Traditionally little similarity exists between the workings of the uranium, conversion and enrichment markets and that of fuel fabrication. Nuclear fuel assemblies are highly engineered products, made especially to each customer’s individual specifications. These are determined by the physical characteristics of the reactor, by the reactor operating and fuel cycle management strategy of the utility as well as national, or even regional, licensing requirements. Nowadays utilities tend to show increasing interest in package solutions, i.e. the fuel assemblies including the fissile material. Especially in case of new nuclear build in emerging nuclear countries, long term assured fuel supply plays a decisive role.
Requirements for fuel fabrication grow roughly in line with the growth in nuclear generating capacity. However, fabrication requirements are also affected by changes in utilities’ reactor operating and fuel management strategies, which are partly driven by technical improvements in fuel fabrication itself. For example, light water reactor (LWR) discharge burnups have increased steadily as improvements in fuel design have made this possible; this has tended to reduce fabrication demand, as fuel remains in the reactor for a longer period. Longer operating cycles on the other hand increase fabrication demand, since the reload batches have to be very big, thus not allowing reinsertion of many fully utilized bundles. Fuel fabricators have had to adapt to these changes, which have been driven by competitive pressures in the LWR fabrication market.
Looking first at demand, annual requirements for LWR fuel fabrication services are approximately 7,000 tonnes of enriched uranium (expressed as tonnes of heavy metal, or tHM). The requirements will increase to about 9,700tHM by 2015. Requirements for pressurized heavy water reactors (CANDUs) account for an additional 3,000tHM/year and gas-cooled reactors for about 400tHM/year. It should be noted that where fuel contains enriched uranium, annual fabrication requirements are only a fraction of annual natural uranium requirements (because much of the mass of the natural uranium remains in the enrichment tailings). However, where natural uranium is used directly (as with CANDU fuel) annual fabrication requirements equal annual uranium requirements. Some PHWR operators have switched to slightly enriched fuel thus reducing the demand for fuel fabrication since the discharge burnup increases and the fuel stays longer in the reactor.
Countries operating CANDUs or other PHWRs with requirements for UO2 conversion are Argentina, Canada, China, India, Korea, Pakistan and Romania. The key question to future growth in demand is the magnitude of the Indian nuclear programme – if it still will rely heavily on PHWRs as in the past or if it will be based on LWRs after the disappearance of the political restrictions. For the UK’s Magnox gas-cooled reactors (now nearly all phased out), conversion from natural uranium concentrates to uranium metal and fuel fabrication is handled domestically in dedicated facilities.
Plans to build many new reactors essentially affect the demand for fabrication capacity in two ways. The demand for reloads increases in line with the new installed reactor capacity, roughly between 16 and 20 tonnes per year per GW. Additionally the first cores create a temporary peak demand, since their volume equals three to five annual reload batches of currently operated LWRs. Given reasonable expectations for new reactors, after 2015 a capacity between 1000 and 1500 tonnes per year will be needed globally for first cores. This is around 15% of the 2015 reload demand. This could be managed at least until 2020 with the existing fabrication capacity but logistics will need some special attention. A first core delivery normally has to be performed in a short period of time, requiring a considerable amount of costly transport containers as well as storage capacity in the fabrication plants, since the readiness for fuel acceptance at the new reactor is prone to delays.
On the supply side, the main fuel fabricators are also reactor vendors, and they usually have supplied the initial cores and early reloads for reactors built to their own designs. As the market developed, however, each fabricator began to offer reloads for its competitors’ reactor designs to fill the surplus capacity no longer utilized by first cores. This has led to the market for LWR fuel becoming increasingly competitive. With several suppliers competing to supply virtually every different fuel design, a trend of continuous
fuel design improvements has emerged with continued focus on increasing burnup and improving performance. Originally the fabrication market for BWR fuel was not as segmented and competitive as the PWR market. This has changed, however, as fabricators focused more attention on this relatively less competitive market as a means to acquire further market share. Nowadays this market segment also faces continued strong competition.
Currently, fuel fabrication capacity for all types of LWR fuel throughout the world is about 13,000tHM annually and exceeds the demand by a considerable amount. Despite this, some fabricators, especially in China, Korea and USA, have to prepare for potential increasing demand resulting from first cores for new build, since their existing capacities are already operated at high capacity factors. China has already increased the capacity of the Yibin plant and is working to expand the capacity of the Baotou PHWR fuel plant for also manufacturing PWR fuel.
Outside the LWR fuel market, fuel fabrication requirements tend to be filled by facilities dedicated to one specific fuel design, usually operated by a domestic supplier. For example, all fabrication requirements for AGR and Magnox reactors in the UK are supplied solely by dedicated domestic facilities. Feasibility studies of competitors have shown upfront investment costs and lead times that are too high to enter this limited market niche.
In the past all VVER and RBMK reactors have been supplied by dedicated facilities in Russia. A few years ago, BNFL/Westinghouse entered this market and delivered a limited volume to VVER reactors in Finland, the Czech Republic and Ukraine. Meanwhile TVEL has regained the contracts in Finland and the Czech Republic, starting fuel delivery from 2009. Toshiba-Westinghouse has started supplying VVER fuel to Ukraine under a US-Ukraine governmental agreement.
“Looking at the Western world alone, fuel fabrication capacity
CANDU fuel is also produced almost exclusively within the country where the reactor is located, by UO2 conversion and fabrication facilities dedicated to such supply. Due to the high fabrication volume needed, because of using natural or only slightly enriched uranium, the installation of national fabricators made good sense. This market is somewhat more diversified than the other non-LWR fabrication markets, however and, as a result, the requirements of some utilities with heavy water reactors may, on occasion, be met from a non-domestic supply source.
Given the very competitive nature of the LWR fabrication business and overcapacity in supply, the industry reorganized at the beginning of this century and has now once again begun to create some mergers and partnerships, possibly driven by the expectation of the nuclear renaissance. The mergers a few years ago were expected to result in reduction of existing over-capacities, but only production consolidation has happened so far. Some plants have even increased their capacity along with modernization and re-licensing projects. There have certainly been recent interesting corporate developments, notably Kazatomprom taking a 10% share in Toshiba-Westinghouse and signing in 2008 a MOU with Areva to build a 1200t/yr fabrication plant at Ulba, supporting Kazatomprom’s plans to become a major nuclear fuel supplier.
As with the other fuel cycle steps, the fabrication industry is affected by secondary and non-traditional sources of enriched uranium feed into the market. Down-blended HEU, tainted UF6 stockpiles, utilization of reprocessed uranium and plutonium will all play a part in determining how competitive a supplier remains. Their ability to effectively deal with these sources as feed for their processes will affect their success in the longer term.
Utilization of reprocessed uranium contributes to the compensation of missing uranium mining capacities but it does not add to the fuel fabrication capacity, since ‘normal’ uranium fuel production lines are used. Currently about 100t/yr are produced at MSZ in Elektrostal (Russia) for Areva contracts. One line in the Drôme, France Romans plant is licensed to process 150t RepU per year and has already been used for deliveries to French and Belgian reactors as well as powder to Japan. The Areva Lingen, Germany plant can process 50t of received pellets per year into finished fuel assemblies. In the US, down-blended weapons uranium is fabricated by Areva into reload fuel assemblies for TVA’s Browns Ferry reactors.
MOX fuel is presently only fabricated on a commercial scale in Areva’s Melox plant in Marcoule, France. With a capacity of 195tHM/yr and a good production rate this plant helps not only to save uranium and enrichment demand, but also adds LWR fabrication capacity to the market. BNFL’s Sellafield, UK MOX plant with a designed capacity of 120tHM/yr was down-graded to 40tHM/yr but has unfortunately not yet reached a stage of reliable output. Only a few tHM/yr has been produced so far. Decisions about the future of this plant are expected to be taken soon. The Japanese Rokkasho-Mura MOX plant is planned to be operational by 2015 and the US MOX Plant in Savannah River will start in 2018 to produce MOX fuel from weapons plutonium.
Looking at the Western world alone, fuel fabrication capacity currently outweighs requirements by approximately 40%. Clearly, existing fuel fabrication capacity is more than sufficient to meet current requirements and this is likely the case under all requirements scenarios throughout 2020. The excess capacity until 2020 seems to be sufficient, even for a high case, to satisfy the demand including expected first cores.
Historically, first cores helped to smooth out the seasonality of fabrication demand. Fabrication plants with mainly annually reloading customers have to deliver about three quarters of their annual volume within the first five months of a year. This indicates that the technical capacity can be assumed to be far above the licensed capacity.
The changes underway in the industry, with some companies reorganizing their fabrication businesses and others consolidating in order to gain stronger positions within the market, appear to be a trend that will continue for some time. As this proceeds and operations are made more efficient or perhaps in some cases even are closed down, the supply/demand balance of the market may begin to shift closer to equilibrium. However, it seems likely that intense competition in the PWR fuel market will continue, especially after the Russian plans to enter the western PWR market with their own 17x17 design and Siemens as a partner. The strong competition in the market for BWR fuel may even increase if all vendors stay in a market segment shrinking in relative terms.
One area of the fabrication market where growth remains a possibility is in MOX fuel fabrication. Existing plans by the limited number of countries that have to date committed to using MOX fuel will require the expansion of capacity at existing MOX fuel fabrication facilities, along with the construction of new plants. However, while decisions on changes within the LWR market are increasingly based on commercial considerations, future decisions related to MOX fuel fabrication are likely to depend as much on political factors as on economic ones. This is irrespective of the better economics of introducing MOX fuel with higher world uranium prices.
The lead time for increasing capacity of existing fabrication plants or even for constructing new fabrication plants is shorter than the licensing and construction period for new reactors. A new fabrication line can satisfy the reload demand of 20 to 30 new reactors. This allows the conclusion that fuel fabrication will not become a bottleneck in the supply chain in any conceivable nuclear renaissance.
Steve Kidd is Director of Strategy & Research at the World Nuclear Association, where he has worked since 1995 (when it was the Uranium Institute). Any views expressed are not necessarily those of the World Nuclear Association and/or its members.Related ArticlesShaw wins contract for Grand Gulf uprate