Sustainability of Uranium Supply and Demand Near and Long by epq17009

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									RWE NUKEM

Sustainability of
Uranium Supply and Demand:
Near and Long Term Prospects



German Atomic Forum,
German Nuclear Society
Joint Conference
Nuremberg


 May 10, 2005
Powerful Group Structure

                            RWE AG (Group Center)



 Generation   Regional      Generation        Regions
              Distributor
              s

Upstream      Trans-
              mission       Sales
Gas
              (Elect./Gas   npower
RWE Dea
              )

              Services      Renewables
Renewables
              RWE           National
Harpen
              Solutions     Windpower




                                                        2
RWE NUKEM • May 10, 2005
 RWE Group at a Glance
    Financial Year                   2004
                                     2004       2003

     Net sales (€ millions)         42,137     43,875

     R.O.C.E. (%)                   12.8         10.4

     Net profit (€ millions)        2,137        953

     Investments (€ millions)       3,737       9,762

     Net Financial Debt (€ millions) 12,385    17,838

                                     97,777    127,028
     Employees (at F.Y. end)

                                                         3
RWE NUKEM • May 10, 2005
RWE NUKEM Delivery Commitments vs.
Uranium Production of the Big Producers
   Million lbs U3O8




                      NUKEM



                                          4
RWE NUKEM • May 10, 2005
  Concentrated Western Production
  (Operating, Planned and Prospective)

              Top Six Operators                         Top Six Operators
                 2004 (87%)                                2015 (82%)

 Uzbekistan                                    Uzbekistan
              Others             Cameco                     Others       Cameco
Kazatom.                                   Kazatom.




                                      Cogema                                  Cogema
   WMC              RTZ                                WMC
               (ERA + Rossing)                                  RTZ Rossing


              38,175 t/U                                        56,375 t/U
                                                                                  5
  RWE NUKEM • May 10, 2005
Western Reactor Requirements -vs-
All Sources Less Excess Inventories
       70,000                                                           Russian LEU Exports

       60,000                                                           Recycling


       50,000                                                           Re-Enriched Tails
 t/U




                                                                        HEU Downblended Upper
       40,000                                                           (only HEU-LEU Deal I)
                                                                        Prospective Production
       30,000
                                                                        Planned Production
       20,000
                                                                        Operating Production
       10,000
                                                                        Reactor Requirements
           0
                2005

                       2007

                              2009

                                     2011

                                            2013

                                                   2015

                                                          2017

                                                                 2019


                                                                                                 6
RWE NUKEM • May 10, 2005
Western Reactor Requirements -vs-
Identified Production Plus Secondary Sources
       70,000                                                           Excess Inventories


       60,000                                                           Russian LEU Exports

                                                                        Recycling
       50,000
                                                                        Re-Enriched Tails
 t/U




       40,000
                                                                        HEU Downblended Upper
                                                                        (only HEU-LEU Deal I)
       30,000                                                           Prospective Production


       20,000                                                           Planned Production

                                                                        Operating Production
       10,000
                                                                        Reactor Requirements
           0
                2005

                       2007

                              2009

                                     2011

                                            2013

                                                   2015

                                                          2017

                                                                 2019


                                                                                                 7
RWE NUKEM • May 10, 2005
Base Case Demand to
Fuel Western Reactors: 2005-2020
     70,000
                              Reactor Requirements
     60,000

     50,000

     40,000
 U
 t/




     30,000

     20,000

     10,000

           0
               2005



                       2007



                                  2009



                                           2011



                                                     2013



                                                            2015



                                                                   2017



                                                                          2019
                                                                                 8
RWE NUKEM • May 10, 2005
Sustainable Demand

 Demand Boosters:

      New builds in China, Japan, S. Korea, U.S., Europe
       (About 40 new units altogether)

      License renewal/life extension

      Higher capacity factors/power uprates

 Demand Damper: Falling Tails Assay

 Net net: Moderate overall demand increase

                                                            9
RWE NUKEM • May 10, 2005
Production from Existing Facilities
2005 -2020 (Western World)
       70,000

       60,000

       50,000
 t/U




       40,000

       30,000

       20,000                 Operating Production


       10,000

           0
                2005


                       2007


                              2009


                                       2011


                                                2013


                                                       2015


                                                              2017


                                                                     2019
                                                                            10
RWE NUKEM • May 10, 2005
Operating Production (Existing Facilities)
2005 -2020 Western World
      40000                                                           Others

      35000                                                           Uzbekistan

      30000                                                           RTZ Rossing
      25000
t/U




                                                                      Cogema / Niger
      20000
                                                                      Kazatomprom
      15000
                                                                      WMC/Olympic Dam
      10000
                                                                      ERA Ranger
       5000
                                                                      McArthur
          0                                                           River/Key Lake
                                          2013

                                                 2015

                                                        2017

                                                               2019
              2005

                     2007

                            2009

                                   2011




                                                                                        11
RWE NUKEM • May 10, 2005
Contribution From Firmly
Planned Additional Production
       70,000

       60,000

       50,000
 t/U




       40,000
                              Planned Production
       30,000

       20,000
                              Operating Production
       10,000

           0
                2005


                       2007


                              2009


                                       2011


                                                2013


                                                       2015


                                                              2017


                                                                     2019
                                                                            12
RWE NUKEM • May 10, 2005
Contribution from Planned Production
2005 -2020 (Western World)
      70,000                                                               Others
      65,000
                                                                           McArthur Expansion
      60,000
      55,000                                                               Kazatomprom +
                                                                           Cameco & Cogema
      50,000
t/U




                                                                           JVs
      45,000                                                               Cameco/Cogema
                                                                           Cigar Lake
      40,000
      35,000
      30,000
      25,000                   Operating Production
      20,000
                                            2013

                                                      2015

                                                             2017

                                                                    2019
               2005

                      2007

                             2009

                                    2011




                                                                                                13
RWE NUKEM • May 10, 2005
Contribution from
Prospective Primary Production
       70,000

       60,000

       50,000
                                               Prospective Production
 t/U




       40,000
                              Planned Production
       30,000

       20,000
                              Operating Production
       10,000

           0
                2005


                       2007


                              2009


                                       2011


                                                   2013


                                                          2015


                                                                 2017


                                                                        2019
                                                                               14
RWE NUKEM • May 10, 2005
Contribution from
Prospective Primary Production
       70,000                                                              Crown Point
       65,000                                                              Brazil
       60,000                                                              Cameco-PRI/Gas Hills
       55,000                                                              Kazatomprom
 t/U




       50,000                                                              Mongolia

       45,000                                                              White Mesa

       40,000                                                              Uzbekistan

       35,000                 Planned Production                           Cogem/McLean

       30,000                                                              WMC /Olympic Dam
                              Operating Production
                                                                           Reactor
       25,000                                                              Requirements
                                               2013


                                                      2015


                                                             2017


                                                                    2019
                2005


                       2007


                              2009


                                      2011




                                                                                          15
RWE NUKEM • May 10, 2005
Contribution From Secondary Supplies

       70,000                                                                  Excess Inventories

       60,000
                                                                               Russian LEU
                                                                               Exports
       50,000
                                                  Prospective Production       Recycling
 t/U




       40,000
                                     Planned Production                        Re-Enriched Tails
       30,000

       20,000                                                                  HEU Downblended
                                 Operating Production                          Upper (only HEU-
                                                                               LEU Deal I)
       10,000                                                                  Prospective
                                                                               Production
                                                                               Reactor Requirements
           0                                                                   Planned Production
                2005

                       2007

                              2009

                                         2011

                                                2013

                                                          2015

                                                                 2017

                                                                        2019   Operating
                                                                               Production

                                                                               Reactor                16
RWE NUKEM • May 10, 2005                                                       Requirements
Other Possible Primary Supply

       75,000
       70,000
       65,000
       60,000                                           Other Possible
                                                        Primary Supply
       55,000
 t/U




                       Secondary Supplies
       50,000
       45,000                            Prospective Production
       40,000
       35,000                   Planned Production

       30,000
                         Operating Production
       25,000
                2005


                         2007


                                  2009


                                          2011


                                                 2013


                                                        2015


                                                                  2017


                                                                         2019
                                                                                17
RWE NUKEM • May 10, 2005
Other Possible Primary Supply

       75,000                                                                     Other Canadian

       70,000                                                                     Kazatomprom

       65,000                                                                     Olympic Dam

                                                                                  Brazil
       60,000
                                                                                  Langer Heinrich
       55,000          Secondary Supplies
 t/U




                                                                                  Aflease
       50,000                                                                     Honeymoon
       45,000                                     Prospective Production          Reactor Requirements
       40,000
                                Planned Production
       35,000
       30,000
                           Operating Production
       25,000
                                                     2013

                                                            2015

                                                                   2017

                                                                           2019
                2005

                         2007

                                    2009

                                           2011




                                                                                                    18
RWE NUKEM • May 10, 2005
Other Identified Secondary Supply

       75,000                                                                DOE Stockpile (As per
                                                                             pending Energy Bill)
       70,000                                                                Other Canadian
       65,000                                                                Kazatomprom
       60,000                                          Other Possible
                                                       Primary Supply        Olympic Dam
       55,000
 t/U




                       Secondary Supplies                                    Brazil
       50,000
                                                                             Langer Heinrich
       45,000                                Prospective Production
                                                                             Aflease
       40,000
                                                                             Honeymoon
       35,000                  Planned Production
                                                                             Excess Inventories
       30,000
                         Operating Production
                                                                             Russian LEU Exports
       25,000
                2005

                        2007

                               2009

                                      2011

                                                2013

                                                        2015

                                                               2017

                                                                      2019
                                                                             Recycling

                                                                             Re-Enriched Tails

                                                                             HEU Downblended Upper
                                                                                              19
                                                                             (only HEU-LEU Deal I)
RWE NUKEM • May 10, 2005                                                     Prospective Production
Prospective Secondary Supplies

 “Rich” DOE-owned tails could produce additional
  20,000 t/U when stripped to 0.3 tails assay

 U.S. “CODE A” Material Held By Urenco and
  Eurodif Could be Stripped in Russia

 Same for Australian and Canadian Tails

 Additional 100 t/U of U.S. HEU could be declared
  “surplus to defense needs.”


                                                     20
RWE NUKEM • May 10, 2005
Sustainable Fuel

 Uranium only a part of total front end nuclear
  fuel cost

 Even at $130 kgU – twice today’s level –
  uranium still just half of fuel cost

 Even at historically high prices for uranium and
  conversion, nuclear fuel is still only a modest
  part of total nuclear generating cost

 Nuclear O&M Plus Fuel More Economic Than
  Any Fossil-Fired Alternatives
                                                     21
RWE NUKEM • May 10, 2005
Nuclear Generating Costs
With Rising Uranium Prices
          60                                                150
                                                     $125
                                                      kgU
          50                                                125
                                          $100
                                           kgU
          40                                                100
                               $75




                                                                  Uranuim $/kgU
                               kgU
   $MWh




          30                                                75
                $50
                kgU
          20                                                50

                           Generating Cost: O&M + Fuel
          10                                                25


           0                                                0

                                                                                  22
RWE NUKEM • May 10, 2005
Generating Costs: O & M + Fuel
Recent Fossil Fuel Prices vs.
Uranium at $50/Pound -- $130 kgU
          60
                                        Gas
                                  Oil
          50

          40
   $MWh




          30

          20        $130   Coal
                     kgU
           10

               0
                                              23
RWE NUKEM • May 10, 2005
Conclusion
 Production plus secondary supplies adequate to fill
    requirements

 There may be market stress in the years ahead as
    some stocks deemed “strategic” are channeled to
    near-term requirements

 Sources are available – but only at “attractive prices”

 Even five-fold increase in uranium price since 2002 (to
    $130kgU) would mean only 30% increase in generating
    costs (barely matching current costs for coal-fired
    generation)

                                                            24
RWE NUKEM • May 10, 2005

								
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