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Solid uranium demand picture in the US and Europe

25 Sep 2010 by Jim Fickett.

Asia shows strong growth in uranium demand, and catches the spotlight, yet 75% of demand is in a better-established base in the US and Europe. Demand from that established base will probably also grow, if slowly. One likely source of growth which often goes unnoticed is uprating – increasing capacity at older plants by upgrading equipment. In addition, several countries of Europe that had planned to phase out nuclear power have now reversed their position.

In the past, when I've talked about demand for uranium, I've mostly emphasized the rapid growth in Asia. And this likely growth remains very important. But it is also important that European and American demand remain solid, and that is today's topic.

At present, European and American demand is most of the market – 75% as of 2008, in fact. This predominance will lessen over time, but that is where we are now. The following pie chart shows world nuclear power plant uranium demand for 2008 (the latest year for which comprehensive data are available; figure from the Red Book – purchase required).

More specifically, here are the top few consuming nations, with estimated 2009 consumption:

Country Tons of uranium
United States 16,160
France 9,000
Japan 8,195
Russian Federation 4,500
Korea 3,400
China 3,300
Germany 2,600
Ukraine 2,480
Sweden 1,685
Canada 1,600
United Kingdom 1,215

The US is the world's largest consumer of uranium for electric power. The very long-term outlook in the US is quite uncertain. The Red Book projects US demand, which was 16 thousand tons in 2008, to be between 11 and 24 thousand tons in 2035. The uncertainty is large for two main reasons:

  • nuclear power plant licenses have to be regularly reviewed, and there is no guarantee that current plants will continue to operate
  • while the government is trying to encourage construction of new plants, there are significant barriers – protests, high cost, and a nightmarish permitting process – so that no new plant has been completed since 1995

What about the medium term? On the one hand, the US has, over the years, shut down a total of 13 nuclear power plants, so that the total number of operating nuclear power plants peaked at 112 in 1990 and dropped to 104 in 2009.

However total generating capacity has not dropped from the peak. First, most licenses continue to be extended. Further, although no new plants have been completed for some time, capacity continues to be added (so-called “uprates”) at older plants, through equipment upgrades. As of June 2010 the NRC expected applications for 40 power uprates over the next 4 years, totaling 2.4 gigawatts – about the power capacity of 2 new reactors. The Red Book reports that power output at US plants increased from 782 terawatt hours in 2005 to 806 terawatt hours in 2008.

As for new construction, there is one plant, Watts Bar Unit 2, under construction and expected to complete in 2013. Some further new construction is likely. According to Wikipedia, “As of March 9, 2009, the U.S. Nuclear Regulatory Commission had received applications for permission to construct 26 new nuclear power reactors with applications for another 7 expected. Six of these reactors have actually been ordered.”

So the bottom line for the US is that (1) currently demand is increasing and (2) it would be surprising to see a decrease in, say, the next 10 years. When the current fleet nears the end of its life, in another 20-40 years, the direction will be much less certain. I personally think that by then fossil fuels will be considerably more expensive, and there will be increased urgency to build more nuclear plants.

In much of Europe demand is set to be stable (e.g. France) or to grow significantly (e.g. Russia). One significant negative for demand has been that several countries – Belgium, Germany, Spain and Sweden – had put in place plans to retire all nuclear generating capacity. So the Red Book projected demand in Germany, for example, to drop from 2600 tons in 2009 to nothing in 2025. However, as the pressure to lower emissions has intensified, and as it has become clear that even high subsidies for wind and solar will fail to ramp them up to a significant fraction of all power in the next decade, the greens have compromised.

  • In 2009 Belgium decided to extend the lifetime of 3 reactors, previously scheduled to close in 2015, to at least 2025
  • Zapatero, Prime Minister in Spain, broke his campaign pledge to phase out nuclear power and, in 2009, extended the operating license for one plant; this was followed by another license renewal this summer
  • This month Angela Merkel, Chancellor of Germany, brokered a compromise in which lifetimes of nuclear power stations would be extended for an average of 12 more years

The trend is fairly clear. I do not expect many nuclear power plant shutdowns in Europe. Since uprates play a significant role in Europe as well, demand should grow.

All told, then, in addition to the strong growth in India and China, the bulk of the installed base, in Europe and the US, is likely to see demand at least remain stable, and probably to grow moderately.

I continue to think the price of uranium will at least keep pace with inflation, and possibly rise more than that, for the foreseeable future. Here is what the price of the Uranium Participation Corporation has been doing lately – up rather nicely since the low last summer: