“We believe China is entering a stage of rapid development in nuclear power. From our channel checks, we believe China will lift its installed nuclear power capacity from 13GW in 2012 to 40GW by 2015 and to 60-70GW by 2020.”
The statement above is from a recent Merrill Lynch report entitled “China’s five-fold nuclear power expansion plan”. It’s a substantial document (nearly 70 pages in total) and as you can imagine, it’s filled with an abundance of facts, figures and statistics. Being a Geo, I’m perfectly happy wading through large amounts of data but for those of you who prefer getting straight to the core, here are what I consider to be the main takeaways:
Huge Growth by 2020
By 2020, the report estimates that China will have increased its nuclear power capacity by as much as 538% from 2012 levels. As big as that number is, a quick glance at the WNA statistics will tell you that in some ways it’s just the start. With 87 under construction or in the planning phase, and as many as 118 in the proposal stage, we are talking about a massive expansion for China and indeed for the world.
Uranium mine assets will become acquisition targets
China is actively securing overseas uranium sources. CNNC International (2302.HK) and CGN Mining (1164.HK) have been established as offshore financing vehicles to help CNNC and CGNPC in procuring overseas uranium mine assets. Apart from importing uranium fuel, CNNC International and CGN Mining will also be paying for the purchase of overseas mines to produce uranium overseas for imports back to China.
It doesn’t get much clearer than that but it’s not surprising that China is looking to purchase uranium assets abroad. The country has very little in the way of domestic uranium assets and most what they do have is buried deep. With the most aggressive nuclear construction program in the world, China’s long-term supply of uranium needs to be 100% secure. For those of us in the uranium exploration and development business, having potential buyers of this calibre hunting for assets is a big plus. Just ask Paladin Energy, who recently announced selling 25% interest in their flagship Langer Heinrich mine in Namibia to China Uranium Corp. Ltd., a wholly owned subsidiary of China National Nuclear Corp.
Scaleable, low generation & transmission cost/kWh & reduced emissions
A large portion of the Merrill Lynch report is devoted to the rationale behind China’s embrace of nuclear energy. Here are some of the key quotes that caught my eye:
China’s increasing emphasis on environmental protection is another reason why the government is encouraging the development of nuclear power. Rapid domestic energy consumption has led to significant greenhouse gas emissions.
The carbon dioxide emission reduction achieved by the Daya Bay nuclear generation units (compared with coal-fired power plants) is equivalent to the amount of carbon dioxide emitted by all motor vehicles in Guangzhou city in 20 years.
In addition to material scale and investment requirements, emissions of nuclear power output is much lower vs fossil fuel power output. Power generation cost and on-grid tariff (for 2.5G plants) at RMB0.43/kWh is lower vs gas-fired, solar and wind power. Nuclear power plants located near coastal consumption centers require much less transmission cost vs wind and solar output from N & NW China.
A great many indicators point to 2014 being a growth year for the nuclear and uranium sectors. It’s clear from the Merrill Lynch report that China will be playing a big role in that growth and that’s good news for all of us in the uranium exploration and development business.
Ted O’Connor, CEO of Azincourt Uranium