Articles in Category: Environment

This is the second part in a multi-part series. Keep an eye out for the next installments in the coming weeks. You can read the first post here.

Safety has long served as a key buying criteria for consumers looking to purchase a new car. One need only look at Consumer Reports or the Insurance Institute for Highway Safety to see the importance safety plays in consumer purchases of cars. According to Michael Jarouche, Vice President of Global Sales and Marketing for Humanetics, a firm that manufactures crash test dummies, the industry studies and implements safety solutions along one of three areas: passive safety this refers to the safety devices within the car including the sheet metal, car structure, etc., that form the basis of the car’s crash worthiness capability. Passive safety includes the product design elements; for example, good weld nuts, good support, air bags, belts etc. The second area of safety, called “active safety includes design features such as ABS anti-lock brakes and vehicle dynamic control. Active safety has little to no relevance in the discussion of aluminum v. steel within the automotive industry, according to Jarouche. Finally, the area of information safety that includes elements such as devices to monitor the occupant and/or gauge what the driver is doing behind the wheel will not comprise any portion of the analysis on safety either. Instead we will focus our attention solely on “passive safety and the relative performance of aluminum v. steel.

The aluminum industry argument hinges on several concepts as articulated in a recent study:

  • A high strength to weight ratio
  • Larger crush zones “which serve to reduce forces on vehicle occupants in a crash
  • Aluminum structural members can collapse in a predicable manner in severe impacts
  • Better corrosion resistance “minimizes deterioration of the crash energy absorption capabilities over the life of the vehicle
  • On a pound per pound basis, aluminum absorbs 2x as much crash energy as typical automotive steel the argument goes on by stating as vehicles “lighten up aluminum will help with fuel economy, performance and safety

But as that same study points out, “There is little doubt that larger and heavier vehicles provide more safety for their occupants. And therein lies the rub until/unless more vehicles on the road contain aluminum vs. steel, the relative crash worthiness of two like vehicles, one with more aluminum, the other with more steel, will provide the steel car with a safety advantage. Thus, some industry participants have advocated a move toward vehicle to vehicle compatibility that would call on industry to move toward standardization of vehicle weights, ground clearance, bumper height and the shape of the front end. This particular issue encapsulated in an “unintended consequences argument says that knowing heavier cars already exist and make up some proportion of total cars on the road, consumers, in their own self interest, will opt for “heavier and safer car choices thereby perpetuating the problem.

In the meantime, we asked Michael Jarouche to share with us where he thinks this debate will go over the next ten years. “Steel isn’t going away at all although bumpers went from steel to plastic as well as fenders, he continued, “the main body, undercarriage and beams, those are steel made out of steel and I personally believe steel has better energy management over aluminum for these specific applications. He went on to say that steel allows for better stamping and different welding techniques that aid in the energy management process. The core structure for the most part is still steel (and that won’t change).

Next week we’ll walk through the steel industry’s arguments regarding safety as well as take a more technical look at some of the manufacturability and design issues associated with using steel and aluminum.

–Lisa Reisman

This is the first part in a multi-part series. Keep an eye out for the next installment.

The opening “crawl of Return of the Jedi references the Galactic Empire secretly building a new “armored space station even more powerful than the first dreaded death star, thought to “spell certain doom for the small band of rebels struggling to restore freedom to the galaxy. We’ll let readers draw their own conclusions in terms of which metal represents the Death Star and which represents the rebels. But make no mistake about it; metal product substitution appears live and well within the automotive industry. One need only visit a few websites — for example, Alcoa’s — to see how it describes the aluminum value proposition, or this slick video from Novelis on the Jaguar XJ aluminum body or the Aluminum Association’s website articulating the virtues of aluminum over other materials.

But the steel industry has not taken this threat lying down; in fact, it has conducted considerable product innovation to address some of the specific benefits the aluminum industry has touted. What we find intriguing about the specific debate between steel and aluminum for the automotive industry is where it has played out and what arguments each side makes.

The automotive industry, guided by recent changes to CAFE standards impacting passenger cars and light trucks, will need to “meet an estimated combined average mile per gallon (mpg) level of 34.1 by MY 2016, and that has driven the industry to lighten up vehicles as one means of achieving the targets. According to a recent Wall Street Journal article, automakers seek to remove anywhere from 250-700 pounds of weight from each car.

Metal makes for an easy target.

The arguments made by both sides of the debate, however, differ in some key respects. This series will examine the arguments made by proponents of both sides as well as offer up some arguments that have received less media attention. The aluminum industry has built a compelling case centered on the following (and borrowed from the Aluminum Association):

  1. Increased payloads aluminum allows a hauler to carry more tonnage than it otherwise could with an alternative material
  2. Lower fuel consumption (see weight argument above)
  3. Reduced GHG emissions (again, see weight argument above)
  4. Lower maintenance costs fewer trips reduces wear and tear
  5. Corrosion resistance aluminum serves as a better material from a corrosion standpoint
  6. Higher resale value this rests on the notion that aluminum retains its value more than steel
  7. High recycling rates aluminum is “infinitely recyclable

Alcoa makes several additional arguments including: crash protection without compromise and enhanced driving performance, along with, “All other factors equal, lighter cars accelerate faster, stop faster, and have better handling that’s why many top performance cars are all-aluminium.

But don’t count the steel industry out. Though CAFE standards may serve as the impetus and momentum behind aluminum, they have also driven innovation within the steel industry. The steel industry has also built a compelling case centered on the following:

  1. CSR/Lifecycle Costs Steel emits fewer emissions during the production process than aluminum, thus it has a lower carbon footprint
  2. Safety/Energy Management – The main body – the undercarriage and beams are made out of steel. Steel’s versatility from a welding/stamping processing standpoint also has advantages over aluminum (we will dive into this in greater detail in a subsequent post)
  3. AHSS Advanced High Strength Steels these materials are recyclable, take less energy to produce and aid in the “light-weighting of traditional steel parts

Several additional considerations make the debate between the two materials all the more fascinating. For example, consider the aluminum shortages that have already started to appear in the European automotive industry. With a significant ramp-up in aluminum usage in the automotive industry, how will the industry effectively meet demand? That question leads us to another key issue: carbon cap and trade legislation, strongly supported by the aluminum industry and largely opposed by the steel industry. Why?

Aluminum, as a global industry, has a strategic advantage over the [largely] domestic steel industry currently supporting the auto sector. Any climate change legislation would handicap the steel industry while allowing the aluminum industry to leverage global supply options not subject to such legislation. Obviously this has implications from a trade perspective, but provides a real-world example of how policymakers will need to consider climate change legislation as well as regulation (as the case may be) moving forward.

No debate would be complete without an analysis of costs. We will continue to cover this topic; check back in with us for Episode 2.

–Lisa Reisman

In response to a recent article of ours entitled “Is there an Alternative to Nuclear for Asia,” a reader left a comment regarding a technology that appears to have been on the cusp of commercial realization for nearly two decades, but has been largely ignored in preference to simpler wind and solar technologies. We’re talking about Ocean Thermal Energy Conversion (OTEC), and we rather liked the idea for a number of reasons. First and foremost, large-scale rollout would involve substantial opportunities for metals in the same way offshore oil and gas exploration have done for nickel- and chrome-based stainless and super alloys. Compared to electricity-generating technologies like wind and solar that are subject to the weather and day/night cycles, OTEC would operate 24 hours a day, seven days a week, 365 days a year with the only likely interruption being due to hurricanes when, like oil rigs, operations can be temporarily shut down. One of the greatest attractions is the economic case made not just on power generation but a host of other potential quantifiable benefits like desalinated water, aquaculture and, depending on the plant location, even air-conditioning for shore-based installations. OK, enough of the hype — how does it work?

Broadly, the technology takes advantage of the temperature difference between warm tropical waters at the surface and cold waters at depth to drive a turbine and generate electricity. In waters between the Tropics of Capricorn and Cancer there are multiple sites around the world where surface temperatures are up to 24-28 degrees Celsius and the sea bed drops down to up to 4,000 feet with temperatures down to 5-6 degrees C.

The above diagram from illustrates the comparatively simple process called the Rankine Cycle – the basic principals have been known for a hundred years or more. Water condensed after the turbine stage can be collected as desalinated water, a resource often in short supply in tropical regions. In addition to electricity and clean water, there is the potential for a proportion of the nutrient-rich cool waters to be diverted to shore-based pools if plants are built on land or close to land. These waters can be used for farming salmon, abalone, oysters, clams and lobster, premium products that can generate additional revenues if carried out on a commercial scale.

Undoubtedly, for OTEC to be viable as a power source (as Wikipedia points out), the technology must have tax and subsidy treatment similar to competing energy sources. Because OTEC systems have not yet been widely deployed, cost estimates are uncertain. One study estimates power generation costs as low as US $0.07 per kilowatt-hour, compared with $0.05 – $0.07 for subsidized wind systems, so for power costs it’s in touch. If other benefits such as desalinated water can be brought into play the viability may be improved further. In one study by a leading technology developer, Sea Solar Power, the fresh water alone could be worth up to two-thirds of the value of the electricity. Lockheed Martin has been running a pilot project in Hawaii that should be generating 10 MW by 2012/3 and all being well, a 100 MW site by 2015. Hawaii was spending $8 billion/year on imported fossil fuels in 2009 (more now with current prices), all of which could be replaced by OTEC with zero carbon emissions.

Major hurdles still need to be overcome, one of which is the cost and design of the deep water pipe used to bring cold water to the surface. One suggestion is to pump the refrigerant down to the depths and then bring it back up chilled. But that would lose the benefit of using nutrient-rich deep water for aquaculture; however, for plants sited further out to sea that opportunity is greatly diminished anyway. It may be that it takes Lockheed Martin’s largely government-funded research project to prove the technology, yet for the last 40 years Sea Solar’s founders have been researching and developing the technology largely off their own backs. (How often has the original inventor not been the one to capitalize on the development of a new technology?) Nevertheless as Lockheed’s video introduces, the world’s oceans absorb the equivalent of 250 billion barrels of oil-equivalent solar energy every day; if less than 0.1 percent of this could be harnessed via OTEC, it would be the equivalent of 20 times the electricity consumed in the US with virtually zero carbon emitted, no unsightly windmills in your backyard or desert tortoises inconvenienced. A prize worth spending some federal dollars on if ever there was one!

–Stuart Burns

Source: Voice of America

The world observes the 25th anniversary of the Chernobyl disaster (April 26th, 1986) tomorrow, the worst nuclear accident in history. The Fukushima debacle in Japan following the earthquake and tsunami last month has thrust Chernobyl back into the spotlight, for better or worse, as a comparative example for scientists, politicians and journalists alike. Now that the benefits and drawbacks of nuclear power are under the microscope once again, the home of the now-defunct Chernobyl plant Ukraine and its government is taking a leading role in the nuclear discussion. (Of course, Soviet authorities ran the Chernobyl power station, as Ukraine remained under the thumb of the Soviet Union until 1991, when it gained independence.)

According to Worldwide News Ukraine, the country’s president, Victor Yanukovich, and scores of delegates from the EU and other G8 countries gathered for the Kyiv Summit in the capital city to agree that nuclear power and safety is a global challenge that must be tackled together. Ukraine, a member of the Convention of Nuclear Safety, called on other nations relying on nuclear power to join it as a show of solidarity. Ukraine, the EU and the International Atomic Energy Agency (IAEA) have been working together for years to bring the country’s nuclear safety measures up to speed with international regulations.

President Yanukovich, speaking at the 2010 US nuclear security summit, also announced that Ukraine has disposed of 106 kilos of weapons-grade uranium, and plans to get rid of most to all of it by April 2012, ahead of a summit in Seoul, Korea, the report also stated.

Ukraine is the world’s 8th largest producer of iron ore and steel, and also produces significant amounts of manganese, manganese ore, manganese ferroalloys and aluminum. Although Ukraine gets most of its nuclear fuel from Russia, according to the World Nuclear Association, the country has “modest recoverable resources of uranium –200,000 tU according to IAEA Red Book 2007 and 131,000 tU according to the Energy Ministry.  The WNA also says Ukraine “expects to be producing 1000 tU/yr in 2011 and hopes to fully satisfy its domestic demand of up to 1880 tU/yr by 2015.  Four power plants are in current operation in Ukraine, with its Zaporizhia plant producing 5718 MW of energy, making it the largest nuclear plant in Europe. Nuclear power represented the majority of the country’s electricity generation since 2007 (see below):

Source: World Nuclear Association

Many of Ukraine’s public statements of late, including international summit talk and agreement, have functioned as a direct show of support for Japan and the destroyed Fukushima power plant. As a country that’s been there before, it appears to be at the forefront of nuclear safety and the political mobilization to achieve it. Now, if only they could get rampant government corruption, unemployment and parliamentary and cultural discord under control¦

–Taras Berezowsky

Every time there is a spike in the cost of energy such as the ’73 crisis and the ’79/80 oil price spike — and then again in Ëœ07/08 — alternative energy sources get a renewal of interest. This time, reaction to the high oil price has been further supported by widespread anxiety about the future of nuclear power, particularly in geologically active areas such as the Pacific ring of fire. Japan, for example, is battling to control, never mind save (they will never operate again), the six boiling water reactors at Fukushima 1 with a combined power of 4.7  GWe. In addition, Japan was planning to build 13 more reactors, plans that must now be in severe doubt as large parts of the country could, potentially, suffer similar geological activity to last month’s earthquake and tsunami. But that very geologic instability has a flip side: Japan is sitting on an estimated 23.5 GW of geothermal power potential. Electricity and heating potential that even in the event of an earthquake would present zero ecological or human health hazard, but which (like nuclear) has a high capital upfront cost and therefore struggles without some form of government guarantees.

Perversely, while many countries in Asia have invested heavily in nuclear power, the region is better placed than almost anywhere to make use of geothermal power for the reasons stated above. Asia runs about 112 nuclear power reactors in six countries and has more than 264 planned for construction, according to the World Nuclear Association. Although many of those will be in China, a number are in Indonesia, also home to 40 percent of the world’s total geothermal reserves even though less than 4 percent is being developed. Encouragingly, Indonesia has plans to develop these resources and triple production this decade, but the challenge is finance. Up-front costs are high, much like oil and gas exploration. In the US, a Reuters article estimates, one megawatt of geothermal energy requires an investment of about $3.5 million, versus $1.2 million for coal energy. The time from planning to production is 5-7 years because of drilling and environmental planning approval geothermal sites are often in forests or national parks. By comparison, a wind or solar farm can be up and running from scratch in 12-18 months – except in Nevada.

Consequently, private funds have been thin on the ground, and investors like a quicker payback.  Plagued by overly optimistic expectations last year, project delays and cost overruns, geothermal companies listed on the Toronto Stock Exchange, which is home to a large contingent of the world’s publicly listed geothermal businesses, have lost 20 30 percent of their market value in the last year. Some high profile investment vehicles in the space such as Magma have tended to invest in existing businesses rather than attempt Greenfield developments.

–Stuart Burns

Events at Fukushima in Japan have put the spotlight not just on nuclear power as a source of energy, but on the storage of nuclear waste. Some of the gravest dangers at Fukushima resulted from spent fuel rods held in cooling tanks that lost fluid and overheated. The world is awash with spent fuel rods being stored in this manner, usually for up to five years while the rods cool to the point were they can be moved, but often for much longer as utility operators struggle to find long-term storage solutions. The Japanese experience has added an additional dynamic to debates in the US about finding a long-term solution and encouraged members in both houses of Congress to try to overcome President Obama’s cancellation of the Yucca Mountain project in Nevada.

According to the Global Security News Wire, the U.S. House Energy And Commerce Committee has started an investigation into the Obama administration’s cancellation of the project while South Carolina and Washington have filed a suit in federal court saying the government has reneged on decades-old commitments to create a long-term store. Opposition to Yucca Mountain within the state of Nevada is probably strong enough to make the project an unworkable solution; as has been shown elsewhere, the support of the local population is key to overcoming planning approval.

In the UK, where the country has been accumulating waste since its first reactor came online in 1956, plans to build a 1000-meter (3300-foot) deep repository in the country’s northwest county of Cumbria has taken a long time, but a decision is expected shortly. Support has built over time such that three communities expressed an interest in the project being sited close to their towns, but then Cumbria has long had ties with Britain’s nuclear reprocessing industry at Sellafield and has become comfortable with the industry being part of its backyard.

Similarly, a Financial Times article describes even more advanced plans to build a depository some 500 meters underground in Sweden in 1.9 billion-year-old rock formations. After 15 years of consultation, two local communities are so keen for the $2.8 billion investment to be made near their towns that they are competing for the project and the jobs that go with it. Under the plan, waste would be buried in copper canisters 500 meters underground, set on granite bedrock with a clay buffer above. The store would be designed to take 6,000 copper canisters containing the used fuel. Building is due to start in 2015 and the first capsules buried by 2020. As in the US, financing has already been raised through a levy on nuclear power.

And therein lies much of the annoyance felt by US states like South Carolina; the US government has been raising the funds for nuclear disposal via $0.0001/KwHr surcharge for years. It doesn’t sound like much but the fund is already at US$24 billion and yet is perversely ring-fenced for the Yucca Mountain project preventing use for other potential solutions such as dry cask storage. According to the WSJ, the US has generated roughly 70,000 metric tons of nuclear waste”enough to fill a football field more than 15 feet deep, according to the Government Accountability Office. The GAO has projected that number will more than double to 153,000 metric tons by 2055 and yet a 2003 report by the Energy Department said it would cost just $7 billion to move all of the movable spent fuel then at U.S. nuclear reactors to dry casks. That is a fraction of the cost of the Yucca Mountain project, which has been estimated at $100 billion, and while not a solution for tens of thousands of years (unless the casks are in a deep depository like Yucca), it is certainly a solution for hundreds of years until technologies develop to make alternative arrangements.

Readily available data would suggest Yucca isn’t quite in the same league as the Swedish location, but is far and away the US’ front-runner. Deep geological disposal requires sites to be highly stable and have no running water due to the risk of container corrosion and possible contamination of ground water in a resulting leak. An alternative to Yucca would need to show the same qualities of extreme dryness found in that area of Nevada and although the site is near a fault line, it is thought to be inactive and several old volcanoes in the vicinity have not been active for a million years. The US does have a similar site in New Mexico, but so far it has only been used for military spent fuel materials.

The subtleties of alternative storage methods may not be the focus of the general public — they will merely want to be assured that whatever the authorities decide as the way forward is indeed a secure, safe and lasting solution, and not an exercise of kicking the can down the road (as we have been doing since the 1980s). For sure though, a storage leak in the US like Japan has suffered would almost certainly put back the industry here by decades just as Three Mile Island has put a moratorium on new reactor builds for the last thirty years.

–Stuart Burns

As a follow-up to our previous discussion about recent developments in carbon capture technology in the steel industry, we turn to the policy side of things by looking at the battle between Congress and the Environmental Protection Agency (EPA). The battle boils down to major sides (although of course there are others as well, including subgroups of the following): the environmentalists and the business community. The vote is scheduled to take place today.

According to The Hill, Senate minority leader Mitch McConnell introduced an amendment that would permanently block the EPA from regulating greenhouse gas emissions. Sen. Jay Rockefeller, a Democrat from Virginia, proposed to delay the EPA’s climate regulations for two years. Finally, Sen. Max Baucus proposed a concessionary amendment that would prevent farms and other small businesses from costs of compliance, but some say that’s won’t be the effect at all. Cap and trade failed in Congress, so why shouldn’t these amendments?

Simply because both Republicans and Democrats will be hard-pressed not to side with business interests on this one in light of high unemployment and stagnant growth. This is especially true for the 14 senators who face uncertain re-election, especially the Democratic ones. As the Wall Street Journal put it, “The question for Democrats is whether their loyalties to President Obama and EPA chief Lisa Jackson trump the larger economic good, not to mention constituents already facing far higher energy costs. Concern that the amendments will die in the Democratic-majority Senate, however, is uncharacteristically low for this one. According to the WSJ, McConnell may have the 13 Democratic votes he needs to get the requisite 60.

Back to “Environment Vs. Business, the League of Conservation Voters put out a poll showing that 63 percent of voters in Michigan, Ohio and Pennsylvania prefer the EPA to set greenhouse gas standards for industry. On the other side, the National Association for Manufacturers (NAM), among others, clearly has a vested interest in keeping compliance with existing and new emissions rules at a minimum, as their television announcement below, for viewers in Michigan, makes clear:


Source: NAM

Straddling the middle, as I often do, it’s clear that both sides cannot nor should they get absolutely everything they want. Should McConnell’s amendment win out? I don’t think so; even though new, overly strict EPA rules may be counterproductive, there should be some semblance of third-party oversight. Is the Baucus counter-amendment a shameless political ploy? Of course; the broad reach of the EPA likely should be scaled down. But should steelmakers and other manufacturers have financial incentives to do what they can to keep our drinking water clean and air less harmless than it was pre-1970 while keeping production efficient? Yes.

We’ll just have to see how this one plays out.

So following the near meltdown of several reactors at Fukushima Nuclear Power, it’s dead is it? Well, to follow one FT article, you could be mistaken for thinking that will be the likely outcome. As the article reports, impact on the industry has been dramatic, from miners like Cameco, a major Canadian uranium producer, whose share price has fallen 20 percent   since March 10th, to major deals like Russian ARMZ’s acquisition of Mantra Resources for A$1.2 billion that has been called off after the buyer’s (an ARMZ subsidiary Uranium One) share price fell 34 percent. Apparently by the end of last week, the (admittedly thinly traded) spot uranium price had fallen 27 percent since Friday to $50/lb.

More importantly for nuclear power, it is not the markets that have been spooked but public opinion and the governments that react to that opinion at least in democracies. Germany has announced ten of their aging reactors will not be given leave to extend their operating life by 12 years as previously expected and countries as far apart both politically and geographically as the US and China have said they are reviewing safety procedures and future projects. Undoubtedly the cost of construction has gone up as a result of Fukushima and public opinion has been hardened, but as we saw with Chernobyl, time does allow fears to subside and the reality is nuclear power will continue to provide a significant percentage of power supply in many countries even if it may not take longer and cost more than we had expected a month ago.

But not all forms of nuclear power are equal; certainly not all forms carry the same inherent risks of meltdown. China is investing considerable sums in developing a technology using radioactive thorium that was first conceived back in the 1960s by US physicists at Oak Ridge National Laboratory but, supporters say, lacked funding because it didn’t have the benefit of creating weapons-grade fissile material as a by-product. In those Cold War days, weapons production was as important as energy production. There are potentially two thorium nuclear energy production technologies; the approach to be developed by China will be a thorium-based molten salt reactor. The fail-safe requires no external power or intervention. If the reaction begins to overheat, a plug in the base of the containment vessel melts and the contents simply drain under gravity into a pan. As a Telegraph article quotes former NASA engineer Kirk Sorensen saying, the reactor saves itself.

Many consider the MSR the best long term option, but there is a second thorium-based reactor process more closely aligned to existing technologies; this requires an external “accelerator source of neutrons to maintain the reaction, and without the existing accelerator the reaction stops. Some, such as Nobel laureate Carlo Rubbia at CERN (European Organization for Nuclear Research) proposed using a photon beam while others use a plutonium core such as that under development by India. According to sources quoted in Wikipedia, India’s Kakrapar-1 reactor is the world’s first reactor that uses thorium with a plutonium accelerator in the reactor core. India, which has about 25 percent of the world’s thorium reserves, is developing a 300 MW prototype of a thorium-based Advanced Heavy Water Reactor. The prototype is expected to be fully operational by 2011, after which five more reactors will be constructed. India currently foresees meeting 30 percent of its electricity demand through thorium-based reactors by 2050.

Thorium, while not without its issues, has much to commend it over uranium. It is widely available in the earth’s crust; the US, for example, has vast reserves as a result of old rare-earth mining waste and Norway has so much it is contemplating research as a second renaissance once oil and gas runs out. The technology can also consume old weapons-grade nuclear fuel and uranium power plant waste, helping resolve a growing storage problem with conventional technology. According to wiki sources, thorium produces 10 to 10,000 times less long-lived radioactive waste. The metal comes out of the ground as a 100% pure, usable isotope, which does not require enrichment, whereas natural uranium contains only 0.7 percent fissionable U-235.

Maybe most pertinent to the current debate, thorium cannot sustain a nuclear chain reaction without priming, so fission stops by default.

To quote the IAEA in the article, the world currently has 442 nuclear reactors. They generate 372 gigawatts of power, providing 14 percent of global electricity. Some suggest nuclear output must double over twenty years just to keep pace with the rise of the China and India, or we will have to build massive numbers of coal-fired power stations. Solar, wind, wave and so on are good local options but are not scalable to fill the gap. If a commercially viable alternative to uranium-based reactors could be developed without the risks inherent in uranium power production, an almost “too good to be true outcome could await. Buy those thorium shares now? Not just yet, but certainly keep your eye on this space.

–Stuart Burns

Japan consumes about 8 to 12 percent of the world’s uranium supply, depending on which source you reference. Of course, nearly a dozen of the country’s 55 nuclear plants is not consuming any uranium post-tsunami; instead, engineers are hastily employing methods from improvised containment to cooling fuel rods with seawater to prevent any sort of radioactive fallout. You may even think that because several governments are talking tough on curbing nuclear power, uranium might be in the toilet for good.

But according to several sources, uranium, although taking a hit in spot prices and being unloaded by the ton by investors/speculators worldwide, has some pretty solid fundamentals behind it (we’ll get into that shortly.) Just as the mainstream press spends lead-headline real estate on the looming nuclear threat while burying the mounting non-radiation-related death toll, market watchers are seizing upon the plummeting uranium spot price instead of taking the long view.

One blogger, Agustino Fontevecchia, has been at the forefront of uranium coverage, writing for Forbes. He details a number of companies (such as uranium miners and energy production suppliers), ETFs and other funds that are losing out because of the tsunami, with short-term valuations plunging. For example, Saskatchewan-based Cameco, Canada’s biggest producer and one of the world’s largest, was down 13 to 15 percent on Monday. (In a Globe and Mail article, Greg Barnes, an analyst at TD Securities, Inc., said “in a worst-case scenario, the company could lose 10 per cent of its sales volume in 2011 because of the Japanese problems.) Uranium, mind you, is not traded on any exchanges. Fontevecchia, rather cheekily, throws this out there: “In the long run, though, the prospects for the industry look sweet.   Buying opportunity?

Cameco, among others, is not downcast about the future. Why? They know that the likes of India, South Korea, and especially China, need to feed their nuclear power hunger with uranium and will continue to do so, regardless of the frightening accounts from Japan. Cameco CEO Jerry Grandey said Monday that the stock markets are being “driven largely by emotion and that Chinese and Indian demand should keep long-term demand up. Demand should outpace supply ” at least through 2012, Desjardins Securities analyst John Redstone told the Globe and Mail.

With Japan’s market demand for uranium decreasing 20-25 percent in recent days, UxC’s VP for Uranium Nick Carter told Forbes’ Fontevecchia that China is, in effect, more than ready to make up the difference. “China, which produces only 2 or 2.5 million pounds [of uranium annually] is looking to take its production to 70 or 80 gigawatts (GW) in the next ten years, from about 10 GWs today, even if they cut their forecasts, they will still have to import a lot, Carter is quoted as saying.

Indeed, as MetalMiner reported several months ago, this means China would be quadrupling its uranium consumption to 50 million to 60 million pounds a year, compared with annual global demand of about 190 million pounds at the time of the post. (China already has long-term contracts with Cameco and Areva, another Top-10 producer.) The Chinese had embarked on an ambitious and aggressive buying spree at prices some 30 percent over current spot and twice spot prices of a year ago, tying up long-term supply offtake agreements and joint ventures. Ralph Profiti, analyst at Credit Suisse in Toronto, believed China was getting ahead of other consumers and, as with copper and non-ferrous metals, was building up a strategic stockpile before the Americans, Japan or Korea needed to restock before the New Year. The latest from Reuters is that China has a total of 187 reactors currently being built or in the planning stages.

Will Chinese power plants be as safe as possible? That remains to be seen. But the intractable environmental problems the country faces from rapid growth, among other things, will force China to continue planning for nuclear power expansion.

But don’t take it from us take it from the horse’s mouth. As Bloomberg reported, China National Nuclear Corp. President Sun Qin said in an interview in Beijing after attending the National People’s Congress that “the pace of the country’s nuclear development won’t be affected by events in Japan.

–Taras Berezowsky

As MetalMiner continues looking into the effect the Japan earthquake and ensuing tsunami have on the metals supply chain, the nuclear power question seems to be taking a considerable portion of aftermath news. While the natural disaster spurs nuclear worries in Japan, especially in the wake of the Fukushima Daiichi nuclear power station failures, the reporting coming out of it paints a picture of imminent radioactive catastrophe. But does the tsunami make the case that nuclear power should be curtailed, or even shelved entirely, as a global energy source?

According to an enterprising Reuters report on the subject, the news organization quotes an executive at state-run utility Korea Electric Power Corporation (KEPCO) as saying, “The nuclear power industry is likely to shrink due to Japan’s nuclear accident¦Rising opposition is seen in developed countries, although developing countries may see less opposition due to their shortage of power unless they reside in earthquake zones.

The last phrase strikes us as the particularly logical if your country and/or your existing or planned nuclear campuses are near earthquake prone-zones, fault lines, or near the ocean shores, then yes, you should plan accordingly. According to Reuters, Taiwan, another island nation in the Pacific arena, mentioned that its state-run energy company Taipower is looking into cutting its nuclear power output. Although Japan’s famously advanced (read: sturdier than most) infrastructure helped prevent even more catastrophic results from the earthquake which seems rather unfathomable, given the unequivocally horrible aftermath — the entire country remains in perpetual danger of tsunamis because of their geographical placement. Admittedly, Japan wasn’t about to stop its path to world’s No. 3 economy due to its geologically volatile island location, just as no one could convince New Orleans not to rebuild because of its prime address in Hurricane Alley.

But do Europe and the US really need to halt or reverse course entirely on nuclear power development and production? The Reuters article cites that Switzerland, Germany and the US all indicated uncertainty in the nuclear sector. Swiss Energy Minister Doris Leuthard “suspended the approvals process for three nuclear power stations for safety standards to be revisited, while German Foreign Minister Guido Westerwelle said that “a government decision to extend the life of the country’s nuclear power stations could be suspended following the crisis in Japan. Even US Senator Joe Lieberman weighed in, saying we should “put the brakes on domestic power plants until the “impact of the Japanese disasters “became clear.

The UK’s Guardian newspaper quoted Professor Gerry Thomas, chair of molecular pathology at Imperial College London, as playing it much cooler than American media outlets when it came to the imminent dangers posed by the reactors. “”One thing to note is that there has not yet been a significant release of radiation from this nuclear plant – the reactor core is currently still intact,” he had said, according to the Guardian. “There has been very little release of radiation and there is unlikely to be a significant release. My advice would be not to worry¦I am afraid there is far too much scaremongering! Granted, Professor Thomas was responding to citizens worried about personal effects from radiation, but this lesson could apply to the global especially American media.

The reality is nuclear power has a relatively steady safety track record over the years when compared with other energy sources. These political heads’ comments likely only serve the stock price rises of green energy companies; of course we all need to diversify our energy production sources, but how about we focus on the task at hand, help Japan, put out the fires, and then move forward with green?  The US and Europe don’t seem to be faced with imminent danger when it comes to regular earthquake activity that could trigger massive tsunamis. Sure, the US probably shouldn’t build more nuclear reactors on the California/Oregon/Washington coasts, and should re-evaluate/renew safety procedures in case of future tsunamis but perhaps all-out nuclear freeze should be a last resort.

Human error and shoddy development and maintenance will always exist no one need to look further than the Chernobyl debacle, which is still fresh in many people’s minds nearly a quarter century on. (The 25th anniversary, on April 26, is nearly upon us.) But scaremongering in the fresh face of disaster might not serve anybody well hype does not equal tangible action.

–Taras Berezowsky

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