Most people don’t know it, but there’s a quiet revolution going on. A revolution in energy supply.
Ever since the dawn of the first industrial revolution, when wood burning gave way to the first water wheels and windmills, and lignite burning, peat burning and then coal, energy has driven the economy. The new energy materials and technologies spurred the industrial revolution, releasing and then capturing that energy made mass production possible, bringing consumer products to the masses.
A second revolution happened in 1901, as oil which had been used in lamps for centuries, and used in petroleum as early as 1870, became cheap enough to drive the second wave of energy use, when Spindletop reservoir in Texas gushed forth, and the U.S. oil supply doubled in an instant. The oil-well took nine days to bring under control, and supplied 100,000 barrels of oil per day, wasting almost a million barrels of oil. However, that spurred further exploration, and all that added oil, made the mass-produced car, the plane and the modern economy possible.
Diesels, plastics, pharmaceuticals and modern agri-business with its NPK based fertilizer, were all made possible from oil. The discovery and development of these new technologies enabled them to win both world wars as technological advantage in the form of military superiority and the cost of moving men, supplies and machines to their required location all worked in their favour. But the spike to $147 per barrel in 2007, plus the talk of “Peak Oil” which was prevalent during the early 2000s, ushered in research into alternatives. And the dominance of oil producers in the unstable Middle-Eastern region was a powerful driver.
Of course, since the second world war, the nuclear industry has grown as the energy released at Nagasaki, and Hiroshima, were turned to peaceful uses. Uranium, the 92nd element on the periodic table has been a major energy source ever since. One kilo of uranium is roughly equivalent to 1500 tons of coal in energy terms. And even the events and disasters at Three Mile Island, Windscale (now Sellafield) Chernobyl and Fukushima have not dented that need for concentrated energy – it has just made people more cautious and safety conscious.
But few know, that 90% of the world’s uranium comes from just 7 countries: Canada, Australia, Kazakhstan, Russia, Namibia, Niger and Uzbekistan.
And, as a result of the Fukushima accident, Japan closed 56 reactors – approximately 15% of the current world demand for uranium and prices for the metal plummeted. Today, 20 plants are undergoing inspection ready for re-starting, and the recent Japanese Federal Government report stated that nuclear is to remain an important base load electricity source.
Japanese Prime Minister Shinzo Abe and his Liberal Democratic Party won a large majority in December last year and one of their election promises was the restarting of nuclear plants once they fulfil all the new safety requirements. The first four reactors that are expected to return to service are two at Sendai and two at Takahama and the next restarts at Units 3 and 4 at the Oi nuclear plant in August.
According to some, it is also expected that by the end of 2015, 10 plants will be back in production and by the end of 2016, 20 facilities will be operating with 28 by the end of 2017. A recent report concluded that Japan could probably cut its energy bills by 30% if it re-opened just 30 of its 56 reactors since it is costing it $12 per million cubic feet (MCF for natural gas which is being used to produce high cost electricity. North American natural gas prices are circa US$3/MCF today).
Japan also increased its coal usage by 20% last year and reopened 92 oil fired plants. The result is that Japan’s reliance on fossil fuels for its electricity generation has now reached 90% of its energy production and this tops 80% for the first time since the oil embargo back in 1973.
Since the Fukushima accident Japan has recorded record trade deficits for 28 consecutive months and the utilities have lost US $34 billion in the last three years. Restarting the nuclear plants would appear to be the obvious solution.
At present, there are 76 nuclear plants under construction in the world and about half of these will be in production in the next four years. As a result, it is expected that worldwide increase in uranium demand over the next three years is inevitable, just as the above ground stock of uranium that was made available from the START Treaty is gone. The Start Treaty, which lowered the number of warheads in Russia, and the U.S., and made enriched Uranium, previously used for nuclear devices, available for energy usage. That can only mean one thing – Higher Uranium prices – and just as in the past, probably significantly higher.
As a result all Uranium producers will benefit, but those small caps with good resources, and good execution will benefit most.
Forum Uranium Corp.
Forum Uranium Corp.(TSX.V: FDC) is a Canadian based uranium company that has a focus on the exploration, acquisition, and development of Canadian uranium projects. The projects are in the Athabasca Basin, Saskatchewan, and the Thelon Basin, Nunavut. And a critical announcement on August 31st could send this virtually unknown stock soaring 100-fold.
Forum recently announced it signed a definitive agreement with Uracan Resources (TSX.V: URC) relating to their Clearwater project that Forum has 100% ownership of. Forum completed a nine hole program in April 2014 on the Clearwater project that totalled 2,310 metres. The drilling identified five major structural trends with alteration and localized radioactivity and was followed up by a two drill program by Uracan and Forum. The Clearwater project is adjacent to the Fission Patterson Lake project (TSX.V:FCU – Now owned by Denison Mines Corp.) which has 105.5 million pounds of uranium resources.
The company has significant major joint venture partners such as Cameco, Areva, and Rio Tinto and good junior partners such as NexGen Energy and Uracan. With $2.1 million in cash, Forum has sufficient captial to fund 2015 drilling programs.
The company is preparing for a 3,000 metre drill program on Fir Island this year. This project is adjacent to the Nisto Mine where 106 tons were mined at 1.63% U308 in the late 1950s. The faults associated with this project are known to contain large uranium deposits.
Thorium another potential energy source, the 90th element on the periodic table was so-called because of the Norse god of Thunder and Lightning “Thor” and was first discovered in 1828 long before its energy potential was recognised. In the second world war, as energy was recquired to win the war, many technologies were explored and a test reactor was built in the 1950s.
Thorium has a number of benefits over Uranium. It is four times more abundant than Uranium and 5,000 times more abundant than gold (another reason to buy some gold perhaps?).
According to one particularly well informed web-site, just one tonne of Thorium, can produce as much energy as 200 tonnes of Uranium, or 3.5 million tonnes of coal. The first reactors using Molten Salt Reaction (MSR) were designed to test the process in the early 50s, but in 1973, President Nixon decided against pursuing this for political ends, as the President fired the chief of the Oak Ridge laboratory where Thorium Energy production was being researched.
The volume of the molten salt which circulates through the reactor and heat exchanger is a fraction of the water used in a traditonal PWR (Pressurized Water Reactor), and this leads to much smaller reactor vessels which can be fabricated from stainless steel sheets instead of 1/2 metre thick steel.
Because the 800 Deg Celcius molten salt leaving the LFTR (Liquid Fluoride Thorium Reactor) can go straight to a heat exchanger which simply replaces the combustion chamber in a conventional gas turbine engine. The open cycle gas turbine is more efficient than the Rankine cycle steam turbine operating at 280 Deg C and requires no cooling water.
The circulating molten salt besides carrying the heat out of the reactor is used to carry fresh fuel into the reactor and allows continuous removal of spent fuel and other contaminants by recognised industrial chemical methods.
For the above reasons, the reactor plant size is tiny by comparison, and about one fiftieth of the cost. It produces no fissile proliferation material, has a tiny fraction of the waste material, the bulk of which is safe within a decade and the rest within 300yrs, rather than the millennia for Uranium waste, and can even burn waste already stored from uranium sites. It also has side benefits to enable excess heat to be used in chemical and rare earth element production and making desalinated water cost-effective.
In 1992 Radkowsky Thorium Power Corporation (RTPC) was formed to develop nuclear fuel designs invented by Dr. Alvin Radkowsky, one of the founding scientists of the U.S. civil nuclear sector.
Radkowsky sought to develop thorium-based nuclear designs that would produce more highly proliferation-resistant spent fuel and dispose of existing weapons-grade plutonium stockpiles. To help realize Dr. Radkowsky’s vision, RTPC in 1994 began collaborating with nuclear scientists and engineers at the prestigious Kurchatov Institute research center in Moscow.
Following the original invention by Radkowsky, his thorium-based nuclear fuel technology underwent extensive scientific and engineering development and evaluation, with years of irradiation testing in a research reactor. In 2001 RTPC changed its name to Thorium Power, Inc. which eventually in 2006, was acquired by Novastar Resources, Ltd. and went on to change its name to Lightbridge Corporation, after listing on the NASDAQ stock exchange. (LTBR)
Lightbridge manufactures fuel rods that use Thorium, in a form that can be used in existing reactors, enabling them to operate more safely and cost-effectively
After the disaster at Fukushima, in 2011, the nuclear industry moved to an even greater focus on safety, but complying with new safety regulations increases the cost of nuclear power generation. With the abundant supply of natural gas due to the advent of fracking, and the lowering of oil prices, the wholesale price of electricity in the United States has fallen overall, and utilities in the US and worldwide are seeking to improve the economics of generating electricity from nuclear reactors, and as Thorium is more abundant, reacts at 1,000 degrees less than Uranium/Plutonium, cannot end in a “runaway nuclear chain reaction” and thus is safer, making it more sense to use as a fuel from many perspectives.
Lightbridge has two operating divisions – the fuel technology division and a consultancy services division. Lightbridge expanded the fuel offerings beyond thorium-based fuel to include metallic fuel developed by Lightbridge’s world-class nuclear engineers. The metallic fuel is designed to address crucial issues facing the nuclear power industry by improving the economics of existing and new reactors by providing increased power output and longer fuel cycles, as well as by enhancing safety and reducing spent fuel volume.
Lightbridge’s consulting business unit advises governmental and commercial entities developing new nuclear power programs or expanding existing programs. Lightbridge wrote a roadmap for the United Arab Emirates, and has advised Korea, Saudi-Arabia, and has offices in several countries.
On July 09, 2015 (GLOBE NEWSWIRE) – Lightbridge Corp announced that they had entered into a binding services agreement for irradiation testing of Lightbridge advanced metallic nuclear fuel samples under prototypic commercial reactor operating conditions in IFE’s Halden research reactor, southeast of Oslo.
“Our agreement with IFE completes one of the key critical path milestones we have set for 2015 and represents a major step toward on-schedule, lead test assembly demonstration of Lightbridge’s advanced metallic nuclear fuel in a commercial power reactor in 2020 to 2021,” said President and CEO Seth Grae.
As yet, there are no major suppliers of Thorium, but that is soon about to change.
Thorium Nuclear Energy Corp.
Thorium Nuclear Energy Corporation, a development stage company, operates as a natural resource company with proprietary ownership and development rights of Thorium deposits located in the Lemhi Pass area adjacent to the Idaho and Montana border, in the United States.
It seeks to explore and exploit possible Thorium reserves by forming joint ventures with mining companies with the resources to exploit its Thorium reserves. Thorium Nuclear Energy was founded in 1965 by H. Deworth Williams.
The company was organized under the name Hazelwood-Gable, Inc. in August 1983 under the laws of the State of Idaho and changed its name to American Thorium, Inc. in November 2003, before its last change to its current name in 2009.
One to watch for its IPO.
In the UK, many electricity generators built Gas-fired plants during the 1980s to produce electricity, as coal was downgraded because of its cost and CO2 pollution problems. Of course we all remember the mine-workers strike in 1983, as entrenched views attempted to prevent the inevitable change to cleaner more efficient means of power generation.
Natural gas is a clean fuel, and its abundance particularly from North Sea oil and gas-fields meant Britain converted to Natural Gas for its nations gas supply as early as the 1970s.
But as those gas fields ran down, Britain increasingly needs to import gas from Russia, and newer fields in the eastern mediterranean, and middle-east – Think Iran, Iraq, UAE, Kuwait, and Saudi-Arabia. Even Israel wants to get in on the act with its recently discovered gas giant field off-shore in the Eastern mediterranean. Is this the REAL reason that Israel is fighting to deny nationhood status to Palestine? We can but guess…
But Fracking, particularly in the U.S. has also boosted the production of Natural Gas there leading to a 2800% increase in gas-supply, and consequently lowered natural gas prices to circa $2.84 per million British Thermal Units (MMBTU).
Power plants to compress this or liquify it will create enormous profits for the companes involved. Cheniere Energy who has already been mentioned in a previous post which negotiated a 25year contract to supply British Gas from this increased supply as they built the first of four export facilities and is likely to supply Japan, who are currently buying it at 4 times the price..
But one other company from South Africa has spotted an opportunity to generate huge profits from this huge glut of gas.
This company uses patented technology, first demonstrated 80 years ago by two german scientists – Fischer and Tropsch who managed to convert coal to oil and gasoline back in the 1930s.
This South-African company, has been at the forefront of coal to oil, and other methods of converting one fuel-type to another for years – decades even. Gas to Liquids (GTL) technology has come on in leaps and bounds in recent years. And this company already has a facility co-developed in Qatar already up and running, and is just about to bring one on-stream in Nigeria.
This company has plans for one in Canada too, and one in the USA, in the heart of that nation’s gas infrastructure.
This plant will allow the company to make gasoline (petrol for we Brits) and diesel, for the princely sum of about $0.58 per gallon (£0.40) or $13.50 per barrel. Of course while its competitors are currently buying oil on world markets for over $50/barrel, ($53.04 as I write) making gasoline (gas) for $2.50 is about their bottom line price. This company plans to have captured about 25% of the U.S. market by 2017, and every drop will just flow straight into gas using vehicles, and may even disrupt the move to electric vehicles by the likes of TESLA, GM and Toyota.
And the fuel created will be a third as cheap as the traditional refiners, and require no modification to any of the 240+ million motor-cycles, cars and light trucks in the U.S., (Source: http://www.rita.dot.gov/) and the 15 million alternative fuel vehicles are a mere drop in the ocean by comparison.
And this company is? SASOL. (SSL:NYSE)
TESLA is building a plant in Nevada that it hopes will turn out 500,000 electric vehicles per year by 2017. SASOL may be a thorn in its side, as all the flexibility and power of a gasoline/petrol powered vehicle that is supplied by this new plant with lower CO2 emissions, and will supply 35million barrels of gasoline, by 2017, and upto 30 million vehicles p.a. by 2030 producing profits of almost $4billion. Can you say – KER-CHING?
Renewables – Solar Stocks.
Anyone who has done any driving around the UK in recent years, cannot have failed to notice the solar panels popping up on pitched roofs everywhere. Government incentives have driven this trend, but the amount of energy created from these early PVCs (Photo-Voltaic Cells) panels has been modest. The cost per watt was several times the price of traditional energy sources, but the developments in the last 4 years have driven these energy outputs and the price per panel down to grid parity levels and soon they will be even cheaper, and more productive.
This means that now, solar is about to become the largest energy provider on the planet, as countries as far apart as the UK and China, Germany and Australia, build solar facilities which coupled with the vast improvements in energy storage technology make this the most cost effective solution in many situations. Vanadium and Aluminium batteries currently in development, will be able to mass store this solar energy, generated at below grid parity prices, and supply at peak prices just hours later. And of course, I’ll keep you posted on which companies to keep your beady eyes on.
Solar companies that have the capital to operate solar leasing systems similar to those used by SolarCity (NASDAQ: SCTY) and Vivint Solar (NYSE: VSLR) should do well.
Roof-mounted solar and smaller micro-grids would not only ensure more reliability, but they would also serve as huge job creators.
Some Chinese corporations are high growth companies, even if the risk of corruption still hangs in the air.
Both Canadian Solar (NASDAQ: CSIQ – $26.63 with a P/E of just 5.2) and Trina Solar (NYSE: TSL – $10.17 and a P/E of 17.8) are good choices. Canadian Solar trades with a forward P/E of 12.03 Trina’s is even cheaper, with a forward P/E of 10. Jinko Solar (JKS, – $25.92 as I write), SolarCity (NASDAQ: SCTY – Price $52.54 at the same time) and Vivint Solar (NYSE: VSLR – $11.11) are all stocks to keep an eye on. That said, I can’t get behind Yingli yet, because it still isn’t profitable.
All of these stocks have been knocked down pretty far in the last few weeks as the Chinese market crash hit a crescendo and Greece caused a few rumbles.
Is now the right time to buy? NO… but if the impending stock-market crash I have been commenting on for the last 2 years happens as I expect, this Autumn, you will soon be able to pick up these shares for a fraction of their current price – and that is how you get – and stay – rich.
Want to make some money to invest with? Then this might help…