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May 01, 2012

India can build nuclear reactors for $1700 per kilowatt

1. India can build cheaper nuclear reactors, than even South Korea according to Dr Srikumar Banerjee, secretary in the Department of Atomic Energy (DAE), said India can now manufacture nuclear reactors at $1,700 per kilowatt.

"We are now the world's most economical manufacturer of nuclear reactors. Our cost per unit, of $1,700 (for a 700mw reactor) is substantially less than our nearest competitors. The average international cost is now between $2,500 and $3,000 per kilowatt (for a 1,000mw reactor).

China, South Korea, Russia and India will be battling for market share in the nuclear reactor export market. They each have substantially lower costs than the US, Japan, Canada and France.

World Nuclear Association on India's reactor costs

The Tarapur 3&4 reactors of 540 MWe gross (490 MWe net) were developed indigenously from the 220 MWe (gross) model PHWR and were built by NPCIL. The first - Tarapur 4 - was connected to the grid in June 2005 and started commercial operation in September. Tarapur-4's criticality came five years after pouring first concrete and seven months ahead of schedule. Its twin - unit 3 - was about a year behind it and was connected to the grid in June 2006 with commercial operation in August, five months ahead of schedule. Tarapur 3 and 4 cost about $1200/kW, and are competitive with imported coal.

Future indigenous PHWR reactors will be 700 MWe gross (640 MWe net). The first four are being built at Kakrapar and Rajasthan. They are due on line by 2017 after 60 months construction from first concrete to criticality. Cost is quoted at about Rs 12,000 crore (120 billion rupees) each, or $1700/kW. Up to 40% of the fuel they use will be slightly enriched uranium (SEU) - about 1.1% U-235, to achieve higher fuel burn-up - about 21,000 MWd/t instead of one third of this. Initially this fuel will be imported as SEU.

Korean government data is reported to put the overnight cost of APR-1400 at the end of 2009 as $2300/kW, compared with $2900/kW for EPR and $3580/kW for the GE Hitachi ABWR. The same data puts the generation cost for Areva's APR at US$ 3.03 cents per kilowatt-hour, compared with an estimated 3.93 cents/kWh for EPR, and 6.86 cents/kWh for ABWR.

2. Cameco produced 4.8 million pounds of Uranium oxide in the first quarter of 2012, which was 2% more than the same quarter in 2011. This was in spite of getting 21% less from the Inkai mine in Kazakhstan. They are waiting for approval to increase production at Inkai.




As announced on August 31, 2011, we signed an memorandum of agreement (MOA) with our partner, Kazatomprom, to increase production from blocks 1 and 2 to 5.2 million pounds of U3O8 (100% basis). Under the MOA, our share of Inkai's annual production will be 2.9 million pounds with the processing plant at full capacity. We will also be entitled to receive profits on 3.0 million pounds.

We continue to await government approval and an amendment to the resource use contract in order to implement the production increase.

We continue to proceed with delineation drilling and the engineering of infrastructure for the test leach facility at block 3.

McArthur River/Key Lake

At McArthur River/Key Lake production was 21% higher in the first quarter compared to the same period last year. In the first quarter of 2011, we decided to remove abandoned freezepipes from a production area, which disrupted production for the quarter. We have not experienced any production disruptions in 2012.

At McArthur River, drilling to install the freezewall in the upper mining area of zone 4 is progressing as planned. We expect to start freezing upper zone 4 in 2013 and begin production from this area in 2014.

We are continuing to advance work on the environmental assessment for the Key Lake extension project. We have submitted the draft environmental impact statement to the regulators. Comments on the draft are expected before the end of the year.

Cigar Lake

We continued to make solid progress at Cigar Lake this quarter. We continued development of the Seru Bay pipeline, which we expect to be complete by mid-2012. We have resumed development in the north end of the mine, and construction of the underground processing facilities is underway.

We continue to expect first commissioning in ore in mid-2013 and the first packaged pounds in the fourth quarter of 2013.

Cigar Lake is a key part of our plan to increase annual uranium production to 40 million pounds by 2018, and we are committed to bringing this valuable asset safely into production.

Industry Outlook

At the beginning of 2012, we expected 96 net new reactors to be built over the next decade, 63 of which were under construction. This translates into an expected average annual growth rate of about 3% for global uranium consumption. Of those under construction, two South Korean reactors were brought online in the first quarter of the year.

In an industry reliant on finite secondary supplies to fulfil about 15% of 2012 consumption requirements, and where a major source of this supply - the Russian Highly Enriched Uranium (HEU) commercial agreement - ends after 2013, it is clear that new production will be needed. The end of the Russian HEU commercial agreement represents the equivalent of removing a mine producing 24 million pounds of uranium per year from the market at a time when a number of new projects have been put on hold - projects previously expected to help fill the HEU gap.

We are well positioned to meet the growing demand for uranium, given our extensive base of mineral reserves and resources located near existing infrastructure, diversified sources of supply, global exploration program and portfolio of long-term sales contracts.

Over the next several years, we expect to invest significantly in expanding production at existing mines and advancing projects as we pursue our growth strategy. The projects are at various stages of development, from exploration and evaluation to construction.


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