The case for uranium is the case for keeping the lights on.
By 2030, global demand for electricity is forecast to grow by 76% (source: OECD 2012) – an unsurprising figure considering in the same time period the global population is expected to hit 8.2 billion while urbanization will hit 70% worldwide. The world needs more energy.
Due to the need to reduce carbon emissions while meeting the rising electricity demand, new power generation needs to be clean and it needs to be low cost. Fossil fuels are cheap but dirty. Renewable energy sources such as wind, solar and tidal have a role to play but due to their high generating costs, their lack of high base load capacity and the limitations of electricity storage capabilities, their part in the energy mix is largely on the margin.
Nuclear Is Growing
Currently 13.5% of the world’s electricity is supplied by nuclear power. In the OECD that figure is closer to 24% and in the EU it’s 34% (source: WNA, 2013). Nuclear Energy is reliable, is low cost and clean. What’s more, it provides energy security – something that governments all over the world are pursuing. Led by China, Russian and India, a worldwide construction boom is taking place with over 60 reactors already under construction, 160 reactors in the planning stage and an additional 319 reactors proposed (source: WNA April 26, 2013). Even Saudi Arabia, the home of big oil, has plans to build sixteen nuclear reactors.
The Role Of Uranium
Nuclear reactors use enriched uranium as fuel. Uranium itself is actually a comparatively common element – nearly 500 times more so than gold. However, while deposits are found all over the world, the vast majority are low grade. In fact, the world average grade is a mere 0.2%. With uranium, as with any other mineral, grade is king so the challenge is to find the high grades.
For the last two decades, the challenge of locating economic deposits has meant uranium production has struggled to meet demand. The supply gap has been filled by secondary sources, foremost of which is the HEU (highly enriched uranium) agreement. Commonly known as the Megatons to Megawatts program, Russia has down-blended their weapons-grade uranium and sold it at compelling rates to the US as nuclear reactor fuel. The agreement is set to end this year.
The Athabasca Basin
The highest uranium grades in the world are to be found in one place – Canada’s Athabasca Basin in the province of Saskatchewan. The Basin, as it is commonly known, provides nearly 20% of the world’s high grade uranium and has an average grade of 2% (ten times higher than the world average). It is home to the world’s largest high grade uranium mine (Cameco’s McArthur River mine) and, with more than 40 years of uranium mining, the Athabasca Basin is considered one of the world’s most important uranium districts. Indeed, so important is the region that in 2011 (post Fukushima), Rio Tinto spent $654 million and won a takeover battle versus Cameco in order to acquire Hathor and its Roughrider discovery – which lay immediately adjacent to Fission Energy Corp’s J-Zone discovery.