There are plenty of scenarios produced today, of various complexity, to show likely futures for nuclear power. Some go further, matching the likely availability of uranium and nuclear fuel to the demand from reactors, in order to determine the possible market balance. Examples include the scenarios to 2030 produced in the WNA’s biennial Market Report, the IAEA’s annual development of two nuclear cases, the US EIA’s International Energy Outlook and the OECD-NEA’s recent Nuclear Energy Outlook. There are now also many consulting companies and financial analysts, suddenly interested in nuclear, who are producing their own forecasts.
Most of these publications develop their scenarios on a country-by-country basis and then aggregate these to show the world situation. With over 30 nuclear countries today and the prospect of several more (for example perhaps Italy, Indonesia, United Arab Emirates and Vietnam by 2020 and many more beyond then), the picture can become quite complex.
Simplicity is always a virtue (assuming it accurately encompasses the likely reality), so it is worthwhile to propose and examine closely a much simpler scenario as a summary statement of what will happen from today until 2020. The concept is that roughly half of the increase in nuclear generating capacity to 2020 will occur in one country, China, and that half of the increase in uranium production will be located in another, namely Kazakhstan.
The Chinese nuclear plans are now attracting a lot of attention. The key feature is that the nuclear programme now has the strong support of the central government and the state planners in Beijing. Nuclear power is often presented by its detractors as an evil technology imposed by technocrats and strong governments on generally unwilling local people who live near suitable sites on coastlines, lakes or rivers. In China, the opposite has been very much the case. It was the local communities who were pressing for additional reactors, having noticed the degree of economic development the early Chinese reactors brought to their surrounding areas. For many years, the central government was somewhat sceptical about nuclear power and so held it back in successive 5-year plans, to the frustration of those who could see the opportunities it offered. Chinese planners were very much wedded to hydroelectric projects, partly because of their locations inland away from the booming coastal provinces (where nuclear projects would be located). Yet China’s electricity growth has become mainly dependent on coal, whose environmental and supply security disadvantages have now become apparent. From the environmental side, the immediate issue is improving the quality of air in the Chinese cities, rather than the impact of greenhouse gases on climate change. The health problems from burning so much coal are now obvious and monitoring air quality is now taken very seriously. The severe winter in 2007-8 emphasized the problems in transporting so much coal from mine sites located a long way from power stations and this has been an additional factor encouraging support for more nuclear plants.
In terms of number of reactors, the Chinese plans are already dwarfing the remainder of the world. With only 11 reactors currently in operation, there are now an additional 12 under construction. This is likely to rise to up to 18 under construction by the end of 2009, representing not far off half of the world’s total. It is the number of different sites that is most impressive, making it quite difficult to keep close track of what is happening on the ground. All the new sites, where one or two reactors are starting construction, have space for six or eight, while there are a huge number of additional locations identified for the future, which are at various stages of initial site work and approval. Some of these are in the poorer, inland provinces, where the state planners, backed by enthusiastic local governments, are still trying to encourage economic development. Much attention has been given to the deals signed to acquire the four AP1000 reactors from Westinghouse and the pair of EPRs from Areva (plus two additional Russian reactors), but the most important reactor in the next stage of the Chinese programme will be the CPR-1000, based on the Framatome design from the 1980s built in China initially at the Daya Bay site. With the fifth and sixth reactors here (Ling Ao 3 and 4) nearing completion, the
Chinese can now replicate this design with high local content on a large number of new sites. Acquiring the latest foreign reactor technology is certainly important to them and this will be incorporated in future reactor designs over later phases of the programme, through licensing agreements with the technology owners. But for now, the pragmatic policy has been to stick to the “tried and tested.”
It is unlikely that plans will be derailed by the global financial situation. Lack of money is not a serious problem for large infrastructure projects in China, while the slowdown in the Chinese economy is prompting the authorities to inject more public money into job-creating investments. A bigger risk for the next period is the difficulty of managing so many big projects on such a large scale across the country. Some things are bound to go wrong – perhaps shortages of key components at crucial times or difficulties with obtaining workers in sufficient numbers with the required training. Nevertheless, the Chinese are great pragmatists at overcoming adversity – now that the central government is taking a lead, all the bits should fall into place. In terms of targets, achieving 40GWe of nuclear capacity by 2020 (compared with almost 9GWe today) has been the officially-stated plan, but this would result in nuclear only representing a few percentage points of Chinese power generation. Much higher numbers, of up to 70GWe by 2020, have therefore more recently been mentioned. Given the scale of recent reactor construction starts, 40GWe by 2020 is clearly achievable, while a close scrutiny of current plans shows that 50GWe is quite possible too. Predicting beyond this is difficult until more progress is seen with the projects recently underway.
Several forecasts predict the world nuclear capacity rising to about 450GWe from 372GWe today, hence predicting growth of about 80GWe of additional capacity. Compared with recent levels of reactor construction, this certainly represents a significant renaissance for nuclear power, which would likely accelerate rapidly after 2020 as new countries get their first nuclear plants. If China adds 40GWe by 2020, this could conceivably constitute half of this expansion.
“Half of the increase in nuclear generating capacity to 2020
No matter what happens with national nuclear programmes up to 2020, the supply-demand balance in the world uranium market means that world primary uranium production must now step up sharply from the current annual level of around 45,000 tonnes. The requirements for fuelling existing reactors and the gradual decline of secondary supplies as a factor in the market (particularly from surplus former weapons material) means that production must rise to 60,000 tonnes and beyond. How far it needs to rise by 2020 depends on how far nuclear generating capacity increases, but 70,000 tonnes on an annual basis is a reasonable level as a base.
Kazakhstan has quickly risen from producing a few thousand tonnes of uranium annually only five years ago to become, almost certainly, the world’s leading producer in 2009 at over 10,000 tonnes. Plans are now in place to expand this to 15,000 tonnes annually and beyond, with 25,000 tonnes mentioned before 2020. This planned rate of expansion has raised a lot of eyebrows, but there are good reasons to suggest that it isn’t completely unrealistic.
Firstly, the uranium resources are clearly in place to support production at these levels. Kazakhstan has the second most extensive uranium reserves in the world, after Australia, and has been a major producer since the 1950s, initially for Soviet nuclear weapons. Since the establishment of Kazatomprom as the national atomic company in 1997, Kazakhstan has established itself as a reliable supplier to the world’s commercial nuclear industry and has demonstrated that the in situ leaching (ISL) uranium recovery technology can yield large quantities of uranium from suitable deposits.
Kazatomprom’s approach has been to enter into a large number of joint venture agreements with foreign companies in order to develop many separate deposits, while also signing a myriad of long term supply agreements with customers in Asia. Initial joint ventures were with Cameco and Areva but there are now deals with Russian, Japanese and Korean companies too. Expanding production at the anticipated rate is not going to be easy and issues have arisen surrounding the supply of sulphuric acid for the leaching process and also the availability of men and materials in general. The ramp up of production has, however, largely kept up with the stated plans, indeed much more closely than has been the case with other uranium producers. The aim in Kazakhstan is to develop other fuel cycle facilities, notably in conversion and fuel fabrication, to add value to the uranium production. It is assumed that enrichment will take place in Russia, where Kazatomprom has deals with Tenex, so it will eventually be possible to offer a complete fuel service to customers. Expanding uranium production is clearly the initial key to this strategy and in itself should yield very satisfactory profits at current uranium prices. Estimates of the cost of uranium production in Kazakhstan vary, but it is clear that it is at the low end of the cost curve. The ISL technology provides a means of exploiting amenable low-grade uranium deposits that could not be developed economically utilizing conventional mining technology. ISL has traditionally only been employed on relatively small-scale mining operations, but in Kazakhstan is being employed on a large scale with many separate deposits being exploited at once. As such, this gives more flexibility to production than by relying on one or two major mines.
If world uranium production rises to 70,000 tonnes by 2020, it is reasonable to assume that Kazakhstan will take up about half of the growth from today’s 45,000 tonnes. There are issues of customers becoming too heavily dependent on supply from one source, but Kazakhstan’s willingness to allow equity participation and to sign long term deals suggests that the Japanese, Koreans and others will be happy to see an increasing share of their requirements coming from here. It is clear, however, that a large part of the additional uranium that China needs will also come from Kazakhstan. China’s domestic uranium resources are relatively poor and it will be hard to increase production substantially above the current 800 tonnes per annum. China is already a substantial uranium importer; current needs are for about 2000 tonnes per year. If nuclear capacity rises to 50GWe by 2020, this will rise to over 10,000 tonnes each year. An accident of geography means that China and Kazakhstan are located with a common land border, but there are obviously more important reasons why one should be a major supplier of the other. The nuclear programmes in each country are indeed very complimentary to each other.
In September 2007 two agreements were signed between Kazatomprom and China Guangdong Nuclear Power Corporation (CGNPC) on Chinese participation in Kazakh uranium mining joint ventures and on reciprocal Kazatomprom investment in China’s nuclear power industry. Kazatomprom is likely to become the main uranium and nuclear fuel supplier to CGNPC, which is to be the operator of over half of the new Chinese plants. Framework strategic cooperation agreements have also been signed with the Chinese National Nuclear Corporation (CNNC), which will invest in Kazakh mines and become a major customer.
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.