| Nowhere was it more evident of battle lines being | | | | deposit has extraordinary head grades, which is the |
| drawn between suppliers and end users in the nuclear | | | | uranium grade at the commencement of the solution |
| fuel sector than at the Platts Second Annual Nuclear | | | | mining. Newton pointed out that in the United States |
| Fuel Strategies conference on September 26th. Since | | | | head grades are about 100 parts per million (ppm) of |
| April, various utility consultants and fuel brokers have | | | | uranium. At Crowe Butte (Nebraska), Power |
| routinely contacted StockInterview to 'talk down' the | | | | Resources is getting 43 ppm.By comparison, the head |
| uranium price. Frequent is the mantra about how | | | | grades in Kazakhstan reach 250ppm and are |
| speculators and hedge funds are driving the spot | | | | averaging over 200ppm. While the deposits are |
| uranium price higher. But spot uranium and long-term | | | | deeper, down to 1500 feet, Cameco will be drilling |
| contracts march higher each month. While utilities | | | | about five times fewer wells because of those |
| appear complacent, there is now an underlying panic | | | | exemplary ppms. The cost per well will be more |
| lurking beneath the surface.About an hour after UxC | | | | expensive, but there will be less wells to drill. Of |
| announced Tuesday's weekly spot price hike - now | | | | course, there are shortages of drill rigs, which adds |
| to $54/pound, Rajiv Kundalkar, Vice President of | | | | another frustrating twist to mining in this country.To |
| Nuclear Engineering for Florida Power and Light took | | | | mine these deposits by the in situ leach method, |
| the podium in the Pavilion Room of the Ronald | | | | Cameco/Power will need about 40 kilograms of |
| Reagan Building in Washington, D.C. to pound the | | | | sulphuric acid to produce one kilogram of uranium. |
| table as to why uranium prices should take a dive. As | | | | Newton bluntly announced, "To mine 100 metric tons |
| Mr. Kundalkar progressed through his presentation, | | | | of uranium will require 40 million kilograms of sulphuric |
| many in the audience wondered if he was the | | | | acid." He explained this annually amounted to 2200 |
| industry's latest sacrificial lamb. Kundalkar galloped out | | | | truckloads of sulphuric acid - about six truckloads per |
| of the presentation room within moments after he | | | | day. Every day year 'round.From where will Cameco |
| answered the final question.Clearly Kundalkar's | | | | get this vast amount of sulphuric acid? Newton |
| audience disagreed with his conclusions of a uranium | | | | explained there were literally mountains of sulphur |
| price downturn, sometime in 2007. Questioning after | | | | waste remaining from the high-sulfur Caspian oil |
| his presentation could be summarized in one word: | | | | production. From there one could obtain sulphuric acid. |
| brutal. It was because Kundalkar argued the uranium | | | | He acknowledged Cameco, Areva or the Kazakhs |
| price was artificially high due to a perception of tight | | | | would first need to build several sulphuric acid plants. |
| supply.He compared uranium's spectacular price rise | | | | His best-case scenario for such a plant would be in |
| over the past six years to the jump in palladium | | | | five years. On the worst case scenario, Fletcher |
| prices. Kundalkar concluded palladium rose and fell, and | | | | skirted the issue, explaining the Kazaks needed to |
| so should uranium. He particularly emphasized the | | | | streamline their operations.And therein one finds the |
| collapse of palladium mining stocks, which fell after | | | | headaches. The infrastructure is lacking. New roads |
| the underlying commodity sunk lower.He explained | | | | will have to be built to replace the 'camel trails' and |
| there was an abundant supply of uranium from | | | | truck the material from the mining operation to the |
| Canada, Australia and Kazakhstan, both now and | | | | processing facility. The Kazaks aren't quite ready for |
| especially in the coming years. Kundalkar pointed out | | | | all those trucks. Newton explained the arrival of |
| that delays in the licensing of new reactors in China | | | | traffic jams in this backward nation, adding an |
| and India would suppress the demand for uranium. He | | | | anecdote about a recent traffic accident resulting in a |
| added that Cigar Lake, Olympic Dam and Kazakhstan | | | | fatality. While we take these for granted, it is an |
| would provide sufficient uranium to meet the | | | | unusual development in the backcountry areas of |
| Western World requirements.Rather than blink at the | | | | Kazakhstan where animals are the primary |
| short-term rise in uranium, Kundalkar explained away | | | | transportation mode. Yet another headache: new |
| any concern about the soaring fuel costs by | | | | transmission lines will also be required to generate the |
| announcing Florida Power and Light was pursuing long | | | | electricity to run the operations.Newton discussed the |
| term strategies and cost-control initiatives. One such | | | | weather. Similar to northern Wyoming, he called the |
| plan was to make reactors more efficient. On the | | | | weather "a fast changing climate." He showed his |
| initiative that his plants would become more efficient, | | | | audience a slide of tall snow drifts, explaining the |
| one must wonder what maximum capacity those | | | | snowstorm produced this much snow in 45 minutes. |
| reactors can endure. Ten years ago, nuclear power | | | | In the winter, Cameco has learned to keep bulldozers |
| plants ran 75 percent capacity. Presently, they are | | | | nearby to dig out of the heavy snowfall. In the |
| being pushed to their limits above 90 percent. | | | | summer, roads need rebuilt from the flooding.A more |
| Kundalkar was not forthcoming in any details about | | | | serious problem is the labor force. Newton showed a |
| how his utility would institute cost-control | | | | slide of a cozy Kazak peasant family during his |
| initiatives.After we called him on his three main | | | | presentation. After he spoke, we talked with him, |
| sources of supply, asking Kundalkar if he had | | | | asking about the labor force. Newton explained that it |
| measured the risk variables inherent with those | | | | would be peasants such as the one in the slide that |
| regions, he acknowledged he had done so. Instead, | | | | would provide the bulk of labor for Cameco's Kazak |
| we lean toward believing he glibly digested industry | | | | operations. Again, during his presentation he referred |
| reports, as far too many have done, but failed to | | | | to most of the country as having one's foot back in |
| investigate further or probe deeper about supply | | | | the eighteenth or nineteenth centuries. We dared not |
| risks. Another questioned Kundalkar if Florida Power | | | | ask him if they still played polo with the heads of |
| and Light had participated in the recent Department | | | | their enemies as they did in the movie, "The Man |
| of Energy uranium sale. The utility had not. He | | | | Who Would Be King."What will materialize when the |
| admitted he thought the price was too high. Instead, | | | | Kazak labor force discovers they need to share in |
| Cameco Corp bought the uranium and quickly resold | | | | the uranium profiteering? Chilean miners struck in |
| some of it for a profit.Bad News for Uranium | | | | August at BHP's Escondida copper mine, the world's |
| BearsHad he not scrambled away from the | | | | largest, this past August, citing the steep rise in |
| conference, Kundalkar might have been shocked by | | | | copper prices. BHP hopes to avert another strike at |
| the disclosures in the afternoon presentations which | | | | the nearby Spence project. Teck Cominco averted a |
| followed him. Had Kundalkar presented his thesis to a | | | | strike Sunday night at the Highland Valley copper |
| less savvy audience, he might have received | | | | mine in British Columbia by reaching a tentative |
| something more than a polite applause when he | | | | contract with the miner's union. As utilities and other |
| stepped down. From the disgruntled audience, one | | | | uranium bears explain that uranium will become more |
| long-time industry consultant asked Kundalkar point | | | | abundant as more companies bring on more projects, |
| blank: Have you heard of peak oil?Unwitting denial | | | | few are factoring in the rising labor costs, the |
| about supply risks has its consequences. The next | | | | variables inherent with developing new infrastructure |
| step down the descending staircase for complacent | | | | and the likelihood of delays. Environmentalists have |
| U.S. utilities came from Jim Ferland, head of Louisiana | | | | also begun rearing their heads over various projects. |
| Energy Services (LES). This was Ferland's final | | | | Few are factoring in this risk. The more active these |
| appearance on behalf of LES as he has since taken a | | | | anti-nuclear groups become, the greater they abet |
| VP job with Westinghouse. In his parting speech, | | | | the rising uranium price.The Milk AnecdoteBusiness in |
| Ferland announced an anti-nuclear lobbying group had | | | | Kazakhstan is not what one finds in the West. |
| filed an appeal against LES for their NRC license in the | | | | Newton admitted during his presentation that the |
| District of Columbia Circuit Court. He warned there | | | | Kazaks don't report their uranium production as other |
| was a potential risk of a stay or worse. By worse, | | | | countries do. For example, he discovered from a |
| Ferland inferred the uranium enrichment plant might | | | | border guard that Kazakhstan had been shipping |
| never operate at all. The consequence of 'worse' | | | | about 50 metric tons of uranium oxide to China |
| hung like a dark cloud in the room.Should the appeal | | | | every month for several months. But, nothing of that |
| be dismissed, Ferland cautioned about labor availability | | | | had been reported in the media or to organizations, |
| in eastern New Mexico. Already, the company is | | | | such as the World Nuclear Association, which track |
| worrying about higher labor costs and is expecting to | | | | mining production for each country.One can not be |
| go over budget on both plant construction and | | | | certain of what to believe when KazAtomProm |
| operations. LES may have difficulty finding an ample | | | | issues a forecast. Yet, many utilities, such as Florida |
| supply of electrical workers and aluminum welders | | | | Power and Light, swallow these predictions without a |
| necessary for building the National Enrichment Facility. | | | | second thought. Questioned about Kazak production |
| He announced that getting the NRC license was | | | | forecasts, Newton responded there were those who |
| relatively easy compared to what the company | | | | had "big thoughts." In the presentation which |
| would go through to construct the enrichment | | | | followed, by Patricia Mohr, Vice President for |
| plant.U.S. utilities are counting upon the new uranium | | | | Economics at Canada's Scotiabank, she said while the |
| enrichment center for the SWU to power their | | | | Kazaks have extremely ambitious plans, their timeline |
| reactors. Will it arrive on time? No one can say right | | | | was "unrealistic."Newton deftly provided the "milk |
| now, but Ferland stuck to LES projections of the | | | | anecdote" for his audience while avoiding a direct |
| first SWU being delivered by fourth quarter 2008 and | | | | answer to the question about KazAtomProm's robust |
| three million SWU generated in late 2012 to 2013. An | | | | production forecasts. He explained that this reminded |
| expansion decision won't be made until 2009. But | | | | him of the old Soviet Union, when a top Communist |
| then again, Ferland will be at Westinghouse in | | | | party official met with the general manager of a |
| Pittsburgh, not in New Mexico where LES will be | | | | Russian dairy cooperative. The party official asked |
| sweating to build that facility.More Bad News if | | | | the manager if he could quadruple last year's milk |
| Utilities Believe Kazak ProjectionsIn what would | | | | production. Of course, the manager promised he |
| qualify as the most sincere presentation of the day, | | | | would, vowing that he would do this for the Politburo |
| Power Resources Chief Executive Fletcher Newton | | | | and so forth. Then, the official asked the manager if |
| discussed the upside and downside of uranium mining | | | | he could increase production by eight times. The |
| in Kazakhstan. It is both a tribute to the crystal clear | | | | manager announced it could be done and that he |
| transparency of Cameco and their subsidiary, Power | | | | would do it for the glory of the Fatherland. Finally, the |
| Resources, in providing us the truth about this difficult | | | | party official asked the manager if he could increase |
| Central Asian country. Promising as Kazakhstan | | | | milk production by 16 times over the previous year. |
| sounds on paper, Fletcher Newton concluded during | | | | Exasperated, the manager declared that he would |
| his presentation that mining in this country would be | | | | achieve this target, saying, "I can do it, but the milk is |
| challenging. More specifically, he said, "There is lots of | | | | going to look a lot like water."Perhaps this anecdote |
| uranium out there, but getting it will be a | | | | will help Florida Power and other utilities become more |
| challenge."Newton described the Inkai solution mining | | | | cautious when readily factoring in Kazak uranium |
| project in Kazakhstan, of which one section is 600 | | | | production into their fuel supply expectations.James |
| feet long by 300 feet wide. It will be the largest | | | | Finch contributes to and other publications. Visit to |
| solution mining project in the world - producing about | | | | read all of his archived articles on uranium and the |
| 2000 tons annually, roughly 5 million pounds. The | | | | nuclear fuel cycle. |