Transcript The Future Uranium Market – China`s Dramatic Growth

The Future Uranium Market
China’s Dramatic Growth
by
MZConsulting Inc
Milton Caplan, President,
Dr. Terry Thompson, Senior Advisor
Presented at Research Capital Uranium Conference
2009 April
Outline
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Global Nuclear Growth
Demand for uranium
China growth and demand
Chinese strategies for supply
Investment in Resource
Summary
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Nuclear Power
• Nuclear renaissance takes hold
• France starts construction on Flamanville amd
commits Penly
• UK Government confirms support for nuclear new
build and British Energy to be sold to EDF
• Contracts signed in the USA
• Ontario Canada bidding process for new units
• New orders in China
• 34 units under construction, 108 planned and 272
proposed
• China and India
– 3% of plants in operation
– One third of plants planned and proposed
Source: WNA 09/04/01
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Uranium Energy
• Highly energy intensive source of energy
Coal
Uranium Pellet
=
7 grams (.24 oz)
1,780 lbs
(or 17,000 cu ft of gas)
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Uranium Market is Unique
• Need a nuclear power plant to realize this
energy
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Uranium – without Nuclear Power
It’s nothing but a rock!!
Demand for Uranium is a direct function of
the number of nuclear plants in operation
and their performance
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Important Characteristics
• Nuclear fuel costs represent only about 15%
of the cost of energy from a nuclear plant
• Uranium is about one third of the fuel cost
• Low volumes
Suitable to develop strategic inventories
to ensure security of supply!
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tU
Uranium Supply and Demand
Source: WNA Market Report
“The global nuclear fuel market:
supply and demand 2007-2030”
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Production
• More than half of supply comes from Canada, Australia
and Kazakhstan
• 7 companies control about 80% of the global production
• UDP Report – Canada will lose its leadership role in 2009
2007 TU
2008 TU
Australia
8,611
8,430
Canada
9,476
8,980
Kazakhstan
6,637
8,521
Africa
6,571
Other
9,984
Total
41,279
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China Electricity Capacity
Growth Rate
China 4.7 %
World 2.4%
GW
25%
14%
Source: WEO 2008
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China Nuclear Plans
• Current capacity – 11 units, 9 GW
• Plan to 2020 – 40 GW
– Target 2% of capacity, 4% of energy
• New units
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CPR 1000 (based on Daya Bay design)
Qinshan Phase 2 repeat
Westinghouse AP1000
Areva EPR
• New policy under discussion
– Want to increase target to 75 GW by 2020
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Nuclear Power in China
Demand for Uranium
• Base requirement to 2020
– 8,000 tonnes per year
– Equivalent to 20% of current production!
• Increased target
– 15,000 tonnes per year
– Almost 40% of current production!!
• Considering India as well
– Target 20 GW – 4,000 tonnes per year
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Global distribution of uranium
resources
Where will it come from?
• Strategy has three major components
– Domestic production
– Foreign purchase
– Investment in foreign resource
• Development of a strategic inventory
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What has been achieved?
• Domestic production in place
– 840 tonnes / year
– Exploration underway
• Part of reactor supply (Areva)
– 26 years fuel supply for new EPRs
– Provided 35% of Uramin property in Namibia
• Agreement with Kazatomprom
• Sino Uranium has projects in Africa
• CNNC purchase of Western Prospector
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Investment in Resource
• China needs new ‘Elephants’
• Canadian Policy concerns China
– NCA issues for sale of uranium
– 49% ownership policy for operating mines
• No interest in USA
• Prefer countries near to China
– Kazakhstan, Mongolia, Australia, Africa
China will become a player in Uranium Investment
How will Canada respond?
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MZConsulting
• Extensive knowledge and experience in the
Canadian and international nuclear industry
• Continuously monitors uranium companies with
emphasis on those believed most likely to succeed
(meaning potential for production)
• Extensive analytical capability
• Provide advice and support to clients looking for
uranium investments
Work with Asian clients to access
uranium supply options
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Summary
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Uranium is a single use mineral
Significant growth in nuclear power
Most of the growth will be in Asia
Large Asian users have little resource
China will:
– Develop a strategic inventory
– Invest in resource
• Decisions are affected by politics
The uranium market will
fundamentally change as the large users
move from the west to Asia!
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Thank You
Milton Caplan, President
MZConsulting Inc
[email protected]
www.mzconsultinginc.com
+1.647.271.4442