Last week the Business section of the Daily Telegraph reported that the Chinese state-owned TV service had claimed that the country’s scientists had achieved a major technical breakthrough in nuclear fuel reprocessing technology. The report stated that the breakthrough allowed for the uranium to be used for 60 times longer than under current conditions, meaning that the impact on price could be quite savage. This report was said to be based on an announcement from the China National Nuclear Corporation that it had developed a new process which would allow spent nuclear fuel to be reused, and it reckoned that China’s current 170,000 tonnes of uranium resources would therefore last for 3,000 years.

It seemed a strange claim to make at a time when China is entering into deals to ensure that it has a hand on adequate production of uranium to meet future requirements. If it is not going to need so much uranium, why bother? But the Chinese are great traders, and traders like to try to tip prices to their advantage. If this is the case, they presumably expected the spot price of uranium to drop sharply on the news, and lead the contract price downwards. This would have enabled them to buy more at a cheap price. At the time, a number of analysts noted that the Chinese were also in talks with French nuclear giant AREVA about a reprocessing technology transfer so a technical breakthrough such as this might increase the pressure on the French.

In the event the spot price rose from US$62.50 per pound to US$66.50 per pound, which makes it look as if the Chinese tactic had imploded. It is never wise to underrate the Chinese, though, so Minews got in touch with Alan Eggers, the Australian uranium entrepreneur who maintains a chain of listening posts around the world and who’s thus always up to date with news about the nuclear power industry. Nowadays he is running ASX-listed Manhattan Minerals Corporation which is exploring for uranium in various parts of Australia. But early in 2007, his previous company, Summit Resources, was taken over by Paladin Energy for A$1.2 billion, so he has plenty of claim to a track record of success in the industry.

Sure enough, Alan produced a report from Beijing News.Net which repeated the Telegraph story but which was published a week earlier. The only difference was that it confirmed just how important uranium is to the future of that huge country. China has 12 nuclear power plants in operation and 25 under construction, so by 2020 it expects to be using 20,000 tonnes of uranium a year, which is quite a step up from its own internal production of 2,400 tonnes. Lin Boqiang of the China Centre for Energy Economics Research put the situation in context when he admitted that recycling of spent nuclear fuel is still at a very early stage.

Alan Eggers canvassed a number of experts and the majority verdict was that the Chinese claim was a load of old rubbish. It relates, according to Edward Sterck, a uranium analyst at the Bank of Montreal, to the use of MOX fuel, which is not new. MOX is a blend of plutonium oxides and uranium, whether pure, reprocessed or depleted, and is being used mainly in the UK and France. “The problems are that this fuel cannot be used in older nuclear power stations and is more expensive than actual uranium”, says Sterck

Mike Smith, senior vice president of UxC, the industry’s leading source of consulting, data services and publications on global nuclear fuel cycle markets reckons that China has been reprocessing uranium for 50 years, as that is how the country made its nuclear weapons. He thinks the announcement from CNNC was simply a progress report on the commercial viability of the technology which is probably still 20 years away. So there you have it. Maybe something was lost in translation, but it has certainly not deterred Mike Smith, another UxC analyst from repeating his forecast that the spot price of uranium will advance quietly this year to around US$70 per pound. Alan Eggers rounds off the debate with his straightforward view that a supply shortfall for uranium looms for 2012/13.


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