America Needs Nuclear Fuel of Some Sort

Every time I attend a materials conference, somebody mentions the American nuclear energy sector’s need for uranium. The Megatons to Megawatts program ends this year.  The Russian government will be free to sell its surplus warhead uranium on the world market.  The US nuclear sector will need a new source of supply.  I see four options.

  1. The US government liberalizes permitting for uranium deposit exploration.
  2. US utilities operating nuclear reactors buy more uranium on the world market.
  3. North American uranium miners rapidly expand production at existing mines.
  4. The US energy sector explores alternatives to uranium-fueled fission reactors.

Option #1 is in keeping with the federal government’s liberalized approach to granting permits for oil and gas exploration on federal lands.  The problem is that the whole uranium fuel cycle has become a political football thanks to the Fukushima disaster and the renewed controversy over storage at Yucca Mountain.

Option #2 pits US energy companies against other utilities around the world.  This is how the free market normally works.  The risk is that the inevitable hyperinflation of the US dollar will make it prohibitively expensive for any US companies to source raw materials outside the US.  This includes energy sources.  I do not expect uranium to be exempt from this dynamic.

Option #3 is probably feasible in the short term, given that increased demand from utilities for uranium supply will drive the price up in the US and encourage miners to produce more. This will of course cause them to exhaust proven mineral reserves at an accelerated rate. We’re back to option #1 for more exploration.

Option #4 is a no-brainer. Notice the title of this blog article says “nuclear fuel,” which does not necessarily mean uranium.  I’m intrigued by the possibility of thorium fuel cycle reactors, which cause fewer problems than reactors powered by uranium. The EPA has clear standards for handling thorium. It’s not like you can eat the stuff, but the safety standards are known to industry and thus not a barrier to operations.

About Anthony Alfidi 128 Articles

Affiliation: Alfidi Capital LLC

Anthony Alfidi is the Founder and CEO of Alfidi Capital. His firm publishes free investment research with honesty and humor.

Mr. Alfidi holds a Bachelor's degree in human resource management from the University of Notre Dame (cum laude) and an MBA in finance from the University of San Francisco. He is a life member of Beta Gamma Sigma, the academic honor society for business majors. He has been a private investor since the 1990s.

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