Fuel review: conversion
Enough for today3 November 2009
The current margin of available conversion supply may not be adequate to overcome another extended disruption at any of the converters. By Julian Steyn
Uranium concentrate (U3O8) to uranium hexafluoride (UF6) conversion services supply concerns began in 2003 when the operation of the Honeywell International, Inc. uranium conversion plant located in Metropolis, Illinois, was shutdown for almost six months due to equipment leakage problems. At about the same time, the former British Nuclear Fuels Limited (BNFL) announced that it would no longer operate its Springfields Fuel (SFL) plant in the UK (although another deal has since kept it open). These events began an immediate tightening of the market and an industry-wide realization that the nuclear fuel cycle supply chain, including conversion services, was vulnerable to serious interruption at any time. The market price was impacted upward at the time because of these events.
In 2007, Cameco shutdown its Port Hope conversion plant for about 15 months because of uranium bearing effluents leaking into the nearby city harbour. Shortly after it was restarted in late 2008 it was shut down again due to a price dispute with a supplier. Interestingly, unlike the Metropolis plant shutdown, the Port Hope shutdowns had no discernable impact on the market price of conversion services. However, during this period the consensus evolved that primary conversion capacity must be expanded in order to meet the industry's gradually expanding needs for uranium conversion services and because of the gradual diminishing availability of secondary supply (already-mined uranium, or AMU as UF6, as well as recycle), and thin supply-demand margins. The plant interruptions also highlighted the logistical issues associated with transport of conversion services supply, particularly between Europe and North America.
The industry’s supply concerns may be moderated in the short term because of the negative impact of the financial market disruptions during the past year. Nonetheless, the world U3O8 to UF6 conversion services market supply capability had already begun to undergo the necessary expansion to meet the growth that is projected for the nuclear renaissance that still lies ahead (see also p.15). In May 2007 the capacity of the Metropolis plant was expanded by almost 20%. During the same month, Areva announced that it would build new facilities in the south of France that would go into operation in 2012, and that would eventually have a capacity that would be 50% greater than that of its current facilities. It is also understood that Rosatom’s enriched uranium product (EUP) export capacity will increase in the coming years as its existing three-plant complex is upgraded to a modernized two-plant direct conversion complex. The Russia-United States highly enriched uranium (HEU) purchase agreement ends in 2013, and Russia is expected to begin deliveries of significant amounts of EUP to the USA in 2014.
Though conversion services market prices have remained relatively stable throughout the past several years the spot price declined significantly in June 2009. The North American (NA) conversion services spot market price dropped to between $6.50 (Ux Consulting) and $7.50 (TradeTech) per kilogram of uranium (kgU) as UF6. The long-term NA market price has been reported as $12.25 per kgU for the past three years. The European long-term price has been $13.00 per kgU since January 2007.
In addition to the plants listed in the table, there are also several small conversion facilities operating in countries that either have or are developing their own indigenous fuel cycle capabilities.
World UF6 requirements are projected to rise gradually in the years to 2030 (see Figure 1). Production by the world’s five primary suppliers met approximately 72% of 2008 requirements, and Russian HEU, the secondary market, loans, inventory, enrichment tails upgrading, and government stockpile draw-down met the remainder. It is projected that identified and expanded sustainable primary capacity and inventory as well as recycle, should more than meet requirements through the early 2020s. However, additional new supply would be required to meet the projected high case requirements after 2013.
Status of Converters
Cameco operates the 18,000 tU per year uranium trioxide (UO3) plant at Blind River, Ontario, and processes the UO3 at its 12,500 tU per year UF6 plant and 2,800 tonne UO2 plant at Port Hope, Ontario. Cameco plans to expand its Blind River capacity to 24,000 tU. The company suspended operations at its Port Hope UF6 conversion plant in July 2007 following a uranium and chemical leak into the ground. In January 2008, Cameco received Canadian Nuclear Safety Commission (CNSC) regulatory approval to begin repairing and upgrading the Port Hope plant. On 14 May 2008, Cameco told the CNSC that trace amounts of leakage from the plant had reached the nearby harbour. Significant upgrades were made to structures and equipment related to liquid management practices. Cameco received regulatory approval and restarted the UF6 plant in late September 2008, after being shut down for slightly more than 15 months. In late November 2008, Cameco once again suspended UF6 production at Port Hope because it claimed that it was unable to resolve a contract dispute and obtain commercially viable supplies of hydrofluoric acid (HF) from its sole supplier. On 19 May 2009, Cameco announced that it had signed a mutually-beneficial contract with its HF supplier. It resumed UF6 production on June 17. During the plant closure, Cameco met its obligations with supply from SFL and through customer voluntary deferrals of deliveries and UF6 conversion services purchases.
Springfields Fuels is a former BNFL SNFL plant at Springfields, Lancashire, UK. In mid-2006, Cameco began shipping the site approximately 5,000 tU UO3 annually from Blind River in Ontario under a toll conversion contract that initially was to run through 2016, and that is now being extended. This arrangement boosts Cameco’s overall sustainable UF6 capacity to approximately 15,500 tU per year.
AREVA NC operates the Malvesi UF4 plant at Narbonne in France whose product is converted to UF6 at the Pierrelatte plant at its Tricastin site; this existing complex is currently referred to as Comurhex I. In May 2007, AREVA announced that it had decided to replace its ageing Malvesi and Pierrelatte facilities with new 15,000 tU facilities at the same sites called Comurhex II. First industrial production at this complex is targeted for 2012. The complex design will accommodate expansion to 21,000 tU, as the future market dictates.
ConverDyn, a general partnership of affiliates of Honeywell and General Atomics, is the exclusive agent for conversion services provided by the Metropolis Works plant in Illinois. The Metropolis plant, which is operated by Honeywell, was shutdown for most of May 2007 in order to phase into operation new equipment required to increase the plant’s annual capacity to 15,000 tU. There are plans to expand the plant’s capacity to 18,000 tU by about 2013.
Rosatom is upgrading its two UF6 production conversion plants operated by the Joint Stock Company (JSC) Angarsk Electrolysis Chemical Combine (AECC) and the Siberian Chemical Combine (SCC) enrichment companies. These two entities currently have a useable UF6 production civilian commercial capacity of approximately 11,000 tU which is expected to be increased to as much as 18,000 tU by 2015. Capacity after 2015 will depend on Russian nuclear power expansion and export market success.
China National Nuclear Corporation (CNNC) is reported to operate a 1,500 tU conversion plant at Lanzhou in Gansu province, and a 500 tU plant at Diwopu, also in Gansu province. Since Chinese conversion capacity must provide feed for Chinese domestic enrichment requirements it can be concluded that CNNC will have a capacity of 2,500 to 3,000 tU by 2010.
The Ulba Conversion Initiative was a joint feasibility study of conversion by Cameco and Kazatomprom. They entered into a memorandum of understanding in 2007. In June 2008, following the completion of a scoping study the two parties announced the establishment of Ulba Conversion LLP, to further advance the development work through the first stage feasibility study of a 12,000-tonne UF6 conversion facility at the Ulba Metallurgical plant in Ust-Kamenogorsk, Kazakhstan. In 2008, the partners put the project on hold because of softening conversion market and economic conditions in late 2008.
The outlook for the conversion services market during the next ten to 20 years will depend on the expansion plans of the primary producers and the nuclear industry’s growth. On the supply side there are also uncertainties associated with the availability of the various AMU materials.
One area of uncertainty is the sustainability of the projected primary production. For example, if producers can only provide supply at about 90% of that projected in the table, then the excess supply margin will only be about 8% greater than the reference requirements projection between 2015 and 2024, a slim margin. Supply at 90% would be substantially less than that demanded by the high case requirements. In fact, in addition to existing and planned capacity, additional new capacity would be required to meet high case requirements after 2013.
While the reference requirements case is currently viewed as having a higher probability of occurrence than the high case, the high case must be viewed as having an increasing probability because of the recent nuclear power commitments in Europe, for example, in the UK, Italy, Sweden, Spain as well as in China and India. During the past year or so, China’s forecast for 2020 has increased from 40 GWe to 86 GWe. The increasing difference between the world reference and high projections weakens confidence in future conversion services supply adequacy.
The rate of AMU drawdown is uncertain for a number of reasons. For example, the availability of U.S. government inventories will depend on the outcome of the needs of government programs and the financial value of the declared excess material, and the resistance of the domestic supply industry to government inventory sales. The extent of Russian tails upgrading can only be presumed since it has given no clear signals of its intentions in the coming decades.
The future supply-requirements outlook bears watching during the next several years. It would be prudent to plan now for the addition of future primary capacity.
Julian Steyn, president of Energy Resources International (ERI) 1015 18th Street NW, Suite 650, Washington DC 20036, USA. Note: Historical and current spot and term market prices referred to in this article are based upon information that is published by the Trade Tech and Ux Consulting (data in Platts NuclearFuel Newsletter) companiesRelated ArticlesNuclear fuel market to double by 2020 Stability in tough times The coming oversupply