Uranium

The Global Energy Market

For both political and practical purposes, industrialized nations are increasingly focused on finding alternative energy sources to reduce their reliance on fossil fuels. Natural and geopolitical supply disruptions, global warming concerns, deregulation and price volatility are all contributing to accelerated technological exploration. Moreover, rising demand for power, especially from exploding economies like China and India, will put ever increasing pressure on the global energy supply chain. Even in the United States, demand is expected to grow by 50% in the next 20 years.

The resulting gaps in the global energy grid have prompted a re-visitation of Nuclear Power. One of the only emissions-free sources of electricity in wide use today, Nuclear Power is increasingly viewed, even by environmentalists, as the only practical, large-scale alternative to oil and gas. Nuclear power provided nearly 17% of the world's electricity generation in 2006, second only to coal. There were 441 nuclear power plants in operation in 2006 in 31 countries which consumed 173 million pounds of Uranium. Of the total Uranium consumed in 2006, however only 90 million pounds came from operating mines, with the balance derived from secondary supply sources such as Highly Enriched Uranium from dismantling nuclear weapons and inventory draw down.

ROLE OF NUCLEAR ENERGY IN WORLD ELECTRICITY GENERATION

Thirty nuclear power plants are under construction in 11 countries, mainly in Asia, and the construction of another 34 is being planned in the near future, with a total of 130 new reactors planned in the next 15 years. According to the World Nuclear Association, China, India and Russia are expected to dramatically increase their nuclear capacity within the next 15 years.

By 2020, however, dwindling secondary supply sources will cover only about 15% of Uranium demand, with the balance coming from newly mined and processed Uranium. Current and planned mines will not be adequate to supply the projected demand for primary Uranium supply - the need for these new supply sources is a foregone conclusion. Concern about where the Uranium will come from has been a factor in the nearly nine-fold increase of the Uranium price in the past eight years.

International Nuclear expects that global uranium requirements will increase to 185 million pounds by 2010, reaching 202 million pounds in 2020, compared to a current 173 million pounds.

GLOBAL URANIUM DEMAND OUTPACES SUPPLY PRODUCTION

URANIUM BOOM

High oil and gas prices will sustain the Uranium boom. High oil and gas prices appear to be here to stay, with oil prices touching near $130 US per barrel, and one of the best competitive options to generate electricity is to build nuclear power plants. Nuclear power plants are a long term solution to fossil-fuel-fired electricity.

LONG TERM INCREASE IN PRICE OF URANIUM, DRIVEN BY RAPID INCREASES FROM 2004 TO 2007

All power plants - including nuclear - work alike. Basically, the fuel (whether coal, gas or Uranium) heats water and turns it into steam which turns a turbine which drives the shaft of a generator to produce electricity.

SCHEMATIC

The biggest difference is that nuclear power plants don't burn fossil fuels - or anything else. Instead, they split Uranium atoms. That means they don't create acid rain, soot, urban smog or carbon dioxide (the principal greenhouse gas). In OECD countries alone nuclear power plants avoid some 1,200 million tones of carbon dioxide emissions annually. Assuming that all nuclear power plants in the world were replaced by modern fossil-fuelled power plants, CO2 emissions from the world energy sector would rise by about 8%. Nuclear reactors are more fuel efficient than conventional reactors and are emissions free.

URANIUM IS A CONCENTRATED ENERGY SOURCE