NRG Defeat: Minor Setback In Week of Good News

This article originally appeared in Fuel Cycle Week #333, 6/24/09

Nancy E. Roth, Managing Editor, Fuel Cycle Week

NRG Energy has failed to convince a U.S. District Court that Exelon misled NRG stockowners about its intentions in its $6.2 billion takeover offer. So said N.Y. District Judge John Koeltl on Friday in a decision dismissing the NRG lawsuit, which the independent merchant generator had filed last March.

But last week the ruling seemed little more than a piece of paper for NRG. The lawsuit has served what in retrospect appears to be one of its key purposes: to stall Exelon’s hostile takeover attempt and push back the crucial NRG shareholder vote on it. Whatever the judge’s decision, the credit freeze meanwhile has begun to thaw—and the Department of Energy has named NRG as one of four finalists slated to receive its coveted nuclear-project loan guarantees. NRG in 2007 was the first of a wave of U.S. energy companies that applied to the Nuclear Regulatory Commission for a license to build and operate advanced new-generation reactors.

Delay Strengthens Hand of NRG

But 2008 was a tough year for the Princeton, N.J.-based power generator. It spent much of the time beating the bushes for joint-venture partners with deep pockets, in the U.S. and abroad, to shore up the financing of two planned GE- Hitachi ABWR reactors at its South Texas site. As the financial market soured NRG could not seal any deals. By October, in the global economic freefall, NRG found itself stranded with $8 billion in debt and murky prospects.

On Oct. 19 Exelon unveiled an offer to exchange 0.485 per share of common stock for each of NRG’s 233 million shares outstanding, valuing NRG shares at $26.10. At the time that represented a 37% premium over NRG’s share price of $19.33, but the NRG board summarily rejected it as inadequate.

Exelon, the 900-pound gorilla of American nuclear utilities, then launched a three-pronged attack on the smaller company. It threatened to sue the NRG board of directors for neglecting its fiduciary obligations to shareholders,while making a direct appeal to stockowners to tender their shares for purchase by Exelon. It also announced a plan to force the company to expand its board to accommodate a set of candidates it planned to nominate at NRG’s annual meeting on May 14.

By the time the offer expired on Feb. 26, Exelon issued a statement that it had won the support of 51% of NRG’s shareholders, and would extend its offer to June 26.

NRG fought back by suing Exelon in federal court in March. The NRG legal team apparently calculated the timing to allow the company to postpone its shareholder meeting, which is now set for July 21—and, hopefully, to realize some gains in an improving economy.

The delay seems to have strengthened NRG’s hand. Its share price now almost matches the Exelon offer, reducing the stockowners’ premium to 3.6%. That allows the company to press its earlier warning to shareholders that Exelon showed signs of financial weakness (FCW #319, March 18). Exelon’s announcement last week of a 500-job cut by the end of August did nothing to dispel NRG’s claims.

Exelon: Pressure to Raise or Retract Bid

On June 17 NRG issued a statement noting that as of June 16 only 12% of its shareholders still supported the Exelon bid—meaning that roughly three-quarters of those that Exelon recruited had now withdrawn their tenders. “NRG believes the low number of shares tendered reflects [shareholders’ understanding] that the value NRG has created over the past eight months greatly outweighs the value of Exelon’s proposal,” the company said.

Analysts cited by Dow Jones linked NRG’s gains to the acquisition of Reliant Energy’s retail business—and “progress” in its nuclear projects, undoubtedly referring to the DOE loan guarantees. Although the Energy Department will not award any guarantees until 2011, when the Nuclear Regulatory Commission is expected to start issuing Construction and Operating Licenses, the federal government’s promised backing undoubted enhances investor confidence in NRG (FCW #316, Feb. 25).

Credit also seems to becoming more available for nuclear projects. Last Friday, for example, Entergy announced that it was reactivating its long-delayed spinoff of Enexus Energy, due to the availability of more credit for the project.

This does not mean NRG and others seeking to build new reactors will suddenly find it easy to attract support, given the cost uncertainties that still dog the industry. But NRG’s turn of fortune may force Exelon to up its offer, after all. Exelon’s board of directors will meet on June 30 to discuss the bid.

For its part, Exelon shows no sign of giving up or sweetening its offer. Analysts at Wachovia Capital Markets wrote last week that Exelon’s bid amount “is likely limited by the potential need to issue new equity to placate rating agencies,” according to the Dow Jones report. Exelon shareholders were not particularly enamored of the deal either, the analysts added.

On June 17 Exelon sent another letter to NRG shareholders urging them to vote in favor of the merger and extending its offer deadline to Aug. 2. In a statement about Exelon’s recent court success, Executive Vice President, Finance and Legal, William Von Hoene said on Monday that the company was now focusing “on the election of nine new, independent and experienced NRG directors who will act in the best interests on NRG stockholders” at the July 21 meeting. The company on June 17 also filed a new definitive proxy statement with the Security and Exchange Commission in connection with the solicitation of proxies for the meeting.

South Korea Looks to Middle East as Portal to West

By Jacob Mazer, Assistant Editor, Fuel Cycle Week

South Korea signed a nuclear pact with the United Arab Emirates this week, vowing to aid the Middle Eastern country in the development of its nuclear energy program over the next two decades. The agreement allows South Korean companies to bid on contracts for the UAE's maiden nuclear plant, which is slated to start operation by 2015.

The United Arab Emirates is one of several Middle Eastern nations who have sought cooperation with the international community and recognized nuclear authorities in the development of their program, a counterpoint to the defiant, rogue tendencies of neighbor Iran. The list also includes Jordan (who has signed a nuclear cooperation agreement with South Korea and just about every other nation with a global nuclear presence) and Kuwait.

Though its presence in the foreign nuclear industry has been focused on heavy component fabrication and supply, South Korea has the makings to become a much bigger player. The country has a strong domestic nuclear presence, generating about 40% of its electricity from its twenty reactors, with plans to expand this figure to 60% over the next twenty years. South Korea also has a strong reactor design in its APR-1400 model, and with the recent purchase of 19.9% of Denison Mines by state utility Korea Electric Power Corp., now possesses a significant uranium connection.

Thus far, South Korea's overseas nuclear ventures have been focused in Southeast Asia, competing with Japan for presence in the region' budding nuclear markets. KEPCO is in the midst of conducting a feasibility study of the abandoned Bataan Nuclear Plant in the Philippines, and has discussed building reactors in Indonesia and Vietnam. In the world outside its home region, South Korea's involvement has been largely limited to parts supply and, recently, a 2.5% stake in AREVA's Georges Besse II plant.

The Middle East, however, presents wider possibilities; namely, the expansion from a regional power into an international presence. The Middle East is largely virgin territory for the industry, free of the histories and existing alliances that make Europe and the Americas less hospitable to South Korea's ambitions. However, it is not the only one to recognize the potential of the region. KEPCO is definitely the underdog in the competition for UAE and Jordanian nuclear projects, pitted against far bigger companies like AREVA, GE-Hitachi, Toshiba-Westinghouse, and Rosatom. But a victory here for South Korea could mean stepping up to the next plateau.

Talked-Out Commissioners Postpone Paradox Mill Vote

This article originally appeared in Fuel Cycle Week #332, 6/17/09

By Nancy E. Roth, Managing Editor, Fuel Cycle Week

Last week the Montrose County Planning Commission listened to five hours of community testimony on whether it should approve a special-use zoning permit that Energy Fuels Inc. has requested in order to erect a uranium and vanadium mill in Paradox Valley in western Colorado. Finally, at 11:00 p.m. the commissioners adjourned, having decided to hold back the vote until their next meeting on July 1. They also declared the issue closed to all further testimony.

Russ Means, an official in the Colorado Division of Minerals and Geology, told FCW in an e-mail that the commissioners “wanted to review EF’s response to a couple of requests. So at the next meeting they will not take any further comments but just vote.”

From Day One Mill Drew Controversy

Local media reported that more than 100 people showed up at the June 10 hearing, most of whom supported the Energy Fuels proposal (as confirmed to FCW by a knowledgeable local source). That is a startling reversal of the prevailing sentiment at earlier public meetings, where EF encountered vocal opposition from quickly mobilized antinuclear groups and individuals.

One extreme example, John Metcalf, was a self-described “instigator” who put up the website savingparadox.org, featuring images of environmental ruin and frightening, albeit irrelevant, articles on the dangers of plutonium. The website is still up, but not very active: the most recent “informational meeting” posted on it was held on May 30, 2008 (FCW #286, July 9, 2008).

A local source speaking on condition of anonymity told FCW that much of the mill’s opponents were residents of wealthy enclaves outside Montrose County, such as Telluride and Durango. Metcalf lives in Ridgway, roughly 60 miles from the mill site.

But local newspapers also quoted mill opponents who are relatively new residents of Montrose County as well. The mill appears to draw its core supporters from families whose members remember when Colorado’s active uranium mines conferred prosperity across the region.

Recession Activated Nascent Supporters

At recent public meetings, it is these long-time residents of work- starved communities on the county’s mineral-rich West End who have been vigorously defending the mill project. While initially slower to respond to the proposal, the closure of mines, and especially the drop-off of gas drilling since the economy tanked last fall may have galvanized this group to raise what Means called “a solid voice.” Local newspapers reported that at a May 19 meeting of an advisory group to the Planning Commission, for example, about half or more of those who spoke advocated the mill.

On June 10 the Telluride Watch reported that mill opponents were planning a protest near the entrance of the hall where the Planning Commission was to meet that evening. But a June 11 account in the Grand Junction Daily Sentinel noted that the protesters lined up outside the hall found themselves face to face with sign-waving mill proponents. A county official “described both sides as respectful,” the report said.

Energy Fuels officials were not willing to comment on record while the matter remains undecided, but Means, who said he had recently spoken to a company representative, told FCW in his communiqué, “EF feels confident they have addressed all concerns and given the county what they wanted.”

It may be that the commissioners need the extra few weeks to tweak the language of a final agreement with the mining company. If they come up with an agreement that Energy Fuels can accept, it would go before the full Montrose County Commission, which would probably green-light whatever the Planning Commission has approved. That would clear Energy Fuels to apply for a mine construction and operation permit from the Colorado Department of Public Health and Environment, perhaps before yearend.

Means thought the EF mill would be a boon to the Colorado mining community. “The uranium world has slowed way down and shrunk some here,” he wrote. “But [a new mill] would push [Denison Mines’] White Mesa to be more competitive and some of my [regulated] mines on shutdown would fire up in a hurry, I think. That’s a stimulus package I can believe in.”

AREVA Joins Duke and Unistar for Ohio Project

By Jacob Mazer, Assistant Editor, Fuel Cycle Week

Piketon, Ohio may (relatively) soon become one of the nuclear power capitals of the United States. Duke Energy announced a new alliance with French giant AREVA and UniStar Nuclear Energy that hopes to build a 1,650 MWe nuclear plant in Piketon, Ohio.

The reactor would employ AREVA's EPR technology, making it the French firm's fifth American EPR project in the works. Other than that, the details are sparse. The companies provided no timeline or cost figures, though observer estimates range from $6.4 billion to $10 billion. Yet Duke CEO Jim Rogers expressed confidence in funding the project in a period where large financing is hard to come by. "I am confident I can fund it," Rogers told The New York Times. "Most of our fleet in Ohio, which is coal-fired, will be retired over the next 15 to 20 years, and we're going to need to replace it, and this plant will be a good candidate to replace that capacity." Rogers said that the participating companies would likely provide about 95% of the funding, perhaps looking to the government for the remainder.

The project suggests a turning point for Duke Energy, a major producer of both coal and nuclear power. Rogers told Reuters last month that it is not likely to begin any new coal-fired power plant projects until carbon capture and storage technology is better developed, which could take 10 to 15 years. Asked which technology Duke would choose if it had to make a decision, Rogers said, "I'm betting on nuclear."

The companies are studying the possibility of building the plant at the existing Portsmouth facility, site of a former uranium enrichment facility owned by the Department of Energy and operated by USEC Inc. that ceased operation in 2001. The Portsmouth site is also home to USEC's American Centrifuge Plant. Other members of the new alliance, officially dubbed the Southern Ohio Clean Energy Park Alliance, include USEC and the Southern Ohio Diversification Initiative.

Pay attention, folks. We all know that nuclear energy is going to play a much bigger part in the next generation of American energy, and this is a model I suspect we will see again. Having an enrichment facility next to your nuclear reactor certainly makes sourcing and transport easier, and the appeal will not be lost on other nuclear hopefuls.

Uranium One Ties In With Russia To Maintain Position In Kazakhstan

By Jacob Mazer, Assistant Editor, Fuel Cycle Week

What is to become of Uranium One? This was the question that all uranium industry observers were wondering as the news unfolded that Kazatomprom Chief Mukhtar Dzhakishev had been arrested, charged with illegally selling Kazakh uranium properties to foreign countries.

Among the properties under investigation is Kharasan-1, the nation's largest uranium mine in which Uranium One holds a 30% interest. The company also has large shares in two other Kazakh mines, South Inkai and Akdala. Despite the inquiries, new Kazatomprom President Vladmir Shkolnik called the company's deals with Uranium One "inalterable." Yet Uranium One stock took a 40% hit following news of Dzhakishev's arrest and has yet to recover.

While having its assets thrown into jeopardy by the Dzhakishev affair (and, for that matter, the whole murky state of Kazakhstan's uranium business) might tempt some to draw back from the country and pursue opportunities elsewhere, Uranium One chose to go in even deeper.

Uranium One on Monday announced a deal with Russian uranium corporation Atomredmetzoloto worth about $585 million for a 50% stake in the Karatau mine. The payment comes in the form of $90 million in cash plus 117 million shares (worth about $295 million), giving ARMZ a 16.6% stake in the Canadian company. An additional $60 million in cash is due to ARMZ between 2010 and 2012. The deal gives the Russian firm rights to buy either half of Karatau's production or 20% of Uranium One's total production, depending on which amount is greater. The agreement also includes negotiation rights for ARMZ's 50% share of the Akbatsu mine.

Uranium One expects to pay for the deal with money from a private placement by a consortium of Japanese companies (Tokyo Electric Power Company, Toshiba, and the Japan Bank for International Cooperation) for a 19.95% stake.

The Russia deal is indicative of Uranium One's strategy amidst Kazatomprom's upheaval: to solidify its position in the country to weather this period of turmoil and emerge with a strong presence in the nation's lucrative uranium sector. Even if it means taking the unusual step of giving a stake to Russia, with whom western companies are usually engaged in a tug of war for dominance. In addition to propping Uranium One up after its massive stock plunge, Russia's powerful influence in the region might lend the company some stability and political clout in the shady world of Kazakh's resource politics.

The agreement has already done some good for Uranium One. According to CEO Jean Nortier, Karatau is expected to produce 3.3 million pounds of uranium this year, boosting the company's output by 35%. The addition of Karatau spurred UBS to raise Uranium One stock from "neutral" to "buy."

Nuclear Vision Gleams in an Otherwise Shortsighted GOP Nuclear Plan

By Jacob Mazer, Assistant Editor, Fuel Cycle Week

Last week, the Republican Party introduced the American Energy Act, an energy plan to rival the cap-and-trade based Democratic plan. We recently wrote about the awkward and unfair treatment of nuclear within the Democratic energy bill currently under consideration by the Senate Energy and Natural Resources Committee. So with word that the GOP plan saw a greater role for nuclear, we were anxious to see how the AEA would measure up.

A greater role indeed!

The GOP plan sets the lofty target of 100 new reactors over the next two decades. We could name about a hundred reasons why this will not happen, but for the sake of space, we'll just name two: financing and regulatory processes. Putting the Republicans’ eagerness and hyperbole for the moment, let’s consider the rest of the plan.

The AEA sets forth a number of ideas for restructuring American nuclear policy ranging from intriguing to long overdue:
  • Streamline the construction of new plants, including initiatives to clear some of the red tape surrounding the reactor licensing process and the creation of a National Nuclear Energy Council to standardize policy
  • Establish a backup uranium reserve from the Department of Energy's inventory
  • Turn efforts back toward the creation of a permanent nuclear waste repository at Yucca Mountain
  • Explore spent fuel recycling
  • Suspend tariffs on foreign-produced reactor components for a five-year period

Sounds good so far, right?

Unfortunately, this little gem of vision is seated within an overarching energy plan that is at best misguided and at worst ignorant and irresponsible. The thrust of the AEA is based in an almost messianic faith in capital-B Business, that somehow the market will naturally produce the ideal energy mix if only enough regulations are removed.

Accordingly, the Act stands firmly against any cap on greenhouse gas emissions and proposes an "all-of-the-above" approach to power generation that embraces all energy sources. This includes encouraging a continued head-on pursuit of dirty sources like oil and coal, and would authorize additional oil drilling offshore and in Alaska's Arctic National Wildlife Refuge. It's a plan that has less to do with crafting a shrewd energy policy than it does with traditional party allegiance to big business.

Nuclear energy is a technology of the future, but the plan proposed by the GOP is tragically retrogressive.

No Lack of Partners for Jordan’s U, Nuke Programs

This article originally appeared in Fuel Cycle Week #331, 6/10/09

By Roger Murray, Special Correspondent, Fuel Cycle Week


Spearheaded by a recently established Higher Committee for Nuclear Strategy, Jordan is gearing up to embark on the development of civilian nuclear power capacity and the exploitation of the country’s large estimated uranium reserves.

Jordan hopes to have the first nuclear plant up and running by 2015/16 and aims to supply a third of the country’s electricity from nuclear by 2030. In doing so, the government hopes to reduce oil and gas imports, which currently account for 95% of the country’s energy requirements, while providing power for large-scale water desalination plants. The nuclear power program, together with plans to mine local uranium deposits, will provide substantial business opportunities for foreign vendors, component suppliers, construction companies, and global mining firms.

The Times reported on May 15 that Jordan’s nuclear committee “has begun a series of talks about finance, construction, foreign involvement and loans.” The newspaper added that King Abdullah II had taken “a close, personal interest” in the program and that Kazakhstan had been invited to assist in mining uranium.

Rio Tinto + JAEC

Multinational resource groups have already started knocking on the door, noted the king who commented, “for the first time in our history we are sitting on a commodity that people are interested in.” France is reported to have offered to mine uranium in exchange for providing technical assistance in building Jordan’s first nuclear power station, and offers of assistance have also been made by Canada, China and South Korea.

In February, Anglo-Australian resources group Rio Tinto signed a memorandum of understanding with the Jordan Atomic Energy Commission (JAEC) for exploration and mining of uranium, thorium and zirconium. The 18-month agreement covers the funding by Rio Tinto of exploration in three different areas of Jordan, the state-owned Petra news agency reported.

The understanding sets out general terms for defining the areas where uranium and other nuclear metals can be found, in preparation for signing specific exploration and mining agreements with Rio Tinto. The official statement added: “A consortium between the two sides will be established at a later stage, boosting prospects of further cooperation in the future.”

U Potential Unconfirmed

Nick Cobban, Rio Tinto’s principal advisor for media relations, told FCW on May 26 that the partnership with JAEC is presently based “on very early stage prospecting.” He added, “It may take several years to determine if there are economic resources of uranium to justify mining in the three areas covered by the agreement with JAEC.”

This cautiously realistic perspective contrasts with widespread media reports that Jordan is sitting on huge deposits of uranium, some of which are contained in the country’s extensive phosphate rock resources, Jordan’s primary export. Two years ago the government announced that known primary deposits contained some 80,000 tonnes uranium, although how much is economically-recoverable was not specified, plus some 130,000 tonnes of U3O8 extractable from the country’s 1.2 billion tonnes of phosphate reserves.

Enter Russia

But western industrial mining groups and nuclear power suppliers already face competition from Russia. A bilateral cooperation agreement was signed in Moscow by Sergei Kiriyenko, the head of Rosatom, and Jordanian Atomic Energy Commission chief Khaled Toukan.

The wide-ranging agreement will initially run for ten years, and covers cooperation in exploration and development of uranium deposits; engineering and construction of commercial nuclear plants, research reactors and water desalination plants; and nuclear fuel services and supply.

Nuclear Power Straddles Renewable Line in Senate Energy Bill

By Jacob Mazer, Assistant Editor, Fuel Cycle Week

The treatment of nuclear energy in the Senate Energy Committee's renewable electricity standard bill reflects the technology's curious status in ideas about America’s Energy Future: accepted with a tacit acknowledgment of its utmost importance in reshaping the current paradigm, but an ineffable hesitance to fully commit.

The RES bill is set to play an important part in the development of new electricity generation, mandating a gradual increase in the amount of power generated by renewable sources in utilities’ electricity output.

The current draft of the bill sets a target of 3% between 2011 and 2013, growing to 15% between 2021 and 2039. The committee voted down an amendment proposed by Sen. John McCain (R-AZ) that would have included nuclear generation as a renewable source. However, the committee did approve an amendment brought by Sen. Lisa Murkowski (R-AK) that exempts new nuclear capacity from the baseline that the renewable obligation is calculated against. Existing nuclear capacity is included in the baseline.

Should the bill become law, the inclusion of Murkowski's language will certainly be helpful to companies planning nuclear projects, relieving them of the obligation to take on renewable projects for every increase in nuclear output. In some ways, it could even act as an incentive to pursue nuclear over coal or gas projects. But refusing to include nuclear among the renewables reveals, I suspect, not only a policy preference but also a particular framework in which traditional renewables technologies and nuclear power are viewed—one that is rooted in impressions and superstitions that may or not reflect the facts.

Is nuclear renewable? Fast-breeder technology is, creating new fissile material as it burns plutonium fuel. Russia, China, Japan, and India all have fast breeder reactor programs, though the U.S. shut down its own program in the early 80's.

But perhaps a better, more relevant question is how to balance “renewable” with “clean” and “achievable.” Renewable energy sources like solar and wind have a crucial part to play in the development of a post-coal and oil dependent power grid. But as Sen. Bob Corker (R-TN) protested, what of regions like the American South that have neither the wind of the Midwest or the sun of the Southwest? And doesn't it seem strange to give preference to CO2-producing biofuels over emissions-free nuclear, especially when our urgent goal is to cut greenhouse gases?

Unfortunately, for many people “nuclear” does not have the same feel-good ring to it that “renewable” does. Rather, the technology remains fraught with associations bred from ignorance and paranoia, like the notion that building a nuclear plant is equivalent to planting an atom bomb in the back yard (a week of nuclear weapons-related tension with North Korea probably did little to quell this tendency). And so, despite an understanding of its necessity, nuclear energy remains the ugly step-child of America’s Energy Future.

Canada to Renew Efforts to Sell AECL CANDU Technology

This article originally appeared in Fuel Cycle Week #330, 6/3/09

By Dan Yurman, Contributing Reporter, Fuel Cycle Week


The government of Canada has again announced it would take the controversial step of putting up for sale a major part of Atomic Energy of Canada, Ltd., a crown corporation. Specifically, it reportedly intends to sell off the company’s CANDU heavy-water reactor technology.

On May 29 The Toronto Star quoted an internal government assessment of the nuclear company’s prospects as saying that AECL’s commercial CANDU reactor division “can be best served by a strategic alliance with one or more partners with global scale that can leverage the technology, skills and experience of AECL in Canada and internationally.”

“AECL faces stiff competition from much larger rivals,” Natural Resources Minister Lisa Raitt said, according to The Star. A strategic alliance with AECL and investors could take the form of a joint venture or merger with another nuclear reactor supplier, or the sale of a minority or majority equity interest in AECL, the internal review added.

What Price for AECL?

For all the talk, though, the minister has yet to assign a price either to a private equity offering, or to a public stock sale. That may be because the one thing investors will demand is that buyers not have to cover potential cost overruns should AECL win the provincial government’s $22 billion tender to install a new nuclear plant at Darlington.

To no one’s surprise, this is the very same sharp stick that Ontario has repeatedly poked into the ribs of the national authorities in Ottawa. AECL, with some 30,000 Canadian workers, would be the obvious first choice of both governments for the project, but the company has consistently shown itself incapable of delivering its projects on time and within budget.

For nearly a year the provincial government has held off picking a winner for the tender, reeling from sticker shock at the costs in the bidders’ proposals, and what construction cost overruns could mean for ratepayers.

Because AECL is a creature of the federal government, Ontario has insisted that Ottawa guarantee that it would pick up the bill if the company were to win the tender but again run over budget. Ottawa is no more inclined to accept the risk than the province; hence an increasingly bitter tug-of-war has ensued between the two governments. By offering AECL for sale Ottawa gains new leverage in the struggle.

If another firm wins the Darlington tender Ontario will almost certainly issue a fixed price contract with draconian penalties for schedule delays and excessive costs. That raises the additional question of whether anyone other than AECL would even accept such a contact. The most likely solution would be for all parties to work out a risk-sharing framework for unexpected costs—if they could only get that far.

Canada’s Most Wanted: Access to Capital Markets

AECL has not made a profit in the last five years. Last year alone AECL’s R&D subsidies amounted to $350 million. The ACR1000 has just entered design review at the Canadian Nuclear Safety Commission, but has not booked any sales or even firm offers abroad, leading some to wonder how well it would fare as an export product. The future of the ACR1000 appears to depend almost entirely on whether AECL gets the Darlington award.

Other bidders for Darlington, and likely equity investors in AECL itself, are AREVA, General Electric-Hitachi, the Canadian construction company SNC Lavalin and Ontario’s Bruce Power, which is thinking about building its own twin-unit ACR1000 power station in Alberta. Westinghouse has stated that it hopes to supply reactor components to Darlington, but is not interested in AECL itself.

By June 21 Ontario Energy Minister George Smitherman is expected reveal the winner, but according to The Star he may postpone that announcement until he sees how the government will dispose of AECL, and to whom. The worst possible outcome for Ontario would be that a private equity deal leaves AECL without enough resources to perform on a contract at Darlington. Then Ontario would have to worry about the loss of 30,000 jobs, while still needing a builder for its reactor complex.

Something Is Rotten In the State of Kazakhstan

By Jacob Mazer, Assistant Editor, Fuel Cycle Week

Last month, Kazakh security service KNB arrested Kazatomprom Chief Mukhtar Dzhakishev and seven other Kazatomprom officials without warrant, holding them in secret locations without access to lawyers. They are charged with illicitly selling shares in uranium properties to overseas firms controlled by Dzhakishev, and cheating the country of more than 60% of the value of its uranium deposits.

While Kazakh authorities are predictably vague about the details, suspect firms include Baiken-U, Betpak Dala, New Power Systems, and most importantly, Kyzylkum, which operates Khorasan-1, the nation's largest uranium mine. Most of these companies are partially owned by foreign investors, including a Toshiba-Tepco-Japan Bank for International Cooperation consortium, and Canada's Uranium One.

In the case of Kyzylkum, for example, note that the 30% stake held by Uranium One was originally owned by Canadian financier Frank Giustra's UrAsia Energy (the company was bought for more than $3 billion by Uranium One in 2007). UrAsia had purchased the stake in 2005 from the privately-held Jeffcott Group Ltd. for $75 million. How Jeffcott gained control of this stake is not known, though the KNB asserts that the shares were sold by Kazatomprom for a mere $103,000.

The scenario presented by the KNB regarding Dhzakishev's alleged crimes is unconvincing, particularly given Kazatomprom's status as a state-owned company, therefore requiring government permission for any sale of assets. This system is attested to by Uranium One, which holds shares in Betpak Dala as well as Kyzylkum. “UrAsia’s acquisition of [the assets in question], as well as Uranium One’s subsequent acquisition of UrAsia, were completed in accordance with the requirements of Kazakh law,” wrote Uranium One CEO Jean Nortier in a statement. “Both transactions were approved by Kazakh authorities.”

Samrun-Kazyna, the state fund controlling large national corporations, now declares its intent to investigate all major asset sales for corruption, including those of the state oil and railway companies in addition to uranium. If indeed such a vast swindle took place under its nose, Samrun-Kazyna also implicates itself in negligence on an epic scale.

If we take the KNB at its word, it is difficult to see how Dzhakishev expected to carry out his heist. Operating a mine is not just a matter of shuffling records and transferring money; it is a labor-intensive project requiring involvement from a large group of authorities—industrial, financial, environmental, regulatory and so forth. It is hard to imagine so many chunks of land sold without anybody noticing.

As a picture of the situation emerges, one wonders why Nazarbaev’s government would go after the man credited with transforming Kazatomprom into a hyper-profitable industry force, especially during a year when it is poised to become the world's biggest uranium producer. The most popular theory is that Dhzekishev's arrest is a politically motivated act, part of a campaign by Nazarbaev to root out all of those connected with Mukhtar Ablyazov, a businessman some reports say is a personal friend of Dhzekishev. Ablyazov fled the country after his BTA Bank was nationalized and a criminal investigation was launched to investigate him.

For now, foreign companies with stakes in the questioned assets are playing it cool, insisting that development plans have not changed. However, if the nation indeed declares asset sales illegitimate, the effects on Kazakhstan's uranium industry would be significant, earning the country a reputation as too politically volatile to be hospitable to business and scaring off foreign capital.

As it stands, rumor and innuendo alone may do lasting damage to its current investors. Uranium One shares dropped 40% following Dzhakishev's arrest, and a bad reputation for Kazakhstan could weigh those shares down regardless of material circumstances. The threat is enough to spur 25 Kazakh businessmen to put out an open letter cautioning Nazarbaev on the possible consequences.

"We ask you to assist the openness of the investigation of the criminal case against Dzhakishev, because a ’secret’ investigation will in this case spoil the investment climate in the country and the position of Kazatomprom," the letter said.

Chamber of Commerce Report Call for Coherent Nuclear Waste Plan

By Jacob Mazer, Assistant Editor, Fuel Cycle Week

The United States needs a more focused nuclear waste policy and this must include a permanent repository for used fuel, according to a new report from the U.S. Chamber of Commerce's Institute for 21st Century Energy. So if isn't going to be Yucca Mountain, the report asks, then where?


The Obama administration acknowledges the crucial role of nuclear in a national energy program to cut greenhouse gas emissions and reduce dependence on foreign resources. Nonetheless, the administration has all but removed the proposed Yucca Mountain nuclear waste repository from its plan, cutting nearly $100 million from its budget and allocating just enough money to allow regulatory processes to continue. The replacement is a blue ribbon panel convened by Energy Secretary Stephen Chu to investigate alternative options, after which point Chu said "we'll take it from there." Some solutions.

The Chamber of Commerce report provides ten recommendations designed to guide the panel toward an up-to-date program.

The document notes the absolute necessity of establishing a permanent waste repository, not only to deal with existing spent fuel but also waste generated by the new wave of U.S. reactors. While the report does not advocate a rekindling of Yucca Mountain, it does call the project "the safest and best option for disposing of the country's used nuclear fuel and nuclear waste given the parameters of U.S. law" and recommends continuing the license application process.

The institute also recommends amendments to the Nuclear Waste Policy Act that would allow the Department of Energy to establish interim storage sites, and remove the retrievability clause in the specifications for a permanent repository, a move that would open up the option for potential sites other than Yucca Mountain (salt formations in particular).

Recognizing the outrage of utilities and utility customers frustrated with paying fees into the Nuclear Waste Fund when DOE has blown all deadlines and spent $13.5 billion developing a repository site that has been abandoned, the report recommends serious consideration for ending the NWF payment requirements or placing the money in escrow until a waste solution is established.

Most gratifying to read is the report's suggestion to move the management of the nuclear waste program out of the hands of the DOE and on to a government corporation with direct access to the NWF. Considering the toll that absurd and unnecessary bureaucratic entanglement has taken on efforts to deal with the pressing problem of waste storage (Congressional appropriations, conflicting White House priorities, changing administrations), this sounds like a magnificent idea.