BNP Paribas Fortis North American energy monthly - Virtual Metals

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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.
16 | BNP Paribas Fortis North American energy monthly | October 2009 BNP Paribas Fortis/VM Group Disclaimer and copyright The information and opinions in this report were prepared by Virtual Energy, which is a subdivision of VM Group. Virtual Energy has made all reasonable efforts to ensure that all information provided in this report is accurate and reliable at the time of inclusion (the 1st of this month otherwise stated), however, there may be inadvertent and occasional errors and lack of accuracy or correctness, for which Virtual Energy cannot be held responsible. Virtual Energy and its employees have no obligation to inform the reader when opinions and information contained in this report change. Virtual Energy makes no representation or warranty, express or implicit, as to the accuracy or completeness of contents of this report. This report is not and cannot be construed as an offer to sell, buy or trade any securities, equities, commodities or related derivative products and the report in no way offers investment advice. Therefore Virtual Energy and VM Group employees accept no liability for any direct, special, indirect, or consequential losses or damages, or any other losses or damages of whatsoever kind, resulting from whatever cause through the use of any information obtained either directly or indirectly from this report. The contents of this report, all the information, opinions and conclusions contained are protected by copyright. This complete report may not be reproduced without the express consent of VM Group. Short extracts may be reproduced but only with the full and appropriate citing of the original source.
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