Low oil prices put an end to nuclear power

US, WASHINGTON (ORDO NEWS) — Over the past 30 days, uranium prices have risen 35% to $ 33.3 a pound, reaching the level last seen 4 years ago. Bloomberg quotes the US company Cantor Fitzgerald, which claims that largely due to the crisis with coronavirus, 46 million pounds of uranium were destroyed in 3 weeks (35% of annual global uranium production).

Prices skyrocketed at a time when the Trump administration was obsessed with reviving the country’s unstable uranium industry. Allegedly, this is necessary in order to achieve energy independence and for national security.

But the third “gold” nuclear fever may be doomed against the background of low energy prices and tough public opposition to the sector, which is increasingly getting out of control.

On Thursday, the Nuclear Fuel Working Group (NFWG) recommended that the US administration allocate about 1,500 acres outside the Grand Canyon for uranium production. The group argues that the country needs to increase domestic production in order to avoid over-reliance on foreign sources.

The organization recommended spending $ 1.5 billion on the purchase of uranium from US mining companies over 10 years to build up uranium reserves. This implies a purchase of 10 million pounds per year.

The report of the Working Group states that the United States needs to increase uranium reserves for two other purposes:

  • low enriched uranium is needed for the production of tritium in nuclear weapons, which should be produced before the 2040s,
  • highly enriched uranium will be used as fuel for Navy nuclear reactors until the 2050s.

The Nuclear Energy Institute (NEI) supported this proposal, saying that the creation of a federal uranium reserve is necessary for the development of next-generation technologies and the development of advanced fuels.

At first glance, this proposal is commendable, given the deplorable state of the country’s uranium industry – fuel, which is crucial for its energy industry.

In 2017, U.S. mining companies produced just 2.4 million pounds of uranium concentrate, and in 1980, at the height of the atomic era, 44 million pounds were produced. American mines accounted for only 7% of uranium purchased by domestic power plants last year. A rather unexpected discovery, given that the country has 98 active nuclear power reactors in 30 states that produce a total of 807 TW / h per year, 20% of the total electricity generated.

Now the industry employs only a few hundred people a year. In the 1980s, nearly 22 thousand people worked.

The slow decline in the US uranium mining industry is understandable: the country does not have the richest and most affordable uranium deposits, and Canada and Australia have significantly more uranium and lower production costs.

American miners are struggling to profit from their activities even in the best of times. Consequently, this industry has always been forced to rely on the generosity of government.

During the golden era of American uranium, from 1955-1980, the US government offered generous bonuses for mined uranium in an attempt to maintain reserves at the proper level during the Cold War. This implied a 10-year guarantee of prices for certain types of ore, and bonuses of $ 10 thousand for the discovery and production of new sources.

At today’s prices, this is $ 100,000. These incentives gave birth to a real crazy gold rush in the vast western region of the country. Everyone who had a jeep and a Geiger counter wanted to make another important discovery.

The program was a resounding success: Uranium reserves in the United States soared so much that the government stopped paying bonuses in the 1960s.

Victim of public policy
Suddenly, an industry heavily dependent on government incentives fell victim to its policies.

In 1975, the government allowed a fairly large percentage of foreign supplies to the domestic market. This opened the door to low-cost supplies from Canada and Australia.

By 1987, the country had imported nearly 15 million pounds of uranium, and domestic production amounted to only 13 million.

Growing competition has strongly affected domestic production. The intrigues of the country with nuclear energy came across the first manifestation of the harsh reality of nuclear technology, when there was a nuclear disaster at Three Mile Island in 1979 and the accident at the Chernobyl nuclear power plant in 1986, after which the whole Ukrainian city turned into a ghost town. Utility companies began to tire of the time and cost of building reactors; demand fell even further.

As a result, US uranium production fell to a 35-year low by the time the last wave of reactors was launched in 1990.

In 1992, the Department of Commerce imposed restrictions on uranium imports from the USSR, which prevented the supply of cheap uranium to the US market.

The relief was short-lived: a year later, the United States and Russia concluded a deal to purchase 500 tons of Russian weapons-grade uranium from dismantled nuclear warheads in the country, which the United States turned into low-enriched uranium for its nuclear power plants. Russian uranium provided one-third of the US demand over the next 20 years as part of the Megatons to Megawatts program.

At the turn of the century, US uranium production fell to its lowest level in 50 years.

At the same time, the former Soviet state of Kazakhstan was rapidly expanding its uranium production, reaching the top of the world ranking of uranium players and becoming the second largest US supplier.

Brief rebirth
The US uranium industry experienced a resurgence in the early 2000s, when global reserves declined, new demand was born from the fast-growing economies of China and India.

Unfortunately, this did not last long, as demand collapsed in the wake of the 2008 financial crisis. After the nuclear disaster at Fukushima in 2011, a new round of reactor closures began, and Germany began a phase-out of technology by 2022.

The third gold nuclear rush begins on very unstable soil.

Global strategic uranium reserves do not run the risk of depletion. In 2016, the International Atomic Energy Agency announced that the world’s nuclear fleet would have enough reserves for 130 years – more than enough for the markets to quickly respond to any shortage, as it was in the past.

But more importantly, an attempt to open the West to uranium mining will inevitably come up against stiff resistance and will resonate publicly.

Despite all its past failures, nuclear power was widely popular in the United States, but a turning point came in 2016, when most people turned their back on these technologies.

According to a recent survey conducted last year, Americans hold rather controversial views on nuclear energy. 49% of the U.S. adult population either strongly endorse (17%) or to some extent (32%) approve of its use in electricity production, the other 49% are categorically against (21%), or in some way against (28%) its use.

Moreover, the opinion of Americans about nuclear energy has nothing to do with radiation or safety issues. It is more likely driven by fuel prices.

And this is strange, given that gasoline and nuclear energy will not be able to replace each other. Gasoline is used in the automobile industry, nuclear energy produces electricity for factories, enterprises and residential buildings. But gas prices have such a huge impact on the psyche of Americans that they often become an indicator of the overall energy situation.

Americans take nuclear energy negatively when oil prices fall, and positively when fuel prices soar. This relationship is understandable, as the shale boom that led to low gas prices also opened up the flow of natural gas, which is also used to generate electricity. When natural gas prices are at historic lows, the competitive advantage of nuclear power is seriously falling.

Indeed, in a 2020 poll from Colorado College, it turned out that 71% of voters in the High West and 77% of Arizona voters are against the development of new uranium mines in public lands adjacent to the Grand Canyon. No president will want to deal with such a reaction, regardless of whether they want to re-elect him or not.

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