19th March 13th 2018 –
There was a noticeable presence of Chinese projects at the PDAC this year and there were a few designated lectures about this country’s prospects. On the last day there was an interesting discussion on Uranium demand by Julio Niu and Roy Milao.
China has seen the largest sustained GDP growth of any country in recorded financial history. What took the UK 200 years of industrial development has taken China no more than half a century. During this time, they have revolutionised their country moving from basic agriculture to the cutting edge of mass production and advanced research.
This achievement was powered by the burning substantial fossil fuels and, as for the Victorians, air pollution is a problem but on an even larger scale. China’s political establishment shows no signs of significantly reducing growth targets, so more power is required, but it also can’t continue to poison its air. China’s population, along with the rest of southeast Asia, has an expanding middle class which historically leads to increased requirement for energy and materials as like the rest of the world they want to become richer. This puts increased strain on energy supplies. Hence China needs a large-scale energy source with little to no pollution.
Therefore, nuclear power for China is a key part of its future energy plans as well as investing heavily in hydro, solar and wind power. Currently at 1%, by 2030 they want 8% of power coming from nuclear. This increase involves building 130 reactors over the next 10 years (although how they tend to deal with the nuclear waste was not disclosed).
With this increase in demand predicted for the future we must look at the supply side. As uranium is classified as a vital resource by the Chinese government the law states “Foreign investment is forbidden in uranium minerals exploration, mining or processing”. However, this is changing, and new legislation will make it easier for foreign companies to mine uranium within China.
China is a net importer of uranium. External sources of uranium predominantly come from Canada, Australia, Niger, Russia, Namibia and Kazakhstan. Cameco in Canada produce 13% of the world supply and the various companies in Kazakhstan make up a further 20%, these two countries are the biggest suppliers. Both are reducing production; Cameco have announced a 10-month hiatus on mining and in Kazakhstan a 20% reduction has been implemented. This is in response to the recent low Uranium spot price of US$21 per Lb as most mines operate profitably above the US$30 per Lb mark. At global annual consumption of 64000 ton/year, as nuclear reactors require little fuel to operate, our current supply will run out in 84 years.
In addition to giving us a lecture on China’s global view Roy Milao presented his company, Ocean Nuclear. Previously only a private Chinese financial business it is now interested in nuclear power. They emphasised they are not related to the Chinese government and simply want to invest in nuclear projects such as reactor construction, uranium mining and research & development even by foreign countries such as the Small Modula Reactors (SMR) being developed in the UK. This was their first PDAC and they hope to return. Ocean Nuclear have recently hosted the Global Nuclear Investment Forum in Beijing, which brings together a variety of people from the nuclear sector. With the investment increasing from non-state run Chinese firms we may see a global increase in nuclear power over the coming years, which could rejuvenate interest in this often-mistrusted energy source.
There is a clear sign of improved investment opportunity within China as they begin to deregulate and their demand for Uranium means a better price for the product. Although my biggest concern is still the lack of information offered on proposed nuclear waste management China’s geography and geology may provide the answer to overcome this. With its extensive landmass it is likely to contain remote, seismically stable and unpopulated areas to safely dispose of the waste, otherwise replacing air pollution with nuclear pollution seems like a short-term fix.
This presentation provided the reasoning behind China’s increased demand and attempts to secure a supply of uranium. Unlike other industries ensuring you have the very best equipment is critical for nuclear power. This is probably the reason why China is opening its boarders and encouraging foreign investment in this sector. Unless China, and the rest of South East Asia forgo their commitment to clean air and improved standards of living they will pursue nuclear energy to reduce the visible pollution that currently afflicts them.
Joshua Powell, reporting from the PDAC in Toronto for MiningIR.com