BNP Paribas Fortis North American energy monthly - Virtual Metals

BNP Paribas Fortis/VM Group October 2009 | BNP Paribas Fortis North American energy monthly | 15
Nuclear
Uranium (U 3 0 8 ), 2007/2008
(spot price, $/pound)
60
55
50
45
40
Oct-08 Dec-08 Mar-09 Jun-09 Sep-09
Source: Reuters Ecowin
News
• Sept 25 th : Canada agreed a nuclear cooperation pact with Kazakhstan.
• Sept 21 st : US Senator Lamar Alexander called for the building of an
additional 100 nuclear power plants within 20 years.
• Sept 16 th : The US signed a nuclear energy research and development pact
with South Africa.
• Sept 16 th : Saskatchewan Premier Brad Wall expressed concern over the high
costs of any nuclear project for the Canadian province.
• Sept 11 th : The US Nuclear Regulatory Commission (NRC) authorized
security personnel at nuclear power plants to carry machineguns.
• Sept 11 th : Bruce Power fired 80 employees at its Ontario nuclear plant for
inappropriate use of the internet.
• Sept 8 th : Fronteer Development said its proposed Michelin uranium project in
Labrador was capable of producing 3,300 tonnes of uranium oxide a year.
• Sept 2 nd : The NRC reached a cybersecurity pact with the Federal Energy
Regulatory Commission for improving information sharing during
emergencies.
Analysis
• Chu emerges as nuclear ally
From being an agnostic when it comes to nuclear power, Energy Secretary
Steven Chu is quietly emerging as the most influential ally of the industry within
the Obama administration. The best evidence of this emerged in late September
when Chu revealed he will lobby for additional federal loan guarantees worth
billions of dollars to the nuclear industry. Current loan guarantees amount to a
maximum of $18.5bn, which would be sufficient to remove the financial
uncertainty in up to five new nuclear power plants. This is in stark contrast to the
18 license applications being considered by the Nuclear Regulatory Commission
for new plant construction. Although Chu dismissed the idea of underwriting a
new fleet of up to 100 new nuclear plants, he indicated that funding might be
available for a further five – in other words a doubling of the current scale of
loan guarantees. Chu’s conversion to the nuclear cause may have more to do
with politics rather than science, as he has been focusing on the longer-term goal
of climate change legislation. He realizes current legislation being drafted in
Congress will only find support from some leading republicans like former
presidential candidate John McCain if nuclear power is included in the equation.
Chu is also believed to be putting pressure within the government to expedite the
creation of a panel to agree a long-term solution to the nuclear waste issue.
Chu’s reputation as a champion of nuclear power was given an additional boost
earlier in the month when he announced that $40m in federal support will be
available to support design and planning work for Next Generation Nuclear
Plants. He said this pump-priming exercise will help bring about a technology
that “holds the promise of safe, cost-effective, zero-emissions energy for major
US industries – like petroleum, plastic and biofuels producers – and allow them
to reduce carbon dioxide emissions, limit their need for fossil fuels, and become
more competitive.”
Outlook
US nuclear industry executives should be able to sleep in their beds easier
this month following a raft of reassuring government announcements in
September. Tangible evidence of firm orders and a more realistic licensing
phase will add weight to the belief that what George Bush set in motion five
years ago might actually happen. Meanwhile, the price of uranium oxide
slipped back a further $3.25 to $42.75/lb during the month – suggesting that
pent-up demand has yet to make itself felt in the spot market.