Nuclear fuel: are we heading for a uranium crunch?

AS THE world prepares for the largest investment in nuclear power in decades, owners of uranium mines last week raised the prospect of fuel shortages. To make things worse, the reliability of estimates of the amount of uranium that can be economically mined has also been questioned.

Volatile oil and gas prices, along with the threat of global warming, have pushed governments to reconsider nuclear energy, partly because it is a low-carbon technology and partly because uranium supplies seem plentiful.

Mined uranium caters for about 60 per cent of the global demand for nuclear fuel. The rest comes from secondary sources, including stockpiles left over from the 1970s and 1980s, reprocessed fuel and the conversion of old Russian nuclear warheads - the so-called Megatons to Megawatts programme.

But the supply may not be as secure as first thought. The price of uranium has plummeted from a peak of around $130 per pound of uranium oxide ($286 per kilogram) in 2007 to $45 today (see graph). Some of this decline is due to slumping fossil fuel prices and some from the uncertainty surrounding the industry.

For example, investors do not know how many of the world's older reactors will be decommissioned and when. They are also unsure about the supply of secondary uranium. For instance, the Megatons to Megawatts programme, which accounts for 10 per cent of the US electricity supply, ends in 2013 and it is unknown what, if anything, will replace it.

This uncertainty is stifling investment in new mines, which could lead to future shortages, says Jean Nortier, chief executive of Uranium One, a mining and exploration company based in Vancouver, Canada. "Current prices are much too low to provide the incentive needed to meet the medium and long-term demand for uranium," he says.

Added to this are concerns that uranium resources may have been overestimated. The International Atomic Energy Agency and the Nuclear Energy Agency (NEA) publish biennial estimates of global uranium resources in the so-called Red Book. Michael Dittmar, a particle physicist at CERN in Geneva, Switzerland, last week released a critical analysis of the figures and argued that the reasons behind the fluctuation in estimated resources in recent years are unclear (arxiv.org/abs/0909.1421).

The 2007 Red Book estimates that there are 5.5 million tonnes of uranium that can be mined for less than $130 per kilo, up from 4.7 million tonnes in 2005. The uranium resources that make up these estimates are split into two categories: reasonably assured and inferred. In the normal process of geological discovery, Dittmar says, increases should be to both categories. But "almost all the increase comes from this second category", he says.