Platts - Tuesday, January 03, 2006 http://www.platts.com ------------ 2006 seen as important year for fuel market London (Platts)--3Jan2006 For the nuclear fuel market, 2006 is shaping up as a particularly important year. Developments market analysts are watching include: LES is still on track to receive an NRC license to build and operate a centrifuge enrichment plant in New Mexico. USEC Inc.'s American Centrifuge development strategy will either be validated or not. Companies currently investigating Silex Systems Ltd.'s laser enrichment process will probably decide one way or the other on whether to invest in a pilot 250,000 SWU/year plant. The winning bidder to take over Westinghouse likely will be known, as will the company that will buy RWE Solutions and its key RWE Nukem uranium trading unit. There should be much more clarity as to the impact of the court decision declaring SWU to be a service on the commercial SWU market, as well as on the Russian antidumping suspension agreement, which is currently undergoing a sunset review. The spot price of uranium is likely to climb over $40 a pound U3O8, but the rapid rise of the spot price?an increase of 75% in the past year and 150% over the past two years?won't continue, most analysts say. Consolidation of the more than 200 junior uranium companies will probably accelerate. Regarding the spot price, most analysts now see it climbing above $40/lb sometime during the first half of the year. But there is no consensus as to how much higher it will climb. A big unknown is whether buying by hedge fund/investment companies will continue in 2006 at its 2005 pace. As the year ended, analysts said that almost 10-million lb were in the control of these entities, which have so far been content to hold their inventories. Also it is unclear how much supply will be available to meet continuing demand of utilities, many of which are taking steps to build inventory. For example, in a Dec. 21 filing with the U.S. Securities & Exchange Commission, the owners of the South Texas Project said the owners committee had approved the acquisition of "a strategic refueling reload of uranium." Although analysts believe that the spot price will not continue to rise indefinitely, they also suggest that until supply catches up with demand there is not going be much sustained downward pressure on the price. Consultant International Nuclear Inc. (INI) estimates 2006 worldwide uranium production at 110-million lb, with consumption around 170-milllion lb. But how soon that gap will be closed is unclear. Bullish estimates of production out of Kazakhstan by 2010?as much as 39,000,000 lb U3O8?may be off by as much as a third, say some analysts. INI estimates 2006 production in Kazakhstan at close to12-million lb U3O8 and projects that production in 2010 could be as much as 22.5-million lb. But there are hurdles that could hinder a smooth production increase. Wallace Mays, one of the key figures in UrAsia Energy Ltd.'s foray into production in Kazakhstan, said in a paper delivered at the World Nuclear Association's annual meeting in September, that a key bottleneck to production by in situ leach mining is the availability of drill rigs in Kazakhstan. "Many of the manufacturers of drill rigs have gone out of business," Mays said. And in Kazakhstan, "the lack of competition from government-licensed drilling companies (only two are licensed) has limited the development of competitively effective drilling equipment and methods," he added. There are also indications that the expansion of BHP Billiton's Olympic Dam copper-uranium operation may proceed more slowly, driven in large part by BHP Billiton's strategy in the copper marketplace. Among the junior uranium companies, Paladin Resources is expected to begin production at its Langer Heinrich mining operation in Namibia late this year. In a recent coup, Paladin announced that it had hired Wyatt Buck, Cameco's general manager of the McArthur River mine and Key Lake mill, as the general manager of the Langer Heinrich mining operations. Buck will start work for Paladin Feb. 1. And Mestena Uranium has started up its Alta Mesa ISL project in Texas. And Uranium Resources Inc. is hoping for increased production in 2006. This story was published in full in Platts Nuclear Fuel. Request a free trial at http://www.platts.com/Request%20More%20Information/ ------------ Westinghouse AP1000 gets NRC okay for certification Washington (Platts)--30Dec2005 Westinghouse's AP1000 received approval today from NRC commissioners in a final rule certifying it as a standardized design. The rule to certify the 1,100-MW advanced PWR as an appendix to NRC's licensing regulations (10 Code of Federal Regulations Part 52) becomes effective 30 days after it is published in the Federal Register, likely to occur some time next month. Although it will be the fourth NRC-certified standardized design, the AP1000 will be the first "Generation III+" reactor to receive such certification, Westinghouse said. DOE considers Gen III+ plants to have significant improvements in safety and economics over the Generation III advanced reactor designs certified by NRC in the 1990s. Westinghouse said it expects an AP1000 could be constructed in about 36 months from first concrete to fuel load. ------------ Waste determination approach proposed by DOE can meet criteria Washington (Platts)--30Dec2005 A waste determination approach proposed by DOE can meet congressionally mandated criteria, NRC concluded in a Dec 28 report. A fiscal 2005 defense authorization bill required DOE to consult with NRC on its strategy for treating and disposing of salt waste at the department's Savannah River Site. The bill required DOE to determine, in consultation with NRC, that certain radwaste resulting from reprocessing of spent fuel is not high-level waste. NRC's technical evaluation report, released by the agency on Dec 29, said DOE could meet the criteria in the bill, "provided certain assumptions made in DOE's analyses are verified via monitoring." NRC spokesman David McIntyre said the NRC's review "does not constitute regulatory approval of DOE's waste management activities" and that it was DOE's responsibility to determine "whether the waste is not high-level waste." For more information, take a trial to Nuclear News Flashes at http://www.nuclearnews.platts.com. ------------