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The Future Uranium Market China’s Dramatic Growth

The Future Uranium Market China’s Dramatic Growth. by MZConsulting Inc Milton Caplan, President, Dr. Terry Thompson, Senior Advisor Presented at Research Capital Uranium Conference 2009 April. Outline. Global Nuclear Growth Demand for uranium China growth and demand

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The Future Uranium Market China’s Dramatic Growth

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  1. The Future Uranium MarketChina’s Dramatic Growth by MZConsulting Inc Milton Caplan, President, Dr. Terry Thompson, Senior Advisor Presented at Research Capital Uranium Conference 2009 April

  2. Outline • Global Nuclear Growth • Demand for uranium • China growth and demand • Chinese strategies for supply • Investment in Resource • Summary

  3. Nuclear Power • Nuclear renaissance takes hold • France starts construction on Flamanvilleamd commits Penly • UK Government confirms support for nuclear new build and British Energy to be sold to EDF • Contracts signed in the USA • Ontario Canada bidding process for new units • New orders in China • 34 units under construction, 108 planned and 272 proposed • China and India • 3% of plants in operation • One third of plants planned and proposed Source: WNA 09/04/01

  4. Uranium Energy • Highly energy intensive source of energy Coal Uranium Pellet = 7 grams (.24 oz) 1,780 lbs (or 17,000 cu ft of gas)

  5. Uranium Market is Unique • Need a nuclear power plant to realize this energy

  6. Uranium – without Nuclear Power It’s nothing but a rock!! Demand for Uranium is a direct function of the number of nuclear plants in operation and their performance

  7. Important Characteristics • Nuclear fuel costs represent only about 15% of the cost of energy from a nuclear plant • Uranium is about one third of the fuel cost • Low volumes Suitable to develop strategic inventories to ensure security of supply!

  8. Uranium Supply and Demand tU Source: WNA Market Report “The global nuclear fuel market: supply and demand 2007-2030”

  9. Production • More than half of supply comes from Canada, Australia and Kazakhstan • 7 companies control about 80% of the global production • UDP Report – Canada will lose its leadership role in 2009

  10. China Electricity Capacity Growth Rate China 4.7 % World 2.4% GW 25% 14% Source: WEO 2008

  11. China Nuclear Plans • Current capacity – 11 units, 9 GW • Plan to 2020 – 40 GW • Target 2% of capacity, 4% of energy • New units • CPR 1000 (based on Daya Bay design) • Qinshan Phase 2 repeat • Westinghouse AP1000 • Areva EPR • New policy under discussion • Want to increase target to 75 GW by 2020

  12. Nuclear Power in China

  13. Demand for Uranium • Base requirement to 2020 • 8,000 tonnes per year • Equivalent to 20% of current production! • Increased target • 15,000 tonnes per year • Almost 40% of current production!! • Considering India as well • Target 20 GW – 4,000 tonnes per year

  14. Global distribution of uranium resources

  15. Where will it come from? • Strategy has three major components • Domestic production • Foreign purchase • Investment in foreign resource • Development of a strategic inventory

  16. What has been achieved? • Domestic production in place • 840 tonnes / year • Exploration underway • Part of reactor supply (Areva) • 26 years fuel supply for new EPRs • Provided 35% of Uramin property in Namibia • Agreement with Kazatomprom • Sino Uranium has projects in Africa • CNNC purchase of Western Prospector

  17. Investment in Resource • China needs new ‘Elephants’ • Canadian Policy concerns China • NCA issues for sale of uranium • 49% ownership policy for operating mines • No interest in USA • Prefer countries near to China • Kazakhstan, Mongolia, Australia, Africa China will become a player in Uranium Investment How will Canada respond?

  18. MZConsulting • Extensive knowledge and experience in the Canadian and international nuclear industry • Continuously monitors uranium companies with emphasis on those believed most likely to succeed (meaning potential for production) • Extensive analytical capability • Provide advice and support to clients looking for uranium investments Work with Asian clients to access uranium supply options

  19. Summary • Uranium is a single use mineral • Significant growth in nuclear power • Most of the growth will be in Asia • Large Asian users have little resource • China will: • Develop a strategic inventory • Invest in resource • Decisions are affected by politics The uranium market will fundamentally change as the large users move from the west to Asia!

  20. Thank You Milton Caplan, President MZConsulting Inc milt.caplan@mzconsultinginc.com www.mzconsultinginc.com +1.647.271.4442

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