Uraniums Bullish Dynamics On The Rise

Published on Saturday Oct 30 2010

URANIUM has taken the back seat to unlikely new crazes such as rare earths, phosphate and mineral sands and retro fashions such as copper. 

 

The fundamentals of the uranium story haven't changed much since the pre-2007 boom times, when the mere suggestion of possible uranium mineralisation could double a junior's stock price, even if they weren't looking for the stuff in earnest.

Resource Capital Research notes the uranium spot price has crept up 14 per cent in three months, but at about $US44 ($44.3) a pound remains well below the mid-2007 peak of close to $US140 a pound.

The go-go dynamics haven't changed, with nuclear seen as filling a crucial non-carbon energy gap.

We won't go near the debate about whether nuclear is clean energy or not but will merely note that there are 493 planned or proposed reactors, with 59 under construction.

Lest anyone gets excited about a repeat of $US140 a pound prices, new supply is likely to come from sources in Kazakhstan, Paladin's second Namibian project, Kayelekera and, locally, Energy Resources Australia's Ranger mine and Olympic Dam's vaunted $5 billion expansion.

RCR's John Wilson expects the spot price to bottom at $US45-$US50 a pound, with the prospect of retraction in the present half as supply increases.

"With stronger global production anticipated in the second half of 2010, there is potential for the spot price to fall back slightly, though we expect the long-term price to remain well supported on strategic inventory purchases from China, India, Japan and Germany," he says. Look beyond the short term, though, and a supply shortfall emerges.

One contributing factor is that the supply of former Soviet weapons-grade uranium is wearing down. For investors, there's better value in the uranium sector but the winners and losers remain difficult to pick.

Criterion has always been chary about the opportunists who raised $5 million or so to poke around for the stuff (or to keep directors in the manner accustomed). Most of these have fallen by the wayside and the producers' performance has been mixed.

 PALADIN ENERGY

Paladin (ASX code: PDN) should be commended for opening not one but two African mines, Langer Heinrich in Namibia and Kayelekera in Malawi. Paladin is meant to be expanding production from its African mines to 7.3 million pounds this year, more than double last year's effort.

Yet a first-quarter report showed production at 1.36 million pounds, but with sales and the received price both 20 per cent lower than they were in the previous quarter.

ALLIANCE RESOURCES

Alliance Resources (AGS) is a 25 per cent owner of the Four Mile project, vaunted as Australia's newest uranium mine and the third biggest behind ERA's Ranger and BHP Billiton's Olympic Dam.

The mine was meant to have been opened in January this year but has been beset by delays, including a stoush between Alliance and the mine's 75 per cent owner Quasar Resources over a native title agreement.

 ENERGY RESOURCES

Veteran producer ERA has a habit of underachieving on production, a common excuse being wet weather at its Ranger mine in the Northern Territory. In its third quarter numbers last month, ERA reduced guidance to 3900 tonnes from the 4300 tonnes to 4700 tonnes issued in July.

 EXTRACT RESOURCES

Extract Resources (EXT) blips loudly on Criterion's radar. Extract hopes to develop Rossing South in Namibia, the world's fifth biggest uranium deposit. "We have estimated the project will reach first production by 2015 at the rate of 14.5 million pounds a year, with capital requirements of $1bn," broker Patersons says.

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Supply Crunch Signals "URANIUM BOOM"

Published on Wednesday Oct 20 2010

GOLD is justifiably hogging investors' attention at the moment, but the uranium market is looking interesting, judging by presentations from uranium producers at recent investment conferences.

Executives such as Paladin Resources CEO John Borshoff (presenting at the Africa Down Under conference in Perth, Australia) and Denison Mines CEO Ron Hochstein (addressing the Modern Energy Forum in Denver, in the United States) reckon the uranium price is about to start moving because of a looming supply crunch.

There are two key factors they maintain will trigger that crunch. While there’s no shortage of the metal worldwide, there’s been a dearth of successful new uranium mining companies able to supply it. That’s due to under-investment in the sector, because the uranium price has been so low for so long while many of the companies that have entered the business have made a mess of it.

Borshoff loves to rub it in on that point, emphasising how Paladin has successfully developed two mines over the past five years – Langer Heinrich (in Namibia) and Kayelekera (in Malawi) – while a string of its competitors have either failed outright or are performing way below expectation.

South Africa provides two classic examples.
Uranium One failed outright with the development of the Dominion Mine, against which it took a $1,8bn impairment charge when it shut it down last year. And First Uranium has run way behind on its production schedules at Ezulwini and its Mine Waste Solutions and is still in business mainly because it was bailed out financially by shareholder Simmer & Jack Mines.

“This is a highly complicated metal to produce. People just don’t seem to understand the complexities of it,” says Borshoff.

But the crunch factor is probably going to be the end of the highly enriched uranium (HEU) deal through which uranium has been provided to the nuclear power generating industry from decommissioned Russian nuclear weapons.

That secondary supply is what has kept the uranium price depressed for the past 20 years, bar the short-lived spike in 2007/2008. Hochstein says that deal ends in 2013 and it’s not going to be renewed, which will leave a large gap in the market.

Hochstein reckons there are 440 nuclear reactors currently operating that require 184m lbs of uranium oxide (U308) to keep them running. World supply of newly mined uranium oxide currently sits at around 130m lbs/year.

Article Continues .....................
Link Provided: www.miningmx.com/news/energy/Supply-crunch-signals...

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Uranium Spot Price News Update Oct 19-2010

Published on Tuesday Oct 19 2010

 

Sellers are responding by raising their offer prices and TradeTech has similarly lifted its Spot Price Indicator by US50c to US$48.50/lb.

Uranium market activity is continuing to pick up as uranium market consultant TradeTech notes the spot market saw eight new transactions and some new demand entering the market over the past seven days.

The transactions totalled almost 800,000 pounds of uranium, the buying coming from utilities, producers and intermediaries. Deals completed during the week included a US utility looking for 200,000 pounds of material selecting winning suppliers for a portion of its needs.

Prices for deals completed during the week spanned a broad range, this depending on delivery date and location. As TradeTech notes, transactions involving delivery next year or in Europe were concluded at higher prices than deliveries in North America and before year-end.

In terms of new demand, one US utility entered the market seeing 180,000 pounds of uranium with offers due October 25th, while another utility is looking for 400,00 pounds of material for spot delivery and a further 650,000 pounds for delivery next year.

This increase in spot activity, along with significant demand in the mid to long-term sector, such as one utility seeking up to 975,000 pounds of material, is putting upward pressure on prices.

There are no changes to TradeTech's mid-term indicative price of US$50/lb or its long-term price indicator of US$62/lb.

Time For A Greens U-turn On Uranium Mining In Australia

Published on Tuesday Oct 19 2010

 

Reg Howard-Smith, Chamber of Minerals and Energy WA

“I refuse to condemn uranium mining in Australia, I think it’s going to be part of the solution…we need to have the best regulatory framework in the world that will satisfy all Australians that we are doing our utmost to make sure this fuel is as safe as it possibly can be.”

 

Dr Tim Flannery – scientist, environmentalist, Australian of the Year 2007.

Confronted by the challenge of climate change and rising energy demands, it’s hardly surprising the Cold War-inspired case against uranium mining is increasingly out of step with the views of community leaders and leading environmentalists.

The reality is that commercial demand for uranium will continue, with overseas countries looking to nuclear power for a secure, reliable source of base-load electricity, which does not pollute the air, nor add to carbon emissions.

There are now more than 440 reactors in operation across 30 countries. Another 60 plants are under construction. Earlier this year, President Barack Obama approved $8.3b(US) in loan guarantees, to build the first nuclear power plants on American soil in thirty years. China will build another 28 nuclear plants by 2020 – a key plank of the country’s strategy to cut greenhouse gas emissions.

With extensive reserves, a stable sovereign profile and a rigorous approvals system, Australia is well-placed to help meet the world’s energy needs, in a safe, responsible manner.

In fact, some commentators would go as far to say we are morally obliged to play our part in reducing global dependence on fossil fuels.

As we enter this new climate-energy paradigm, it must be remembered Australia has mined and exported uranium for more than half a century.

These days, it’s sold strictly for electricity generation, under the terms of the Nuclear Non-Proliferation Treaty. In Australia, yellowcake mining and transport is heavily regulated, with close to a dozen state and federal departments and agencies administering the industry.

Claims in some quarters of an acute risk to human health are simply not supported by science, nor the experience of uranium mining in other states and territories.

Each year, the typical uranium mine worker is exposed to about 5 millisierverts (the unit of measurement of biological effects of radiation) – similar to that of a commercial airline pilot. To put this in context, the world-wide population average is 2-3mSv and a CAT scan 10-20mSv. The bottom-line – radiation exposure for those involved in mining and transport remains very low.

In Western Australia, changing community attitudes have been reflected in government policy.

Since the ban on uranium mining was lifted two years ago, a new sector has emerged from the state’s dusty interior. The first mines could be in production by 2013, however the socio-economic benefits are already being delivered.

In the last financial year, $55m was spent by companies exploring for uranium in WA – almost double the figure for 2008-09. Conservatively, it’s estimated the industry could deliver $460m in state revenue by 2030.

If just one of the current projects achieves production, it will create hundreds of jobs, including opportunities for Aboriginal employment. Importantly, it will broaden the export base of the state’s minerals sector and strengthen the regional economies, from where these resources will be extracted.

And contrary to claims of widespread opposition, right now, companies are engaging with communities and regulators alike. To date, the response from civic leaders and residents has been encouraging. For example, the Shire of Wiluna recently declared its support for continued uranium exploration in the area. Furthermore, the shire has publicly stated it’s prepared to consider approvals to mine, on the basis proponents comply with all statutory requirements, including health and environmental, and can demonstrate the project’s socio-economic benefits to the region.

As an industry, we welcome this willingness to objectively examine the facts and issues.

The Greens should drop the fear-driven rhetoric and follow suit – it’s time the party reviewed its position and recognised that an outdated ideology is threatening WA jobs, regional economies and global efforts to tackle climate change.

Reg Howard-Smith is the Chief Executive of the Chamber of Minerals and Energy of Western Australia

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Australia's Energy Resources Cuts Uranium Output Target, Will Buy Spot

Published on Tuesday Oct 13 2010

Energy Resources of Australia (ERA.ASX) cut its full-year uranium oxide output target by up to 800 tonnes after third-quarter output dropped 35 percent and said it will need to buy material to meet sales obligations.

* ERA blames less rich ores for the drop

* Says 2010 output target cut by up to 800 tonnes

* Braces for adverse impact on 2010 earnings

The news, which sent ERA shares down more than 6 percent, is expected to exacerbate an already-tight world market for uranium oxide, used in nuclear power generation.

"The shortfall represents about 1 percent of world supply in 2010, so it's not the end of the world, but could have some impact on the uranium price," Warwick Grigor, a sector analyst and chairman of BGF Equities in Sydney.

"Overall, ERA is coming in 20 percent under their capacity, and that's significant," Grigor said.

ERA, which in 2009 accounted for nearly 10 percent of world uranium oxide output, downgraded its full-year output target to 3,900 tonnes, from between 4,300 and 4,700 tonnes.

It also said it would have to go to the market to meet 2010 sales commitments of around 5,000 tonnes.

By 0455 GMT shares in ERA, which is 68 percent owned by Rio Tinto , were down 6.4 percent at A$13.53.

TIGHT URANIUM MARKET

The limited growth in mined supply is a legacy of the 1990s, when plunging prices froze most exploration and development.

After falling as far as $7 a pound on spot markets in 2000, prices rebounded to $136 in 2007 -- spot uranium UX-U3O8-SPT is now at $48 -- as countries searching for an alternative to greenhouse gas-producing power sources such as coal have re-embraced nuclear power.

The Australian Bureau of Agricultural and Resource Economics forecasts global uranium production in 2010 will rise 5 percent to 60,190 tonnes, mainly because of higher output from Kazakhstan and parts of Africa.

ERA said its outside purchases were expected "to adversely impact 2010 earnings as the small price margin associated with the sale of the purchased material is more than offset by the ongoing costs of operation."

Its third quarter output of 911 tonnes was 10 percent higher than the previous quarter due to mining of richer ores, though the uranium grading still remains significantly below 2009 levels, the company said. (

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Resistance To Nuclear Power Leaving Australia Vulnerable

Published on Tuesday Oct 12 2010

BRISBANE -(Dow Jones)- Australia's resistance to a domestic nuclear power industry risks leaving the country vulnerable if the world agrees to greenhouse gas emission targets, the head of Canberra's nuclear power body said Tuesday.

Ziggy Switkowski, chairman of the Australian Nuclear Science and Technology Organisation, said the country's current dependence on fossil fuels would leave it exposed if carbon emissions targets are agreed to.

"This is a national vulnerability. If the world moves to clean energy, then what's been a source of competitive advantage for Australia--low-cost fossil fuels--will become a competitive disadvantage," he told a conference in Brisbane.

Australia is home to around 38% of the world's uranium reserves and two of the world's three biggest uranium mines--BHP Billiton Ltd.'s (BHP) Olympic Dam mine and Energy Resources of Australia's (ERA.AU) Ranger mine.

However, it was alone among the world's 28 largest economies in not considering nuclear power as part of a future energy and climate change policy, Switkowski said.

The country's only working nuclear reactor, at Lucas Heights near Sydney, produces medical isotopes.

Around 90% of Australia's electricity is generated from fossil fuels, principally coal, and establishing a nuclear industry would be essential to breaking that pattern, he told Dow Jones Newswires.

"We're just about the highest per capita greenhouse gas emitters in the world, and we are publicly committed to massive greenhouse gas reduction targets.

"But I don't see how we're going to get there without nuclear power in the narrative. I can't make the numbers work."

He suggested that ten 1,000-megawatt reactors could be built by 2050 to deliver a quarter of the country's energy needs, built on the location of existing fossil fuel stations because of their good grid connections, water supply, and the absence of local communities.

However, the result of recent federal elections, after which the Labor government holds power thanks to the support of a Green party MP and three independents, has made the prospects of change more remote, he said.

The Greens are publicly opposed to nuclear power, and two of the three independents have a record of opposition to the nuclear industry.

"I think the election outcome has, if anything, slowed or tempered any enthusiasm for nuclear power at the policy level for some time," he said.

At the same conference, Tsunehisa Katsumata, chairman of Tokyo Electric Power Co. (9501.TO), one of Japan's largest power utilities, said Australia was more suited to nuclear power than his own country.

"You have lots of land where people don't live. You don't have earthquake issues because you have solid geology," he said. "But it is difficult to convince your community on the basis of energy security," since the country has such abundant energy supplies, "and also fossil fuel power generation is very low cost, so it is very difficult for nuclear to compete."

Tepco operates 17 nuclear reactors in Japan, accounting for 40% of the company's electricity output. Its Kashiwazaki-Kariwa plant is the world's largest-capacity reactor.

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Trade Tech Uranium Spot Price Update

Published on Tuesday Oct 5 2010


Uranium Spot Price Update
Uranium prices posted a modest gain last week, industry analyst TradeTech lifting its spot price indicator for the week ending October 1 by US$0.75 to US$47.50. The increase reflects multiple producers entering the market actively seeking uranium for immediate delivery, which one assumes would be to make up contract short-falls.

One utility also entered the market, seeking around 400,000 pounds of uranium for spot deliver and a further 650,000 pounds for delivery next year according to TradeTech. Elsewhere, the group notes two buyers are still evaluating offers for up to one million pounds of material.

In the term uranium market TradeTech notes there has been no new demand or transactions since the end of last month. One US utility is assessing offers for delivery of up to 2.2 million pounds of uranium between 2013-2019, while another US utility is evaluating offers for 520,000 pounds for delivery in 2011 and 2012 and up to 1.1 million pounds per year in 2015 and beyond.

There was one September transaction in the term uranium market, a utility selecting a preferred supplier for delivery of around two million pounds of material to be delivered across a six-year period.

TradeTech's new spot price indicator compared to a price of US$46.75 the previous week and is an increase of US$1.25 from the level at August 31. Prices were volatile through September as earlier in the month TradeTech's spot price had been as high as US$48.00 per pound.

For the month a total of 20 transactions were recorded for a total of 3.1 million pounds equivalent of uranium, while year-to-date volume now stands at 32.6 million pounds uranium equivalent.

Falling prices in recent months attracted new buyers into the market, though TradeTech notes the impact of this increased buying interest was offset by new supplies hitting the market.

Factoring in September's market activity sees no change to TradeTech's medium-term price indicator of US$50 per pound. The group has lifted its long-term price indicator to US$62 per pound from US$60 per pound previously. The increase to the long-term price indicator reflects both increasing demand for material and recent offers and transactions.

URANIUM --- Resource Capital Research

Published on Saturday Oct 2 2010

-- The uranium spot price is currently trading at US$46.50/lb, up 14% from 3 months ago (US$40.75/lb).

-- The Fund Implied Price (FIP) is US$47.50/lb, which compares with US$46.00/lb Jan '10.

-- The long term contract uranium price is US$60.00/lb. It is up from US$58/lb 3 months ago.

-- There are 493 new nuclear reactors planned or proposed globally as of August '10.

-- Global supply 2H10 is expected to increase, with stronger production from Kazakhstan, Ranger,Olympic Dam and continued ramp-up at Kayelekera.

-- There is potential for production to decline in Niger where Areva is understood to have withdrawn expat staff following a series of kidnappings in the country.

-- Utility purchases remain discretionary though timing of demand from long term Chinese inventory build remains a factor and will continue to influence short term market trends, as will, increasingly, Japanese and Indian utility purchases.

Resource Capital Research ("RCR"), an equity research company which focuses on small and mid size resource companies, today launched its major quarterly research report covering 17 global uranium exploration and development companies.

The quarterly report typically reviews companies listed in Australia, Canada, USA and UK and active in established uranium districts globally, including Australia, Canada, USA, Argentina, Peru, Mongolia, Zambia, Tanzania, Niger and Namibia.

To access the free summary report or to purchase the complete 98 page comprehensive report, go to www.rcresearch.com.au/reports. RCR also publishes gold, iron ore, and tin-tungsten sector reports.

Equity market performance

The market valuation of Australian companies with one or more uranium projects is up 18% over the past month, up 29% over the past 3 months, and up 18% over the past 12 months. This compares with Canadian companies with one or more uranium projects, up 22% over the past month, up 28% over the past 3 months, and up 43% over the past 12 months.

In the past 1 month, the uranium mining majors have had mixed share price performance: Cameco (CCO) is up 5% (3 month performance +18%), Denison Mines (DML) is up 14% (3 month performance +26%), Uranium One (UUU) unchanged (3 month performance up 28%), Energy Resources of Australia (ERA) up 1% (3 month performance -5%) and Paladin (PDN) down 4% (3 month performance -3%). The UUU three month price increase (+26%) is attributable to the announced ARMZ transaction; and ERA's 6 month price decline (-30%) is attributable to a number of factors including the impact to sentiment of the decision to subsume nearby uranium deposit Koongarra (Areva) into Kakadu NP.

The Merrill Lynch Uranium Equity Index (a basket of uranium equities) is up 4% over the past month, up 9% over 3 months and down 17% over the past 12 months.
Uranium price outlook

The uranium spot price is currently trading at US$45.50/lb, up 14% from 3 months ago (US$40.75/lb) and compares with US$44.50/lb at the start of the year. The Fund Implied Price (FIP) is US$47.50/lb, which compares with US$46.00/lb Jan '10. The FIP has generally been a good leading indicator of near term spot price performance.

The uranium spot price is expected to find a floor around US$45-50/lb. The gradual downward drift in spot and contract prices over the past 12 months reflects in part the tremendous growth in new mine supply from Kazakhstan's ISR projects. Recent price influences driving the spot market up to US$48/lb are not entirely clear, though traders point to purchases from major producers. Utility purchases remain discretionary though timing of demand from long term Chinese inventory build remains a factor and will continue to influence short term market trends, as will, increasingly, Japanese and Indian utility purchases. WNA expects the market to remain in modest surplus through 2013/14.

Supply 2H10 is expected to increase, with stronger production from Kazakhstan, Ranger, Olympic Dam and continued ramp-up at Kayelekera, partially offset by a potential decline in production in Niger where Areva is understood to have withdrawn expat staff following a series of kidnappings in the country.

The long term contract uranium price is US$60/lb, up from US$58/lb three months ago. It is down from US$61/lb Jan '10, though has been relatively stable since peaking at US$95/lb from May '07 to March '08.

Kazakhstan ISR production is forecast to reach 47mlbs in 2010, up from 36mlbs in 2009 (+30%) and potentially rise to 78mlbspa U3O8 by 2018. At the recent WNA conference in London, Kazakh officials indicated they will expand production capacity only so far as demand and price warrant.

World planned and proposed nuclear power reactors

Currently there are 440 nuclear power reactors in operation and 59 under construction. There are 493 new nuclear reactors planned or proposed globally as of Aug '10, up from 435 Dec '09 (+13%). A total of 84 new reactors are scheduled to be commissioned by 2017.

As of Aug '10, countries with the largest number of planned and proposed new nuclear reactors are: China 153; India 60; Russia 44; USA 31; South Africa 27 (mostly smaller modular reactors); and Ukraine 22.

Since Dec '09 the largest increases in announced planned and proposed new nuclear reactors are in India, increasing from 38 to 60 (+22, up 58%); and China increasing from 125 to 153 (+28, up 22%).


Events of the past 3 months include:

-- Greenland Minerals and Energy -- Greenland Government amended the
Standard Terms of Exploration Licenses that allows for the inclusion
of radioactive elements as exploitable minerals for exploration and
evaluation. This allows GGG to advance the world class Kvanefjeld rare
earths and uranium project through DFS (expected 2011).

-- The Australian federal government has scrapped the formerly proposed
RSPT -- resource industry super profits tax -- which was to apply to
all mining resource sectors, and in its place is proposing the scaled
down Mineral Resource Rent Tax (MRRT) which is applicable only to the
iron ore and coal sectors.

-- Aura Energy announced (Aug '10) enhanced metal extractions from
bioleaching at the large multi-metal Haggan Project, Sweden. Initial
test results indicate Alum Shales may be amenable to bioheap leaching
at low capex and opex. The project's Inferred Resource includes
291mlbs U3O8 grading 162ppm.


"Producer buying has driven the spot price from ~US$40/lb three months ago to a recent high of US$48/lb, and is currently US$46.50/lb. With stronger global production anticipated 2H10, there is potential for the spot price to fall back slightly though we expect the long term price to remain well supported on strategic inventory purchases from China, India, Japan and Germany," John Wilson, Managing Director of RCR, said.
About Resource Capital Research

Resource Capital Research ("RCR") (www.rcresearch.com.au) was founded in 2004 and is based in Sydney. RCR provides investors with in-depth reports on current investment opportunities in the mining sector both in Australia and globally. The focus is on small and mid cap resource companies, within the gold and uranium sectors, ranging from exploration stage through development and production. John Wilson the principal of the firm and analyst has over ten years' experience analysing mining companies in Sydney and on Wall Street including for major investment banks.


The report is available at www.rcresearch.com.au. The next Uranium Sector Review will be published in the December Quarter, 2010. RCR also publishes the Gold Company Review, Iron Ore Company Review, Rare and Minor Metals Company Review; and a Copper Company Review -- out soon.

Laser Uranium Enrichment

 

Two technology giants, GE and Hitachi, are betting big on a nuclear renaissance. The companies formed an alliance in 2006 to push for a global expansion of nuclear power. But selling new reactors is only half the game. The joint venture is also aggressively pursuing a controversial technique for making nuclear fuel using lasers, a method they hope to commercialize by building the world's first industrial-scale pilot plant in 2012. Regulatory agencies are worried that laser enrichment of uranium could lead to the proliferation of nuclear weapons.




GE has called the laser method a "game-changing technology" and along with Hitachi and Cameco Corp., a Canadian nuclear fuel provider in Saskatoon, Sask., is devoting hundreds of millions of dollars to developing it and building the plant near Wilmington, N.C. The technology in question was licensed from Silex Systems, an Australian company that's been quietly conducting enrichment research at a small facility near Sydney for the last quarter century.


But many experts are skeptical. Allan Krass, a retired U.S. State Department official and a physicist who visited Silex's laboratory in 2000, says GE and Hitachi "are betting that there will be an upsurge of nuclear power plant construction—that's a huge and extremely risky bet." He adds that laser enrichment has been held back by substantial technical hurdles.
If approved, the pilot plant will be the first large-scale attempt to use photons to separate the desirable uranium-235 isotopes from the more abundant but nonfissile U-238 isotopes found in natural uranium. Experts generally believe that a laser facility would be both smaller in size and have much lower energy demands than existing enrichment plants. Those features are excellent from the perspective of improving the economics of nuclear power plants, but they also present a major headache for the International Atomic Energy Agency (IAEA) and other nuclear watchdog groups attempting to spot clandestine enrichment plants, largely from satellite imagery.


At least 20 countries have attempted—and, at one point or another, failed—to use lasers to economically separate uranium isotopes since the 1970s. "Everyone was looking for this magical elixir, the best way to do this," recalls Dennis Garratt, who was director of R&D for Cameco from 1989 to 1996.


So what's different this time? And will this version of laser enrichment somehow be proliferation proof? When contacted by IEEE Spectrum, GE-Hitachi, Silex, and the IAEA wouldn't say. But some hints can be found in the technology's history.
Of the many government-sponsored laser enrichment programs, most were shut down in anticipation of a 1993 agreement between the United States and Russia, known as the Megatons to Megawatts Program, which flooded the market with cheap uranium scavenged from Russia's nuclear arsenal. The engineers and physicists working in those laboratories tend to argue that they were on the verge of success when their projects were discontinued.
In essence, all those programs made use of the unique frequencies at which atoms and molecules vibrate. A laser tuned to the precise vibrational frequency of a U-235 atom or a molecule containing U-235 can cause that isotope to behave differently from the heavier U-238.


Broadly, in the method that Silex explored, called molecular laser isotope separation, enrichment begins with uranium hexafluoride gas—in which each uranium atom is surrounded by six fluorine atoms—mixed with an inert gas that dilutes the uranium. The gas is cryogenically cooled and shot out of a nozzle at supersonic speeds. Rapid-fire pulses from an infrared laser penetrate the gas, increasing the vibrational energy in the U-235 molecules' chemical bonds.


That higher vibrational energy causes each U-235 molecule to react more quickly with a third substance in the gas stream, explains Garratt. In one version of the process, a new molecule forms around the U-235. The new molecule lasts for less than a microsecond before breaking apart, and the repelling force from that event pushes the U-235 to the edges of the stream, where it can then be siphoned off.


Though the precise mechanics of Silex's process may differ, the underlying logic is that illuminating a gas with a laser would require only a fraction of the energy needed by the two methods used now to enrich uranium—spinning the gas in a series of centrifuges or repeatedly forcing it through a porous membrane.
At least that's the theory. In practice, several obstacles have kept the technology in the lab. "These lasers are unlike any other in the world—basically, if you need a laser, you've got to go invent one," says Bruce Warner, a laser physicist who led Lawrence Livermore National Laboratory's enrichment program, in Livermore, Calif., until the program's demise in the late 1990s.


According to several laser enrichment experts, Silex's approach likely begins with a 10.8-micrometer carbon dioxide laser that pulses hundreds of times per second. The infrared pulses travel through elaborate optics that tune their wavelengths to the needed 16 µm. Each pulse must contain about one joule of energy and be repeated fast enough to expose as much gas as possible. And if the laser doesn't pulse fast enough? Add more lasers! In short order you can wind up with an expensive and complex assembly of staggered pulsing lasers, each with its own set of tuning optics.


The optics themselves are also difficult to engineer, says Einar Ronander, the CEO of Klydon, a South African firm that grew out of that country's laser enrichment program and sold Silex its lasers. The laser-tuning process uses a hydrogen gas whose aerodynamics can be finicky. Bouncing shock waves in the gas can disrupt the beam, diminishing the laser's overall efficiency. And that's no good, says Ronander, because the energy cost of photons adds up fast.


The difficulties don't end there. Skimming off the enriched material is troublesome too. In the system Cameco built in the early 1990s, the entire laser apparatus had to be shut down to collect the enriched uranium. "We had ideas of how to solve this, but we never had the chance to try them," Garratt says.


GE-Hitachi wouldn't say if it has solved these issues—or has faced entirely different ones.
Either way, whether the venture even gets to work out the kinks in laser enrichment is now a question for the U.S. Nuclear Regulatory Commission (NRC). That agency is charged with assessing the safety of nuclear facilities but is unaccustomed to weighing the proliferation risk of new technologies.
The extent of this particular risk, of course, is open to debate. Jeff W. Eerkens, an independent physicist who has worked on laser enrichment as long as lasers have existed, recognizes the threat and suggests tracking sales of the optics, which are uncommon. Other experts think there's no imminent danger; they say that countries interested in clandestine enrichment will continue building centrifuges because that technology's comparatively simpler designs have already eluded proliferation controls. But Charles Ferguson, the president of the Federation of American Scientists, cautions that as more niche laser applications emerge, laser enrichment will eventually seem less exotic.


The NRC is expected to rule on GE-Hitachi's building license by the end of 2011. Should it deny the license, though, laser enrichment is unlikely to disappear. As Krass, the state department physicist, wrote in a 1977 review of laser enrichment in the journal Science (paraphrasing J. Robert Oppenheimer), "It would be a mistake to underestimate the great desire of scientists to achieve something 'technically sweet'…and worry about the consequences later."