Primary and Secondary Sources
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Primary and secondary sources in Global Nuclear Fuel Supply; focus on Uranium Georges CAPUS AREVA VP Front-End Marketing Seminar on Global Nuclear Fuel Supply Permanent Mission of Japan to the IAEA VIC January 26, 2009 Contents 1. Projected nuclear reactor fleet; from fuel demand to uranium demand scenarios and uncertainty 2. Supplying the uranium demand 1. Primary and secondary sources 2. Primary uranium outlook 1. 2. 3. Countries and security of supply Types of mines and potential cost trend Producers 3. Secondary sources 1. 2. 3. 4. uranium stocks Mox and RepU re-enriched tails downblended HEU 3. Balancing Supply and Demand: will future market equilibrium differ from past? 4. Focus on long term Security of Supply 5. Conclusions 3 > G. Capus – 2009_01_26 – IAEA VIC _ v0 1) Projected nuclear reactor fleet; from fuel demand to uranium demand scenarios and uncertainty X Warning: predicting the future is nonsense, forecasting is risky! X Pros: Global population growth Global economy growth Global warming Energy crisis X Cons: Ongoing financial crisis and impacts Public acceptance, technical and manpower bottlenecks… X We, at AREVA, are confident many new reactors will be added in the coming decade, significantly helping at limiting CO2 emissions ( we are still expecting around 635 GWe by 2030 and working at turning it into reality…) 4 > G. Capus – 2009_01_26 – IAEA VIC _ v0 Projected nuclear reactor fleet; from fuel demand to uranium demand scenarios and uncertainty Key parameters and sources of uncertainty in U demand forecast X Short term: the fleet is slowly evolving 1) availability of major secondary sources (mostly U market insensitive) 2) NPPs availability factor and load factor (mostly bound to technical issues or natural events, thus highly unpredictable) 3) Enrichment tails assays (Uranium feed v.s. enrichment market situation) X Long term: all is possible but forecasting the future is difficult 1) Top 1 parameter = projection of installed nuclear capacity 2) Top 2 parameter = composition of future fleet ; LWR and related generation shares, HWR, FBR… Second order parameters 5 z Enrichment tails assays z Recycling and substitutes (Mox, RepU, Th fuels?) z Load factors > G. Capus – 2009_01_26 – IAEA VIC _ v0 Projected nuclear reactor fleet; installed GWe scenarios and uncertainty X After 20 years; a rapidly widening range of uncertainty Under the high scenario, the nuclear share of global electricity production would rise from 16% today to 22% in 2050 1500 NEA2008 high 1250 Net GWe 1000 2009 to 2029 750 1973 OECD scenarios WW 500 WNA-2007 NEA2008 low 250 Existing capacity From OECD-NEA Nuclear Energy Outlook 2008 6 > G. Capus – 2009_01_26 – IAEA VIC _ v0 2050 2045 2040 2035 2030 2025 2020 2015 2010 2005 2000 1995 1990 1985 1980 0 Projected nuclear reactor fleet; from GWe to uranium demand scenario X A simplified calculation assuming a steady yearly consumption of 168 tU per installed GWe (current fleet consumption of 62 ktU) 250 NEA2008 high 200 NatU kt 150 2009 to 2029 1973 OECD scenarios WW 100 WNA-2007 NEA2008 low 50 Existing capacity From OECD-NEA Nuclear Energy Outlook 2008 7 > G. Capus – 2009_01_26 – IAEA VIC _ v0 2050 2045 2040 2035 2030 2025 2020 2010 2005 2000 1995 1990 1985 1980 0 2015 Maxi past U prod 68 ktU in 1980 Will it be – easy, possible, difficult – impossible to fuel the projected nuclear reactor fleet? X Say up to 150 ktU /y, the resources in the ground are there, the projects are identified… So, what is needed? X Adequate market signal (durably “sufficiently high” NatU prices)! 250 NEA2008 high 200 RB2007_Existing + committed + planned + prospective Mine capacity NatU kt 150 100 NEA2008 low 50 Actual production RB2007_Existing + committed + planned + prospective Mine capacity Maxi past U prod 68 ktU in 1980 From OECD-NEA Nuclear Energy Outlook 2008 8 > G. Capus – 2009_01_26 – IAEA VIC _ v0 2050 2045 2040 2035 2030 2025 2020 2015 2010 2005 2000 1995 1990 1985 1980 0 2-1) Supplying the uranium demand; Primary and secondary sources X Definitions: (from WNA Report 2007 p. 116) Secondary supplies may be defined as all materials other than primary production (sometimes also named “already mined uranium” or AMU) Conversely primary sources correspond to “freshly mined uranium” Secondary supply sources include z Inventories z Government & strategic inventories HEU inventories … Use of recycled materials of various types - 9 Commercial NatU and LEU inventories RepU MOX from civilian fuel cycle MOX from excess military stockpiles NatU equivalent recovered through depleted U re-enrichment Scraps and other sources > G. Capus – 2009_01_26 – IAEA VIC _ v0 Global Uranium Secondary Supplies X A large share of total supply X Obviously, most of the secondary sources come from previously stockpiled uranium Commercial stockpiles build-up Military stockpiles build-up From OECD-NEA – IAEA « Red Book » 2007 10 > G. Capus – 2009_01_26 – IAEA VIC _ v0 Secondary supplies Primary supplies (Mine production) Primary uranium remains the dominant supply source 2-2) Primary uranium outlook Primary uranium outlook 1. Countries and security of supply 2. Types of mines and potential cost trend 3. 11 Producers (possible changes in market and corporate structures …financing… Cooperation among producers, possible impact of the credit crisis.) > G. Capus – 2009_01_26 – IAEA VIC _ v0 Conventional fissile resources represent more than 200 years* of 2007 world demand CATEGORY of Uranium resources (million tons = Mt) Conventional Identified (deposits) Undiscovered Cost of recovery $/kgU Reasonably Assured Resources Inferred Resources 1 Prognosticated Resources 2 Speculative Resources 3 < 40 1.8 1.2 40 to 80 0.8 0.6 80 to 130 0.7 0.3 0.8 > 130 ? ? ? 3.0 Subtotal 3.34 2.13 2.8 7.8 General total 2.0 5.5 4.8 10.5 General total of conventional resources: 16,000 000 t World demand in 2007: less than 70,000 t Resources: > 200 times 2007 demand + With Gen IV Fast Breeder Reactor, resources are virtually unlimited Source: OECD Nuclear Energy Agency & IAEA "Uranium 2007: Resources, Production and Demand" 12 > G. Capus – 2009_01_26 – IAEA VIC _ v0 1 Based on direct geological evidence 2 Based on indirect geological evidence 3 Extrapolated values Unconventional 7 to 22 * Of which about 80 years with a very high probability Uranium market price & «Identified Resources» X More than all the currently «Identified Resources» (up to 50$/lb in early 2007 $ estimates!) are needed to fuel a sharply growing Nuclear Renaissance X Therefore: what should be an adequate LT price level???? 140 Spot price 40$/kgU limit 80$/kgU limit 130$/kgU limit 260$/kgU limit LT_Price 120 80 60 ? 5.47 40 4.46 20 > G. Capus – 2009_01_26 – IAEA VIC _ v0 déc-07 déc-06 juin-06 juin-05 déc-04 juin-04 déc-03 juin-03 déc-02 juin-02 déc-01 juin-01 déc-00 13 déc-05 2.97 0 juin-07 US$/lbU3O8 100 Identified U Resources in MtU (RB2007) World Uranium resources*; a widespread energy source potential X Identified uranium resources X Top 10 countries (88%) + 5 next (96%) 15% 10% 8% RUSSIA CANADA 6% 3 5 Ukraine 10 U.S.A. 6 5% others 5% BRAZIL 23% KAZAKHSTAN Uzbekistan 2 Jordan NIGER Mongolia China India 9 5% 8% 7 NAMIBIA 8 AUSTRALIA S.AFRICA 4 1 •Id. Resources recoverable at less than 130$/kgU or 50 $/lbU3O8 •Total 5.47 MtU as of 1/01/07 Source OECD-NEA–IAEA « Red Book 07» 14 > G. Capus – 2009_01_26 – IAEA VIC _ v0 Uranium: a production mainly coming from politically stable countries X A rather slow ramp-up of global production X A fast increase in Kazakhstan X Almost 60% from top 3 countries 50000 45000 40000 Others Africa other CIS Kazakhstan Australia Canada 35000 tU 30000 25000 20000 15000 10000 5000 0 2002 2003 2004 2005 2006 2007 2008* * preliminary 15 > G. Capus – 2009_01_26 – IAEA VIC _ v0 World uranium production 2007; countries X Major producing countries likely to remain exporters in the LT… Producing & consuming country 10 Ukraine 9 China 2% USA 4% 8 autres 4% 2% Canada 22% 7 Uzbekistan 1 5% Namibia 7% 6 5 Producing country Niger 8% Australia 21% 4 Russia 9% 2 Kazakhstan 16% 3 16 > G. Capus – 2009_01_26 – IAEA VIC _ v0 Total 2007 = 41 700 tU (108 MlbU3O8) Top 10 = 96% World uranium production 2007 (major producers) X The production structure is basically concentrated (oligopoly), however less than other fuel cycle segments X opposite tendencies: + juniors – take over = resulting trend? Russia, Kazakhstan Others* 15% AREVA partners /Niger 2% 5 AREVA 3 14% CAMECO 1 18% AEP/TVEL 9% 7 Canada, Niger, Kazakhstan Canada, USA Uzbekistan NAVOÏ MMC 5% 4 KAZATOMPROM 12% Kazakhstan BHP-B ODM 8% 6 Australia RTZ - ERA RTZ-RÖSSING 11% 6% 2 Namibia Australia Total 41700 tU Top 10 = 90% * Others <= 1000 tU/an 17 > G. Capus – 2009_01_26 – IAEA VIC _ v0 Mining and processing methods; current repartition X Main types of Mining Methods 25% 45% 30% Tailings reprocessing … -% • • 18 Open pit Underground In Situ Leach (ISL or ISR) X Main types of process for U3O8 recovery 57% Conventional ore dynamic processing 3% Conventional ore static processing (Heap leaching) 30% 10% ISL Solution processing By-product processing z Copper- U z Gold- U z Phosphoric acid – U z … Cost structure differs from one method to another However the overall costs are not directly linked to mining and processing methods, but instead to a combination of factors including • The average grade • The ore-body depth • The reagents (types and consumption…), extractants… > G. Capus – 2009_01_26 – IAEA VIC _ v0 2-3) Secondary sources X Secondary sources; main categories Uranium stockpiles (commercial, strategic…) Mox and RepU; the recycling source Re-enriched tails; another form of recycling Downblended HEU; from weapon grade U to civil fuel X In the recent years they were contributing to up to 45% to the Market S&D balance X Some are easy to forecast (like Mox or RepU) X Other are much more unpredictable (excess material disposition by Governments) but this is improving… X Finally some are creating some « market addiction » like Russian HEU? 19 > G. Capus – 2009_01_26 – IAEA VIC _ v0 U stockpiles estimates: What’s left? X Cumulative production less cumulative reactor requirements: the easy way to get a raw figure for U « inventories » From a cumulative production of about 2 350 000tU Around 625 000tU As of end 2006 Around 1 700 000 tU Currently as DU tails Spent fuel Fissionned Process losses From OECD-NEA – IAEA « Red Book » 2007 20 > G. Capus – 2009_01_26 – IAEA VIC _ v0 Estimates for recoverable fissile material from stockpiles: a high recyclable potential X If some is consumed an some not easily recoverable, most can be recovered for use as NatU equivalent in existing reactors* X However in most cases this would require dedicated industrial capacities From a cumulative production of about 2 350 000tU** % of the Translated original in ktons U235 content Equiv. NatU Scale: 2 500 000 tU Balance to total Around 625 000tU As of end 2006 Commercial inventories FC pipeline &strategic Total HEU stockpiles Recoverable from tails 3% 3% 11% 19% 70 65 250 455 10% 230 (nw2= 0,1%) Feed for fresh fuel Around 1 700 000 tU Currently as DU tails Spent fuel Fissionned Process losses Recoverable from SF (RepU only) Losses & wastes (including secondary tails) Consumed Fissionned 27% 27% 250 Recoverable from SF as Pu + separated Pu (from U238 balance) * FBR not considered here ** At YE 2006; estimates are within a +- 2% range 21 > G. Capus – 2009_01_26 – IAEA VIC _ v0 From the top of the pile: example of USA commercial grade stockpile evolution X 1) Build-up, then 2) drawdown, then 3) instant transfer from Gvt to Market, and more recently 4) stabilization and even again build-up 140 120 ktNatU equiv. data DOE-EIA 100 2 80 1 4 60 3 40 20 Utilities NatU Suppliers EUP TOTAL COMMERCIAL 22 > G. Capus – 2009_01_26 – IAEA VIC _ v0 Utilities EUP GOVT NatU Suppliers NatU GOVT EUP 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 82 80 78 0 How military & strategic stockpiles reach the market (1/3) example of US- Russia HEU deal X Huge quantities of NatUF6 • Back to Russia for HEU dilution or • Sold outside the US, or • Added to the « Monitored Inventory » Mainly added to the USDOE (95, 96, 97, 98) inventory (now for sale) 10000 9000 8000 7000 tU 6000 5000 4000 feed tU US quota tU Used quota tU 3000 2000 1000 23 > G. Capus – 2009_01_26 – IAEA VIC _ v0 2013 2011 2009 2007 2005 2003 2001 1999 1997 1995 0 (source UxC fromUS DoC) US-Russia HEU deal: a complex secondary supply X Scheme of yearly physical flows (rounded in tU and MSWU) In the US In Russia 30t HEU (90% U235) LEUF6 (4.4% U235 in average) From Tenex To USEC + NatUF6 or DEUF6 (x% U235) 24 in average) 900t + + SWUs (nw2 = 0.1x%U235) LEUO2 (4.4% U235 830t SEU (1.5% U235) > G. Capus – 2009_01_26 – IAEA VIC _ v0 900t LEU containing 9000 tU as NatUF6 and 5.5 MSWU From USEC to US Fuel fabricators However Howeveraasmaller smallernet netcontribution contributionto tothe the Global Market for NatUF6 and SWUs Global Market for NatUF6 and SWUs How military & strategic stockpiles reach the market (2/3) example of US-DOE Excess U X US-DOE Dec. 2008 Excess Uranium Management Plan 4500 As tNatU equiv. 4000 Off-spec non UF6 DU as UF6 Russian Origin NU for initial cores unallocated HEU downblend allocated HEU downblend 10% of maxi anticip. US requrts 3500 3000 tU 2500 2000 1500 1000 500 0 FY2008 25 FY2010 > G. Capus – 2009_01_26 – IAEA VIC _ v0 FY2012 FY2014 FY2016 FY2018 FY2020 Depleted Uranium (Tails) re-enrichment; top 1 potential from the pile 16000 8 14000 7 12000 6 10000 5 8000 4 6000 3 4000 2 2000 1 0 1000 2000 26 > G. Capus – 2009_01_26 – IAEA VIC _ v0 4000 5000 6000 Recovered NatU equiv. (in tU) Equivalent of a large mine = large enrichment plant = x billion dollars Examples for DUF6 at 0.35% U235 depleted to 0.1% and 5$/kgU as UF6 for handling, no other cost than SWUs 3000 0 7000 300 250 Recovrd NatU$/kgU as UF6 NatU cost 0 MSWU needed DU feed needs (tDU) X Currently participating to the supplies, this source is driven by both Uranium & SWU market conditions 200 150 US$/lbU308 for Conv. = 12 100 50 0 0 50 100 150 SWU cost 200 250 From apart the pile*: MOX is a significant secondary supply, where recycling is the choice * Does not belong to the U235 inventory balance WNA estimate for worldwide current MOX use = 1400 t NatU equiv. 27 > G. Capus – 2009_01_26 – IAEA VIC _ v0 MOX; a secondary supply with long term potential (from Spent Fuel to New Fuel) La Hague (general view) La Hague (SF cask handling) Views from AREVA Industrial Recycling Facilities Melox Mox fuel fabrication plant (general view) 28 > G. Capus – 2009_01_26 – IAEA VIC _ v0 MOX fuel assembly From the pile: RepU is a significant secondary supply, however currently under-recycled X The driver for RepU use should be mainly the uranium market situation, however it is currently driven by other factors and constrained by the needed dedicated capacities The new AREVA GB2 plant (view below) will include dedicated cascades for RepU enrichment in unit N which will start construction this year 29 > G. Capus – 2009_01_26 – IAEA VIC _ v0 From the pile*: RepU is a significant secondary supply, however currently under-recycled X Dedicated facilities under construction or firmly planned France (Pierrelate site) z GB2 centrifuge enrichment plant: RepU dedicated cascades in Unit N (2nd unit) z REC2 : for RepU handling, sampling and blending z Comurhex RepU; a new RepU conversion plant is under detailed design stage These new capacities will mainly feed the FBFC fuel fabrication plant (Romans site) currently hosting two lines dedicated to RepU fuel (from UF6 to assemblies) Elsewhere: some capacities are currently recycling RepU z Russia & Kazakhstan z USA from former governmental programs (BLEU project…) Or planning to do so; Japan… 30 > G. Capus – 2009_01_26 – IAEA VIC _ v0 3) Balancing Supply and Demand: will future market equilibrium differ from past? X 1) Lengthy period of overproduction (largely triggered by price spike due to over-stated fleet forecast and then enrichment monopoly request for advance feed delivery) X 2) Lengthy period of production capacity reduction and massive secondary supplies X 3) Entering instability ??? 80 70 70000 3 60000 2 1 50000 t U 40000 40 30000 30 20000 20 10000 10 0 0 1970 31 60 Spot price Year average 50 US$i 1975 1980 > G. Capus – 2009_01_26 – IAEA VIC _ v0 1985 1990 1995 2000 2005 Comments on future market equilibrium X A frequent approach is to pile up all the potential supplies as announced or foreseen => this result in re-doing the past! Is this likely to occur? From WNA MR 2007 – Upper Supply Scenario 32 > G. Capus – 2009_01_26 – IAEA VIC _ v0 Comments on future market equilibrium; is a massive uranium glut likely? X Many factors have dramatically changed since the glut of the early 1980’s No more significant subsidies for U production No more significant financing from Governments No more SWU monopoly Lengthy and demanding licensing processes X Two types of market trend are thus possible, in theory at least X 1) To continue to heavily rely upon already mined uranium and deplete the stockpiled material to its end or so. X 2) To progressively increase the mines output to timely reach the level needed by the expected fleet increase. X We must find a way to de-commoditize uranium, meaning to smooth its market volatility. 33 > G. Capus – 2009_01_26 – IAEA VIC _ v0 4) Focusing on long term Security of Supply XQuestion asked: Uranium producers’ strategies for hedging against risk (accidents, disasters, contract disputes, work stoppages, etc.)? XBy the way, what about UF6 conversion???? 34 > G. Capus – 2009_01_26 – IAEA VIC _ v0 Identified Risks threatening S&D balance X The following set of Root cause… Accident and other technical causes Social / political interferences Regulation inadequacy Market dysfunction X Impacting either an actual supply source or a planned supply source firmly committed to deliver A prospective production area representing significant resources X May turn into => Temporary and geographically limited delivery disturbances, or into Lengthy and widespread market tension X Depending upon the size of the affected source and of the impacted market segment mitigation capacity 35 > G. Capus – 2009_01_26 – IAEA VIC _ v0 Actual examples of risk occurrences and already identified consequences X Technical event leading to a temporary suspension of an existing production center: in uranium; McArthur River flooding in 2003, consequences limited to some pressure on price In conversion: Port Hope ; so far no visible consequences X Technical event leading to a temporary suspension of a firmly planned and committed project: Cigar Lake project flooding; consequences so far limited to some pressure on price (from Oct. 06) X Regulation inadequacy leading to a risky situation Lack of sea ports open to nuclear transports in Australia; limited number of Shipping Cies accepting nuclear cargoes X Social / political interferences Ban on uranium mining (example of a recently lifted ban in Western Australia…) X Market dysfunction Recent U price volatility; cost components price spike 36 > G. Capus – 2009_01_26 – IAEA VIC _ v0 Uranium producers’ possible strategies for hedging against risk X Technical Causes: Work constantly at sticking to the best achievable practices, monitor, benchmark and improve X Social, political, regulatory causes: Keep good relationship with all stakeholders Comply, dialogue and anticipate X Market inefficiency Is it up to producers? X All causes Keep a sufficient level of inventory and/or set up a back-up policy X Timely invest: example: AREVA has committed > 8 billion € of investment to Key Front-end projects, of which about half are outside Europe and around half of that in its advanced uranium mining projects 37 > G. Capus – 2009_01_26 – IAEA VIC _ v0 Conclusions X A few concluding remarks 38 > G. Capus – 2009_01_26 – IAEA VIC _ v0 Uranium: when fueling the fleet, think LT X LT natural uranium supply is a production and cost issue, not a resources in the ground issue X Mines with production cost well above 60$/lbU308 needed X Secondary sources are not a sufficient answer without accelerating recycling Cumulated 2008-2030 HEU remaining potential: 2,500 150ktnatU equiv. 2,000 New build ktU 1,500 MOX & RepU potential@ current capacity: New mines 1,000 120ktnatU equiv. 500 Existing fleet Existing mines 0 Ref.Req-2008-2030 39 > G. Capus – 2009_01_26 – IAEA VIC _ v0 U production WNA Ref 08-30 U production WNA upper 08-30 Revisit the Long Term Security of Supply X Several countries with a large NPP fleet (like Japan, France and others) are also scarcely endowed in oil, gas, coal and uranium. Therefore they have always been focused at improving their LT Security of Supply in Energy X Populated countries with ambitious nuclear power programs are also scarcely endowed in uranium (China, India…) and will increasingly secure LT sources X Because the World is now increasingly shifting to low to no CO2 emitting power sources, Nuclear Power is back and nuclear fuel LT security of supply must be revisited X Securing uranium exploration and mining remains a key part of the answer along with the other fuel cycle segments including all forms of recycling 40 > G. Capus – 2009_01_26 – IAEA VIC _ v0 Estimate of World Uranium Exploration Expenditures (Historical) X A strong correlation with the spot price…in real term 1200 120 About 130$/lbU3O8 in 2008 money 1000 100 Total explo&dev 800 80 600 60 400 40 200 20 41 > G. Capus – 2009_01_26 – IAEA VIC _ v0 2009 2006 2003 2000 1997 1994 1991 1988 1985 1982 1979 1976 1973 0 1970 0 US$i/lbU3O8 MUS$ (current) Spot price TrT The End 42 Annex 1: Selected references X The Global Nuclear Fuel Market – S&D 2007-2030 – WNA 2007 X G. Capus – 2005 – paper 1.2 in IAEA Fissile Material Management Strategies for Sustainable Nuclear Energy X K. Fukuda & M. Ceyhan – 2005 – paper 2.3 in IAEA Fissile Material Management Strategies for Sustainable Nuclear Energy X OECD-NEA 2008 - Nuclear Energy Outlook X OECD-NEA & IAEA 2007 - Uranium 2007: Resources, Production and Demand 44 > G. Capus – 2009_01_26 – IAEA VIC _ v0
