophic mining event like the flooding at Cigar Lake. Rather, it is due to just the opposite. David Talbot, a securities analyst with Dundee Capital Markets, told FCW the reason is investor indifference due to the price of uranium being stuck at about $41/lb.

"The lack of movement of uranium price is the reason investors are not active. There is no incentive to invest if there is no movement in the underlying commodity."

However, nuclear utilities are benefiting from the low price. While the vast majority of uranium sales take place as part of long-term contracts, U.S. and European utilities have reportedly been buying on the spot market to secure uranium at what today looks like a bargain price - $41/lb.

Some winners among the losers

Fission Energy, which is the only firm on FCW's list which saw a gain in its stock price, announced May 27 new drilling results at its Waterbury Lake site in Saskatchewan. The exploratory drilling work is part of a joint venture with KEPCO, a Korean firm that last December inked a $20 billion deal to build four nuclear reactors in the United Arab Emirates.

Having an Asian partner may have helped Fission, but it was not a plus for CanAlaska (CVE:CVV) which has separate joint ventures with KEPCO and Mitsubishi and saw a 31% drop in its stock price from $0.16 to $0.11/share for the period December 2009 to June 2010.

Being a producer helps

Although Denison reported May 6 a quarterly loss of US$9.1 million for the period ending March 31, 2010, the firm also reported quarterly sales of 267,000 pounds U3O8 at an average price of $56.27/lb which is very close to the long term price cited by Ux Consulting on June 14, 2010. Additionally, the firm said May 6 it expects annual uranium production in the next year to continue at the same rate as 2009 which is approximately 1.6 million pounds U3O8.

Jim Anderson, a spokesman for Denison, told FCW the company's stock price stayed relatively stable, hovering at $1.35/share "because we are a mixture of an exploration and production company."

As far as general trends are concerned, Anderson said "investors are betting on future exploration results as a way to monetize the value of the stock. The low prices, and the spot price is particularly weak, create confusion about how to value stocks."

Anderson said the company's $9.1 million loss was attributable to "cost of production just below the spot price," and strengthening of the Canadian dollar relative to the U.S. The firm reports financial results in U.S. dollars.

Despite disappointing quarterly numbers, Anderson said lower uranium grades and higher production costs in the U.S. were offset, in terms of impact on the stock price, by "excellent prospects at our Wheeler River deposit where we have an aggressive summer drilling program."

Perhaps an indicator of the supply issue for the industry as a whole is Denison's report that as of March 31st it had 525,000 pounds U3O8 in inventory available for sale. That's one-third of its total expected production for the current fiscal year. The inventory is worth $22 million or more than two quarters of revenue at the current pace of sales.

Is change coming and how soon?

What's a uranium mining CEO to do? To raise funds from investors, CEOs must show them the demand for and the price of uranium will go up. Is there hope for this effect on the near-term horizon? Interestingly, one of Canada's largest producers thinks there is.

Penny Buye, Cameco's Director of Market Planning & Analysis, (right) said demand will increase. In a presentation to the RBC Capital Markets Global Mining & Materials Conference on June 9. she also said there is a "lag" between price and production and future uranium prices. (Photo via World Nuclear Organization)

"This uncertainty is a challenge faced by uranium miners when planning new production."

New demand will come from new reactors worldwide. Buye told the RBC conference over the next decade globally there will be 89 new nuclear reactors with 42 in China, 18 elsewhere in Asia, and 12 in India. The U.S. will add 9 new reactors.

Overall, Buye estimates there will be a 28% increase in electricity generating capacity from 390 GW to 498 GW fueled by uranium over the next 10 years. She said each 1,000 MW of new reactor capacity equates to 500,000 lbs U3O8/year in new demand.

However, it isn't clear how that demand would be spread over the next ten years in terms of timing or by region. If anything, the demand is back-end loaded toward the latter half of the period and concentrated in Asia.

Are there any wild cards?

Ed Sterck, a securities analyst with Bank of Montreal, told FCW there are no prospects for significant increases in the uranium spot price for the next few years. He said there is "ample supply coming to market."

Factors which might change this picture include increased demand from China as it starts up new reactors earlier than anticipated and possible changes in tax laws in Australian which could affect all mining in that country, not just uranium.

Sterck said an Australian government proposal could impose a tax up to 57% of the profits from uranium mines. He called it "nationalization by another name."

Sterck said elections slated to take place this Fall may overturn the proposal if the miners are able to make their case to the electorate and help vote in a new government. If the tax is implemented, Sterck said, it could cause some Australian uranium mines to shut down which could significantly impact global markets and drive the spot price up by the factor associated with the losses from shut down mines.

Another wild card is political unrest in any of the third-world producing countries especially in Africa or Kazakhstan could crimp supply.

# # #