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Low Oil Prices May Kill Off The Next Nuclear Boom Before It Begins

Low Oil Prices May Kill Off The Next Nuclear Boom Before It Begins, Oil Price, By Alex Kimani – Apr 27, 2020
“…… the third nuclear gold rush could be dead in the water amid low energy prices and stiff public opposition towards a sector that has increasingly fallen out of favour.

Opening up the West

On Thursday, the Nuclear Fuel Working Group (NFWG) made recommendations to the U.S. Administration to open up ~1,500 acres outside the Grand Canyon for uranium production, arguing that the country needs to beef up domestic production to avoid an over-reliance on foreign sources.

The organization has recommended spending $1.5 billion over ten years buying uranium from American producers to create a uranium stockpile that would necessitate buying about 10 million pounds a year.

The working group’s report claims that the United States also needs more uranium for two other purposes:

–  Low-enriched uranium for the production of tritium for nuclear weapons through the 2040s, and

–  Highly enriched uranium to be used as fuel for Navy nuclear reactors through the 2050s

The slow and painful demise of the American uranium mining industry can be chalked up to the fact that the country is not endowed with the most abundant and most accessible uranium deposits, with resources in Canada and Australia boasting significantly higher uranium content and a lower production cost per unit.

American miners have had trouble making a profit from their operations even at the best of times. Consequently, the industry has historically had to rely heavily on government largesse.

During the golden age of American uranium that spanned from 1955-1980, the U.S. government offered fat uranium bonuses in a bid to shore up its stockpiles during the Cold War. These included 10-year price guarantees for certain kinds of ore as well as $10,000 discovery and production bonuses for new sources, which pencils out to nearly $100K in today’s dollars. The incentives set off a mad gold rush in the nation’s vast Western region as every man with a jeep and a Geiger counter set out to make the next significant discovery.

The program was a resounding success: U.S. uranium stockpiles skyrocketed so much that the government stopped paying out the bonuses sometime in the 1960s…….

By 1987, the tables had turned completely, with the country importing nearly 15 million pounds of uranium while domestic production clocked in at just 13 million.

Growing competition weighed heavily on domestic production while the country’s love affair with nuclear energy got its first dose of the harsh reality of nuclear technology thanks to the Three Mile Island nuclear disaster in 1979 as well as the Chernobyl reactor meltdown of 1986 that turned an entire Ukrainian city into a ghost town. Meanwhile, utilities began to grow weary of the time and cost of building reactors, which further depressed demand.

The result: U.S. uranium production had sunk to a 35-year low by the time the last wave of reactors came online in 1990…….

Brief Renaissance

The U.S. uranium industry enjoyed a renaissance in the early 2000s as falling global stockpiles, and booming economies in China and India drove new demand.

Unfortunately, this, too, was not to last as the financial crisis of 2008 destroyed demand, while the Fukushima nuclear disaster of 2011 led to another severe backlash that set off a new round of reactor closures while Germany set to phase out the technology by 2022.

The third nuclear gold rush is starting off on very shaky grounds, too.

First off, the world’s strategic uranium reserves are not in any immediate danger of running out. In 2016, the International Atomic Energy Agency said that the global nuclear fleet has enough stockpiles for 130 years, more than enough for the markets to respond to any shortfalls rapidly as they have done in the past.  …..

But more importantly, trying to open up the west for uranium mining is bound to be met with stiff resistance and widespread public uproar.

For all its setbacks over the years, nuclear power has remained broadly popular in the United States. However, the turning point came in 2016 when the majority of people turned against the technology.

The latest poll last year revealed that American public opinion remains split over nuclear power, with 49 percent of U.S. adults either strongly favor (17 percent) or somewhat favor (32 percent) it in power generation while 49 percent either strongly oppose (21 percent) or somewhat oppose (28 percent) its use……

The funny thing is that Gallup has found that American opinion on nuclear power does not have much to do with radiation or safety concerns; rather, it is driven by prevailing fuel prices.  …..

a 2020 Colorado College Conservation in the West Poll found that 71 percent of voters in the Mountain West and 77 percent of Arizona voters oppose the development of new uranium mines on public lands adjacent to the Grand Canyon. It’s the kind of backlash that no president wants to deal with, whether they are seeking re-election or not.

April 30, 2020 - Posted by | business and costs, Uranium, USA

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