At a trite level, nuclear fuel is obviously important because without it, the reactor will not run and generate electricity. So any delays and disruption to the timely arrival of the fabricated fuel at the reactor will be fatal. Yet despite the complications of the nuclear fuel cycle and possibilities of regulatory concerns or political, trade or transport difficulties intervening, there are very few cases where fuel has failed to reach reactors. The international nuclear fuel market is clearly somewhat imperfect, but it has always performed well in its basic function of supplying reactors. One obvious exception to this rule is in India, where non-proliferation restrictions meant that reactors could not run at full capacity owing to India’s poor domestic uranium supply situation.

Yet there is a significant paradox surrounding nuclear fuel. In short, it can be viewed as both the biggest advantage of nuclear power, but at the same time arguably its greatest handicap.

On the positive side, the small amount of uranium required to produce a huge amount of nuclear energy leaves a correspondingly minor amount of solid waste which, as far as the industry is concerned, can be safely contained and managed without environmental harm. Secondly, because the splitting of the uranium atom releases energy without the combustion of carbon, there is virtually no production of greenhouse gases, the major waste product from fossil fuels. Thirdly, because nuclear fuel supplies are relatively inexpensive and highly energy-intensive (and thus small in volume), they can readily be stockpiled, affording a major buffer against energy insecurity. Finally, because fuel represents a small proportion of the generating costs of nuclear power, relative price stability for electricity is assured regardless of fuel price fluctuations.

On the other hand, those opposed to nuclear power have identified the volume of nuclear waste, small as it may be, as its Achilles heel. As yet, there are no operating repositories for high-level waste (HLW) and there remains a very live debate, both within and outside the industry, on the merits or otherwise of reprocessing, which itself creates additional public affairs debates. There are also a whole host of other objections about nuclear fuel brought up by those opposed to nuclear power. These include: uranium mining is dangerous and involves high levels of radiation exposure to workers; the uranium will soon run out (or if it doesn’t run out, recourse to lower grades will result in high greenhouse gas emissions from the fuel cycle); the transport of nuclear fuel brings with it significant risks to the general public; nuclear fuel used in the civil sector involves an unacceptable proliferation risk. It is not difficult to demonstrate that these make very little sense.

Market size

The volume and mass of the materials within the fuel cycle are indeed tiny by comparison with the fossil fuels used to generate an equivalent amount of electricity. Since the beginning of the nuclear age in the 1940s, just over two million tonnes of uranium has been mined, initially for nuclear weapons and after 1970 largely for civil nuclear power, and we can still identify where nearly all of this is located today. Well over half is in the form of depleted uranium, much of the rest is used fuel from reactors, while the remainder is held in a variety of other forms, many of which are potentially useful in the future. This is surely a significant advantage of nuclear power. Materials that may be waste and materials that may be useful in the future as better technology emerges are all identified and dealt with in an appropriate manner. Indeed, historical uranium production remains highly relevant to the future nuclear fuel business today as any material still containing fissile isotopes can potentially be processed for re-entry into the fuel cycle. The economics as well as the politics of recycling are the limiting factors.

Nevertheless, we can demonstrate that nuclear fuel is still quite a big business. In order to refuel a large 1GWe reactor on an annual basis, about 20 tonnes of enriched uranium is needed and at current market prices the cost will be about $40 million. Multiplying by the 400 plus reactors in operation around the world and adjusting for their size gives a world market for nuclear fuel of $15-20 billion on an annual basis depending, of course, on the contract prices. This is a small figure by comparison with coal, oil and gas trade, but is still undoubtedly a very significant business, employing many thousands of people and creating significant economic multiplier effects in many areas of the world where fuel facilities exist (notably in remote uranium mining areas in developing countries).

On the other hand, in the oil and gas industry the importance of their fuel means that big and powerful companies like Shell, BP, Exxon and Total are able to devote huge resources to massaging their corporate reputations. This rubs off, to some extent, in a generally favourable public image of their industry. The reputation of nuclear has undoubtedly suffered because its fuel business is not so significant in an economic sense – the largest uranium producers like Cameco and Kazatomprom are tiny by comparison with the oil giants. Most companies in nuclear are involved in other, sometimes competitive, energy sectors too. With the exception of Areva in France, they are not (as yet) powerful enough to leverage their own image onto industry reputation.

In an economic sense, the relatively low cost of nuclear fuel (and indeed the relative stability of those costs) is clearly nuclear’s trump card. In every other element of the cost structure of electricity generation, nuclear is disadvantaged: in the capital cost of the plants; the time it takes to build them; the operating and maintenance (O&M) costs of running them; and the costs of eventually decommissioning the facilities and returning them to alternative use. In addition, nuclear projects are often regarded as relatively risky by investors, and the cost of securing finance may well be higher than for other energy-related ventures. The cost of nuclear fuel includes, in addition to the front end costs of uranium mining, conversion, enrichment and fuel fabrication, a full contribution to the cost of waste management, as prescribed by national rules.

&#8220One of the great myths perpetrated about nuclear power
is that uranium is scarce in a geological sense, on a
par with diamonds, gold and other precious metals.”

For nuclear plants already in operation, the fuel cost is a relatively small part of generating costs, at around 25%. The economics of operating oil and gas generating plants swing almost entirely on the fuel price while coal plants, too, are heavily dependent the cost of coal. Despite some movements up and down in the price of uranium, the nuclear fuel cost has remained very stable over time. However, despite the low share of fuel in their overall costs, reactor operators fight hard to save every last cent because this is a cost that they feel they can control. Higher prices will directly hit profits. They cannot pass on increased fuel prices to customers in competitive markets. New nuclear plants are even less sensitive to fuel cost. New nuclear economics swing heavily on the capital cost of the plant and the rate of interest, with fuel costs playing only a relatively minor role. Once a nuclear plant is started up, its profits depend on it running it 24/7 with long periods (sometimes now up to 24 months) between shutdowns (outages) for maintenance and refuelling.

A plentiful resource

One of the great myths perpetrated about nuclear power is that uranium is scarce in a geological sense, on a par with diamonds, gold and other precious metals. It is true, however, that (rather like gold) there is a significant amount of emotion around its discovery and exploitation. Indeed, there was a uranium rush in the western United States in the 1950s, on a par with the somewhat-mythologised Californian gold rush of the late 19th century. There was an equivalent uranium frenzy at the same time in the former Soviet Union and its satellite states, which involved hundreds of thousands of workers operating mines with terrible labour and environmental conditions.

We know today that the underlying reality is rather different. Uranium occurs throughout the Earth’s crust and is about 500 times more abundant than gold, 40 times as silver and about as common as tin, tungsten and molybdenum. It occurs in most rocks in concentrations of two to four parts per million, for example at about four parts per million (ppm) in granite, which makes up 60% of the earth’s crust. In fertilisers, uranium concentration can be as high as 400 ppm (0.04%), and some coal deposits contain uranium at concentrations greater than 100 ppm (0.01%). Fertiliser and coal ash exploitation of uranium has been viable in the past and may conceivably be so again in the future. It is also found in the oceans, at an average concentration of 1.3 parts per billion and the Japanese, at least, have seriously studied possible extraction from seawater.

In fact, the much bigger issue is one of economics. Apart from during the 1950s, the late 1970s (and once again today), uranium prices have been relatively low and have limited the known deposits where extraction is economically feasible. That feasibility is certainly related to the concentration of uranium in the ore (the grade) – but that is only part of the story. The depth below the surface, geological setting and a variety of other

factors are also important. Trade and transport of fuel have, in the past, created some difficulties, but these are essentially commercial in nature. There are no substantive safety issues within the nuclear fuels business and trade restrictions are today much less onerous than in the past.

Today there is every reason to expect that the world supply of uranium is sustainable, with adequate proven reserves being continuously replenished at costs affordable to consumers. Speculation to the contrary represents a misunderstanding of the nature of mineral resource estimates and reflects a short-term perspective that overlooks continuing advances in knowledge and technology and the dynamic economic processes that drive markets. If uranium prices rise sharply, more exploration takes place and there are possibilities of substituting more enrichment services to produce low-enriched uranium. In the longer term, new reactor designs will be developed which will greatly economise the uranium input, and will conceivably make use of much of the world stockpiles of used fuel and depleted uranium. It may therefore be fairly concluded that fuel supplies will be more than adequate to meet foreseeable expansions of nuclear power, even if the number of reactors runs into the thousands.

The possibility of a significant increase in new nuclear power plants, particularly in new nuclear countries, has brought out the non-proliferation lobby in some force. The examples of North Korea and Iran have been cited as a warning of the dangers that nuclear fuel technologies, particularly enrichment and reprocessing, might spread to countries who will seek to use them to acquire nuclear weapons. Ideas for multinational fuel cycle centres and fuel banks have therefore been promoted. But these are essentially solutions looking for a real problem. Countries intent on acquiring weapons are unlikely to be deterred by these, while those new countries requiring fuel for their reactors will either have it supplied by reactor vendors on very long term contracts or be able to source what they need from the competitive commercial market, which guarantees high security of supply.

On grounds of adequacy, economics, security of supply and safety, nuclear fuel should therefore remain the crucial advantage of nuclear power. Those investors currently considering nuclear power are, of course, perfectly aware of this. It is somewhat curious why many of those opposed to nuclear power focus on imaginary weaknesses in the fuel area. Fuel is, in reality, a strength. This point has been inadequately stressed by the industry, which has too often been pushed onto the defensive by its opponents. Ultimately however, if investors are happy to put their money into new nuclear reactors, they must not be very worried that the instrument of their profit might run out of fuel.

Author Info:

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