SENSITIVITY ANALYSES

The supply–demand model used in this analysis and described in Table 2 and Fig. 5 is a tool for approximating how the balance between uranium supply and demand will be maintained up to 2050. By changing the model input we can assess the adequacy of different confidence levels of resources to satisfy a range of demand projections. We can project when production from projects of a given production cost range will be required to balance growing demand as a means of projecting market price trends. It is, however, important to remember that we are dealing with a model and that the projections based on the model are only as good as the input to the model.

Nearly all of the model input is based on estimates and assumptions, the accuracy of which decreases the further into the future we consider. The present uranium industry can be modelled with a high degree of accuracy using data reported to organizations such as the IAEA, WNA, Organisation for Economic Co-operation and Development and various government agencies.

Predicting how the industry will look 20, 30 and 40 years from the present, however, becomes increasingly speculative. To partially accommodate these uncertainties we have used three demand cases against which to measure the adequacy of uranium supply. In addition, we can use sensitivity analyses to determine how changes in different input parameters will affect the adequacy of supply or market price projections. The following sections provide examples of how changes in certain parameters could affect the future balance between supply and demand.

7.1. AVAILABILITY OF RUSSIAN HIGHLY ENRICHED URANIUM The reference demand case for primary supply assumes that the avail-ability of Russian HEU under the current US–Russian HEU agreement will end when the agreement expires in 2013. It has already been noted that while the availability of Russian HEU to Western markets may indeed end in 2013, a portion of that material will probably still be available to satisfy Russian markets and obligations to its fuel cycle customers. This likelihood has been reflected in the secondary supply projections. The potential that the United States Department of Energy will also make additional HEU available to the market has also been provided for in these projections.

7.2. CHANGING THE ENRICHMENT TAILS ASSAY

It has already been noted that lowering the enrichment tails assay reduces the demand for natural uranium. To evaluate the impact of such a reduction on the balance between supply and demand we assumed that the average Western enrichment tails assay will be reduced from 0.30% to 0.25% starting in 2008 and that this reduction will result in a 10% reduction in Western uranium demand. The WNA [2] estimates that annual Western uranium requirements account for an average of about 90% of worldwide primary supply require-ments up to 2025. Table 7 shows the effect of reducing Western primary supply requirements by 10% annually between 2008 and 2050 as a result of reducing the enrichment tails assay. As shown in Table 7, a reduction in the tails assay from 0.3 to 0.25% would result in a balance between supply and demand in the reference case with production derived from total RARs. The cumulative deficit, 14 830 t U, is well within the limits of accuracy of the model. Although tails assay reduction has already been implemented by some Western utilities, there is no assurance that uranium prices will justify the reduction in average tails assays over the long term.

We cannot evaluate the effect of lowering (or increasing) enrichment tails assays as an isolated strategy. Instead, the implications of such a reduction relative to other fuel cycle activities must also be considered. Just as there are questions about the adequacy of uranium resources and production capacity, so too are there similar questions regarding availability of conversion and enrichment services. Therefore, the broader implications of changes in one stage of the fuel cycle for other related activities need to be examined.

TABLE 7. REFERENCE CASE TOTAL RARs WITH AND WITHOUT REDUCTION IN ENRICHMENT TAILS ASSAY

Tails assay scenario

First year of deficit between supply and

demand

Cumulative deficit (t U)

Without tails assay reduction 2038 520 060

With tails assay reduction 2048 14 830

8. CONVERSION

All reactors that use enriched uranium, which is the majority of reactors worldwide, require conversion of natural uranium concentrate (U₃O₈) to gaseous uranium hexafluoride (UF₆). Many of the same factors that affect uranium demand — capacity factors, tails assays optimization, etc. — also affect UF₆ conversion requirements. Therefore, demand for UF₆ conversion closely parallels primary uranium supply requirements. Similarly, many of the same secondary supply sources that displace primary uranium supply — HEU, inventory drawdown, RepU, tails re-enrichment and optimization of tails assays — also displace UF₆ conversion requirements.

Heavy water reactors, mainly those of the CANDU design, do not use enriched uranium. Instead UO₂ produced from the direct conversion of U₃O₈ is used in the fabrication of fuel for HWRs.

8.1. UF₆ CONVERSION REQUIREMENTS

When averaged over the period to 2050, UF₆ conversion requirements will approximately equal uranium requirements, with a downward adjustment of about 7% for reactors that do not use enriched uranium. On the basis of this relationship, Table 8 lists current worldwide UF₆ conversion capacity.

TABLE 8. WORLDWIDE UF₆ CONVERSION CAPACITY (source: WNA [2])

Country Facility/owner Capacity^a

(t U/a)

Brazil 90

Canada Port Hope/Cameco 12 500

China CNNC^b 1 000

France COMURHEX/AREVA 14 000

Russian Federation Rosatom 15 000

United Kingdom (UK) BNFL 6 000

USA Metropolis/ConverDyn 14 000

Total 62 590

a Nameplate capacities. There is no assurance that these capacities can be achieved or maintained throughout the study period.

b CNNC: Chinese National Nuclear Corporation.

In addition to the conversion capacities listed in Table 8, the WNA [2]

estimates that the Western inventories of UF₆ total approximately 50 000 t U.

The Russian Federation also holds inventories of UF₆, which contain uranium in various forms. The Russian UF₆ inventory is thought to be about half that held in the West, but the exact quantity is uncertain.

Cameco and BNFL recently announced a ten year toll conversion agreement, ensuring that the Springfields conversion facility (Lancashire, UK) will remain in operation to at least 2016. Cameco is currently studying conversion options after this.

AREVA is currently envisaging the building of new conversion facilities at its existing sites with an operating capacity in the range of 15 000–20 000 t/

UF₆, which will progressively replace the old plants from 2010 to 2020.

ConverDyn has also announced its intention to increase its capacity when market conditions justify such an increase.

In the Russian Federation, Rosatom has also indicated its intention to increase its concentrates purification capacity when market conditions are judged favourable.

With good planning and proper economic incentives, future UF₆ conversion capacity will be adequate to meet demand. This may be accom-plished by expansion of existing facilities or construction of new plants.

Whereas a uranium mine must be built where the orebody is located, a new conversion facility can be constructed in many favourable jurisdictions regardless of geography. Some of the major uranium producers are also partic-ipants in the conversion and enrichment industries. This vertical integration of the industry will help to ensure a future balance between uranium production and the downstream services required to balance supply and demand at all stages of the front end of the nuclear fuel cycle.

8.2. UO₂ CONVERSION

Table 9 lists worldwide UO₂ conversion capacity. Demand for UO₂ conversion in the reference case is expected to increase from about 2870 t U in 2005 to 5480 and 9730 t U in 2025 and 2050, respectively, assuming that HWRs continue to account for about 7% of total reactor uranium requirements.

Although there will be an apparent shortfall of UO₂ conversion capacity by 2025, capacity increases at existing facilities are expected to keep pace with increases in UO₂ demand throughout the study period. Cameco is the sole market price based supplier of UO₂ for HWRs and maintains additional standby production facilities at Port Hope, Ontario.

Cameco is currently developing a new fuel called slightly enriched uranium for use in the Bruce Power HWRs. This fuel is approximately 1.1% ²³⁵U. Depending upon successful introduction of this fuel at Bruce Power, and perhaps other HWRs, UO₂ conversion requirements will marginally decrease, with a consequent slight increase in demand for UF₆ conversion and enrichment.