A Nuclear Solution

The French have taken a fair share of grief over the past few years. Granted, they were the one’s that gave us a giant statue of a babe in a toga for our nation’s 100th birthday.

But a close examination of Lady Liberty reveals she’s no looker, and was likely one of the first “torch singers” from the Paris Cabaret District.

Plus, can you imagine how much of a danger that headgear would be on a date?
No thanks.

There are two things…okay three…that the French do really well. They make amazing fried potato strips, have developed a respectable wine industry (sometimes rightfully confused with its homonymic cousin, the whine industry), and generate a lot of clean, cheap electrical power. France generates 80% of its energy from nuclear power plants scattered about the French countryside.

Romantic, non?

Apparently, oui, because there are towns in France who not only embrace the concept of nuclear powered electricity generation, they actually compete to see who gets to store the spent fuel rods nearby. So what to the French know that we American’s do not? Or the Finn’s, for that matter?

In 2002, the Finnish government looked at the change in electricity costs for coal, nuclear and gas fired plants. When uranium prices doubled, the resulting increase in the cost of nuclear-generated power was only 9%. However, doubling the price of coal and natural gas costs resulted in a 31% rise for coal-generated electricity, and a 66% boost in cost for gas-generated power.

Remember when natural gas was being touted as the cheaper alternative?? Sacre bleu, vive le Nuke!

According to nuclear physicist Bruno Comby, who heads up the oxymoronically-labeled group, “Environmentalists for Nuclear Energy,” it is the best choice. In a recent paper, entitled, “The Benefits of Nuclear Energy,” he wrote:

"The entire cultivable surfaces on Earth wouldn’t suffice to produce enough biofuels to replace oil, and obviously these surfaces are also needed to produce the food we eat.There are those who have fallen in love with the simplicity of solar cells and the pristine elegance of wind turbines, but who refuse to accept that they’re quantitatively incapable of supplying the energy required by an industrial civilization. I don’t mean to say that these renewable energies should be excluded. They’re useful and have important niche roles to play in remote locations and under special circumstances, but they can make only a marginal contribution to the energy demands of an industrial civilization."

While nuclear power is cheap to generate, and clean to use, there is still the issue of what to do with spent power rods, which must be safely stored until their half-lives have been expended. Who deals with it now…and how do we overcome the NIMBY (Not In My Back Yard) factor?

Most of the waste sits in pools of water on the site of the power generating stations.
That’s the easy stuff to deal with.
Eventually the rods can be disposed of.

It’s the high-level waste that you have to be careful about; it makes up about 3% of the total waste generated. Remember the French villages tussling over who gets to play hide the fuel rod? The US government has been seeking a facility in the Yucca Mountains of Nevada for the past 20-years.

How much waste are we talking about?
If you took all the nuclear waste ever generated in the entire history of the US Nuclear program over the past 50-years, both civil and defense, it would occupy an area roughly the size of a football field, packed 5-yards deep. Hardly enough to turn Yucca yucky.

Energy newsletter guru Elliott Gue was on my show this morning with some revealing information about the nuclear energy industry. The Cameco Corporation, based in Canada, (CCJ-NYSE) is the largest uranium mining company in the world, sitting on 65% of the known reserves of uranium. Cameco takes raw uranium ore from its mines in Canada and Eastern Europe and converts it into its first stage on the way to final enrichment. Cameco can mine uranium for $6-pound, and the going rate is $47-pound.
Do the math.

Another Canadian company, Uranium Participation Corp, which is an Uranium ETF, owns several million pounds of uranium, which it stores in government-approved warehouses. The price of this company stock will fluctuate with the price of uranium. This is a great way to own uranium without glowing in the dark.

Another piece of the nuclear power puzzle is building enough reactors to meet demand. Interestingly, the companies that seem to be in the best position to take advantage of this opportunity are Siemans (SI) and Toshiba (TOSBF) which bought Westinghouse a while back.

When you consider that it will take the US at least 15-years to ramp up the permitting, construction, and actual power generation for nuclear plants, there is a tremendous growth opportunity for years to come in this area.

You can hear the entire interview with Elliott Gue as a podcast at http://www.bizradio.com/