Wednesday, August 8, 2012

Cameco Takes 2Q Hit On Falling U3O8 Prices


The firm maintains it financial guidance for 2012

This is my coverage as published in Fuel Cycle Week V11:N483 published 8/2/12 by International Nuclear Associates, Washington, DC

CamecoCameco (TSX:CCO) recorded precipitous drops in revenue and earnings for the 2012 second quarter compared to the first quarter.

The second quarter’s average realized U3O8 price declined 15%, from $49.40 at the start of the year to $42.21 by June 30.

And sales to customers were off by 3.2 million pounds, due to scheduled deliveries being back end loaded to the fourth quarter.

In a conference call with securities analysts on July 27, CEO Tom Gitzel said demand for uranium globally has fallen since the March 2011 Fukushima crisis. He said, however, that sales, revenue, and production for the year are unchanged from previous guidance.

News about risks and the feasibility of new projects seemed to outweigh concerns about current markets based on questions asked by securities analysts during the call.

Two areas garnered the most questions. The first is the U.S. Department of Energy’s plan to sell up to 15% of annual U.S. reactor requirements from its surplus UF6 inventory. The second is the nature of prospects for profits from the Kintyre project in Western Australia.

DOE Surplus Uranium Sales With U.S. uranium requirements of approximately 50 million pounds a year, a 15% slice, represented by federal government sales, would be approximately 7.5 million pounds a year—a 5% jump from the 10% limit set in the Energy Department’s 2008 uranium inventory management plan.

According to the Energy Information Administration, U.S. uranium production in 2011 was just 4.1 million pounds. Cameco executives expressed their unhappiness with DOE’s decision but said “it is what it is and we’ll live with it.”

The surplus uranium, combined with the end of the Megatons-to-Megawatts agreement. Analysts were not excited by this news because uranium spot prices have not seen a corresponding rise as a result. One reason for the pessimism is the follow on contract between USEC and TENEX.

Under the terms of the agreement announced last year, the supply of low enriched uranium to USEC will begin in 2013 and ramp up until it reaches a level in 2015 that is approximately one-half the level currently supplied by TENEX to USEC under Megatons-to-Megawatts. The new contract includes a mutual option to increase the quantities up to 5.5 million SWU, which is the same level as the nonproliferation program.

Unlike that program, the quantities supplied under the new contract will come from Russia’s commercial enrichment activities, rather than from down blending of Russian weapons material. Deliveries under the agreement are expected to continue through 2022. USEC will purchase the SWU contained in the LEU and deliver the uranium feed to TENEX.

Kintyre Delayed

Cameco has completed a prefeasibility study for the Kintyre project, which shows production of 40 million pounds with an estimated mine life of six years. The mineral resource estimate is about 55 million pounds with an average grade of 0.58%. Cameco says to break even at the mine the spot price needs to move north of $67 per pound—a $7 per pound jump from the $60 figure assumed by analysts and $17 lower than current market price.

“The economics of the project are not as favorable as we had hoped,” Gitzel explained during the call. But Cameco is moving on to the feasibility stage and accelerating exploration drilling.

“The aim is to improve the economics of the project by expanding the resource base and have the project ready when the market improves. So I want to emphasize that this is not a production decision but rather the next step in our stage gate process. “We are not going to develop Kintyre at any cost,” he said.

Other Projects

For the Smith Ranch-Highland project in the U.S., Cameco has a bone to pick with state and federal regulatory agencies. It blames delays in bringing new wellfields into production on a “lengthened review process” needed to get decisions out of various levels of government.

At Inkai, increases in uranium production are tied to success of a uranium conversion project. However, there is no timing on the start of construction of a plant. If the conversion plant is built it would be accompanied by a doubling of Inkai production from 5.2 million to 10.4 million pounds per year. However, both Cameco and Kazatomprom recognize the weakness of prices in the conversion market.

Meanwhile, there have been problems with rail transport from the mine to China. Gitzel confirmed what had been rumored for some time: shipments have not made it past the Chinese border. He did not say what the nature of the delay is, but expects the situation to be resolved in a month or two.

On enrichment, Cameco’s equity investment in GE-Hitachi’s laser technology may have to wait a few more years to pay off. Gitzel said it will be another year or so before a decision is made to move to full industry-scale development of the technology.

Japan, China, and Market Demand

Cameco is encouraged by the fact that two nuclear reactors have restarted in Japan. It is a psychological boost. The firm thinks that at least six to seven more units will restart by the end of the year. Cameco executives declined to say whether there has been any slowdown in uranium business with Japanese utilities.

Like the rest of the nuclear vendor world, Cameco is waiting for China to announce restart of approvals of new reactors. The nation has 26 units under construction. Gitzel said he still sees confidence in estimates that China will complete 60 GWe by 2020.

While China has published a new safety plan for its current and planned reactor fleets, the central government has not authorized restarting approvals of new projects.

USEC Q2 Profitability Plunges

USEC logoOn July 31 USEC Inc. (NYSE:USU) reported dismal second quarter financial results. The company posted a loss of $92 million, the result of $85.7 million in development costs for its American Centrifuge project.

In an Aug. 1 conference call with securities analysts, USEC CEO John Welch said project progress is being made with a Department of Energy funded research, development and demonstration program.

So far 50 machines for the first 120- unit cascade of the American Centrifuge effort have been built. Another 90 cascades are planned to complete the facility.

DOE is providing funds to complete the technology design, but current year cash will last only until November. While the agency has promised a total of $300 million in an 80/20 cost share effort, Congress has not yet acted on the request.

Welch said no promises have been made by the federal government for a $2 billion loan guarantee upon completion of the RD&D effort. USEC also announced the appointment of a board of managers to guide the project. It is composed of current USEC investors, a key customer, and several nuclear industry experts.

Welch said with regard to uranium sales, there is one more year of life left in the Paducah gaseous diffusion plant. It will be processing depleted uranium tails under the multi-agency re-enrichment deal involving the Energy Department, Tennessee Valley Authority, Bonneville Power Administration and Energy Northwest.

On the global front, Welch said that the restart of Japanese reactors following the earthquake at Fukushima is taking longer than expected, but he did not qualify that disappointment in terms of specific contracts with Japanese nuclear utilities.

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Virtual alliance created of seven U.S. reactor sites

Plan to share best practices cleared by U.S. Department of Justice

StarAlliance logoNuclear utilities representing 13 reactors and 16 GWe of generating power have formed a virtual alliance to share best practices to improve their overall performance.

While it is not a merger in the traditional financial sense, the new STARS Alliance sought and obtained approval from the U.S. Department of Justice to operate as a limited liability corporation.

The organization is focused on working collaboratively to maximize the strengths and similarities of the seven stations that make up STARS to drive operational, regulatory and financial excellence.

"Our primary focus areas include continued enhancements to safety, increasing efficiency in station operations, performance improvement, sharing operating experience, training and standards. We are focused on initiatives that benefit all member companies,” said STARS Alliance Executive Director Tod Moser. 

The STARS Alliance includes Callaway, Comanche Peak, Diablo Canyon, Palo Verde, San Onofre, South Texas Project and Wolf Creek. All seven stations are Westinghouse pressurized water reactors located in NRC Region IV.

The newly formed entity will work to distinguish its identity and presence within the industry in regard to organizational structure, legal composition and flexibility.

Read the full story exclusively at CoolHandNuke online now

coolhandnuke

Sunday, August 5, 2012

NASA Mars vehicle uses nuclear power source

Idaho National Laboratory built the space battery which will last for years

mars_rover-small1(Reposted and updated 8/6/12 from Nov 2011)

NASA's Mars Science Laboratory mission, which landed safety on Mars August 6, has the potential to be the most productive Mars surface mission in history. That's due in part to its nuclear heat and power source.

The New York Times for Sunday Aug 5 pointed out that the fate of the Mars mission rested on its landing. See also NASA's video animation of the landing sequence.

Follow landing progress at the NASA web page for the Curiosity project and on Twitter @MarsCuriosity

When the rover Curiosity (right) headed to space last Fall, it carried the most advanced payload of scientific gear ever used on Mars' surface. Those instruments will get their lifeblood from a radioisotope power system assembled and tested at Idaho National Laboratory (INL). The Multi-Mission Radioisotope Thermoelectric Generator (RTG) is the latest "space battery" that can reliably power a deep space mission for many years.

The device provides a continuous source of heat and power for the rover's instruments. NASA has used nuclear generators to safely and reliably power 26 missions over the past 50 years. New generators like the one destined for Mars are painstakingly assembled and extensively tested at INL before heading to space.

"This power system will enable Curiosity to complete its ambitious expedition in Mars' extreme temperatures and seasons," said Stephen Johnson, director of INL's Space Nuclear Systems and Technology Division.

"When the unit leaves here, we’ve verified every aspect of its performance and made sure it’s in good shape when it gets to Kennedy Space Center."

The power system provides about 110 watts of electricity and can run continuously for many years. The nuclear fuel is protected by multiple layers of safety features that have each undergone rigorous testing under varied accident scenarios.

The INL team began assembling the mission's power source in summer 2008. By December of that year, the power system was fully fueled, assembled and ready for testing. INL performs a series of tests to verify that such systems will perform as designed during their missions. These tests include:

  • Vibrational testing to simulate rocket launch conditions.
  • Magnetic testing to ensure the system's electrical field won't affect the rover's sensitive scientific equipment.
  • Mass properties tests to determine the center of gravity, which impacts thruster calculations for moving the rover.
  • Thermal vacuum testing to verify operation on a planet’s surface or in the cold vacuum of space.

The system will supply warmth and electricity to Curiosity and its scientific instruments using heat from nuclear decay. The generator is fueled with a ceramic form of plutonium dioxide encased in multiple layers of protective materials including iridium capsules and high-strength graphite blocks.

As the plutonium naturally decays, it gives off heat, which is circulated through the rover by heat transfer fluid plumbed throughout the system. Electric voltage is produced by using thermocouples, which exploit the temperature difference between the heat source and the cold exterior.

More details about the system are in an INL fact sheet

Gale crater marsCuriosity will land on Mars on August 6, 2012 and carry out its mission over 23 months. It will investigate Mars' Gale Crater (right) for clues about whether environmental conditions there have favored the development of microbial life, and to preserve any evidence it finds.

NASA chose to use a nuclear power source because solar power alternatives did not meet the full range of the mission's requirements. Only the radioisotope power system allows full-time communication with the rover during its atmospheric entry, descent and landing regardless of the landing site.

And the nuclear powered rover can go farther, travel to more places, last longer, and power and heat a larger and more capable scientific payload compared to the solar power alternative NASA studied.

"You can operate with solar panels on Mars, you just can't operate everywhere," said Johnson.

"This gives you an opportunity to go anywhere you want on the planet, not be limited to the areas that have sunlight and not have to put the rover to sleep at night."

For more information on the RTG

INL NEWS MEDIA CONTACTS:
Teri Ehresman (at launch site), 208-521-9882, teri.ehresman@inl.gov
Misty Benjamin (at INL), 208-351-9900, misty.benjamin@inl.gov

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116th Carnival of Nuclear Energy Bloggers

It’s a busy week as usual with a focus on the continuing ire of Sen. Harry Reid as well as unrelated nonproliferation issues over nuclear fuel

Nuclear abstractThe Carnival is the collective voice of blogs by legendary names that emerge each week to tell the story of nuclear energy.

If you want to hear the voice of the nuclear renaissance, the Carnival of Nuclear Energy Blogs is where to find it.

The publication of the Carnival each week is part of a commitment by the leading pro-nuclear bloggers in North America to speak with a collective voice on the issue of the value of nuclear energy.

While we each have our own points of view, we agree that the promise of peaceful uses of the atom remains viable in our own time and for the future.

This Week’s Carnival

The integrity of the Nuclear Regulatory Commission and one of its commissioners got attention. Perhaps we thought we were over that with the resignation of Chairman Gregory Jaczko. U.S. Senator Harry Reid removed any illusion that was the case.

Atomic Insights – Rod Adams

Lying under oathRod writes that Harry Reid is confused between “loyalty” and “integrity” – Bill Magwood is a man of integrity.

A Huffington Post interview report titled "Bill Magwood, NRC Democrat, Is ‘Treacherous, Miserable Liar’ And ‘First-Class Rat,’ Says Harry Reid" offers an illuminating view of political thinking coming from inside the Washington, DC beltway.

That way of thinking, in this case, can be traced back to Las Vegas, NV and the mob-influenced power politics that played a role in the Sin City’s development. And nothing happens in Las Vegas, politically, unless it meets with the stamp of approval of the Nevada Gaming Commission.

In the “ethical” behavior code ingrained into people who grow up in that milieu, the word “loyalty” is often confused with “integrity”. NRC Commissioner Bill Magwood is man of integrity whose sense of responsibility towards his oath of office outweighed any implied promise that he would do Harry Reid's bidding merely because Reid supported his nomination to the Commission or to be its chairman.

Four Factor Consulting - Margaret Harding

Margaret Harding examines the accusations that the NRC is a captured regulator, reviewing the mechanisms for potential issues and where the NRC fits. The upshot is that though there are risks, the indications today are that the NRC is and remains an independent agency.

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Nonproliferation issues came to the top of the list of topics this week. All had to do with nuclear fuel rather than bomb making though that is what’s really on the front burner. Are there serious issues or are some anti-nuclear groups just ‘crying wolf?’ Here are three entries

Nuclear Diner - Cheryl Rofer

New State Department Report - Illicit Trafficking of Nuclear Materials Still an Issue

Susan Voss looks at the State Department's report on illegal trafficking of nuclear materials. The situation is better than it was at the breakup of the Soviet Union twenty years ago, but incidents continue.

Data Not Available: SILEX and Proliferation

Cheryl Rofer looks at the questions of proliferation surrounding the granting of an NRC license to GE-Hitachi for the SILEX laser uranium enrichment process. Is "Trust us" a sufficient answer to those questions?

ANS Nuclear Cafe - Paul Bowersox

"Revisiting Reprocessing in South Korea"

Crying wolfA bilateral nuclear cooperation treaty between South Korea and the U.S. has been in place for more than 40 years. South Korea is now a major user and exporter of civilian nuclear energy technology, and is interested in revisiting provisions of the treaty in regard to uranium enrichment and spent fuel reprocessing.

The U.S. is concerned with proliferation considerations. Dan Yurman at the ANS Nuclear Cafe examines the issues in the ongoing negotiations.

Canadian Energy Issues - Steve Aplin

An article in the Bulletin of the Atomic Scientists claims General Electric’s proposed new laser enrichment technology SILEX “could become America's proliferation Fukushima.” Steve Aplin examines the motive behind this hyperbole.

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The NRC, which has commanded way too much of our attention this year, and nonproliferation issues, which seem magically to appear more frequently as well, are not the only things on bloggers’ minds. A broad range of topics is worth as read as well.

Yes Vermont Yankee - Meredith Angwin

Guest Post by Howard Shaffer "Vermont Yankee, What's In It for Us?"

granolaThe state might force Vermont Yankee to close. Vermont distribution utilities decided not to renew their contracts with the plant, Today, the Vermont utilities are not buying Vermont Yankee power. Maybe they think they can keep the lights on with granola?

Consequently, plant opponents ask: "So what's in it for Vermont if Vermont Yankee keeps operating? Why should Vermont give the plant a Certificate of Public Good?" Howard Shaffer shares an excellent set of answers to these questions.

Atomic Show #187 – Women In Nuclear - Rod Adams

Rod Adams interviewed three people who attended the 2012 Women In Nuclear annual conference held in Orlando, Florida. Julie Ezold is the manager of an isotope production program at the Oak Ridge National Laboratory, Sandy DePirro is a member of the oversight group at the Crystal River nuclear power plant, and Savannah Fitzwater is a graduate student at the Colorado School of Mines whose work focuses on nuclear non-proliferation.

NEI Nuclear Notes - Eric McErlain

NEI's Mark Flanagan takes a closer look at the latest Japanese election results and tries to divine what it means for the future of nuclear energy there:

powerpylonAlmost 700 million people in India were without power this week, and it's time for us to consider what the lack of reliable electricity means in the developing world:

CNN crafted an entire report on nuclear energy facilities and drought without talking to the people who own and operate the plants. Here's what they missed:

Anti-nuclear activists in New Hampshire are launching a film festival about the drawbacks of nuclear energy, but NEI's David Bradish crunched the numbers to show what the presence of Seabrook Station has meant for the state:

Australia has long been seen as hostile to nuclear energy, but things may be changing according to NEI.

The California Energy Commission released a study on what rising temperatures will mean for the state's electrical grid. If the report is right, John Keeley wonders how the state will adapt without adding new nuclear generating capacity to the grid:

Next Big Future - Brian Wang

RareearthoxidesIndia’s Department of Atomic Energy (DAE) would permit private miners to process beach sand and supply monazite tailings to the government-owned Indian Rare Earths Limited (IREL) to increase the latter’s capacity to extract thorium and uranium.

The DAE hoped to secure supplies of at least one-million tons of thorium from beach sand processed by private miners, and increase the supply of monazite to IREL.

Canada and China are now working on a project to convert the Qinshan CANDU reactor units to full core use of NUE (natural uranium equivalent) fuel by 2014.

South Korea starts up another reactor and begins construction on another. The Shin Wolsong 1 OPR-1000 unit, construction of which began in November 2007, started up and was connected to the grid in January 2012. The final stages of commissioning tests began on 24 June.

A 'performance guarantee test' confirmed that the unit generates its designed output. KHNP subsequently received approval from the Nuclear Safety and Security Commission for the reactor to enter full-scale commercial operation. Its sister unit, Shin Wolsong 2, is expected to start up next month and enter commercial operation in January 2013.

Using nuclear power instead of fossil fuel will save Japan about $1 trillion

Atomic Power Review - Will Davis

Will Davis covers the story behind the contamination by seawater of numerous plant components at Chubu Electric Power Company's Hamaoka No. 5 nuclear generating plant, including details released by Chubu and present speculation.

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Past editions of the carnival have been hosted at Yes Vermont Yankee, Atomic Power Review, ANS Nuclear Cafe, Idaho Samizdat, NEI Nuclear Notes, Next Big Future, and CoolHandNuke, as well as several other popular nuclear energy blogs.

If you have a pro-nuclear energy blog and would like to host an edition of the carnival, please contact Brain Wang at Next Big Future to get on the rotation.

This is a great collaborative effort that deserves your support. Please post a Tweet, a Facebook entry, or a link on your Web site or blog to support the carnival.

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