When China announced that one of its government companies had figured out how to reprocess spent uranium, it was with no small amount of fanfare.
The development was billed as a breakthrough that could save the nation the cost of importing uranium (known as yellowcake in its semi-processed form) and allow it to sidestep troublesome storage of radioactive waste material. “With the new technology, China’s existing detected uranium resources can be used for 3,000 years,” state-run China Central Television gushed on Monday when it delivered the news of the claimed breakthrough by China National Nuclear Corp. “Nuclear fuel feat to solve uranium shortage,” read a front page headline in the next day’s China Daily.
Foreign analysts were less excited. And the market seemed positively unconvinced: Uranium prices moved higher, not lower as would be expected if the largest future consumer had rid itself of the need to buy fresh supplies.
Actually, China National Nuclear made clear in a brief announcement (in Chinese), dated Dec. 22 and posted to its website, that the reprocessing claim is based on a very small pilot project, an experiment.
China’s media appeared to extrapolate that the company’s success in “closing the fuel cycle,” as the industry jargon puts it, could be replicated on a commercial scale.
“It sounds fantastic and simple but is very complex and expensive,” says Mark Hibbs, a Germany-based nuclear expert with the Carnegie Endowment for International Peace.
Nuclear engineers have long had the ability to reprocess uranium after it is used in a reactor to produce power. In the process, plutonium is split from the spent uranium and fed into a reactor to produce more power–or used to make nuclear weapons.
In fact, China likely obtained the plutonium for its first test of a nuclear weapon in 1964 using a process similar to the one now claimed by China National Nuclear, experts say.
China National Nuclear’s success at Factory No. 404 in Gansu province may be the equivalent of reprocessing the spent uranium for one or two power plants, when the country has 13 today and is building over twice that many. Also, there are challenges in between converting the plutonium into fuel for a nuclear power plant and actually producing power with it.
What’s at stake, according to Mr. Hibbs, is whether policymakers in Beijing will side with engineers at China National Nuclear who are pushing for permission to proceed in commercializing its system.
In a report Mr. Hibbs says he prepared after visits last year to Beijing, Paris, Vienna and Washington to discuss China’s nuclear plans, he argues China shouldn’t rush into a commitment to the reprocessing program. He estimates it would require decades of work and “scores of billions of dollars.”
“It might be premature for China to jump into industrial plutonium separation right now,” Mr. Hibbs said. “The Chinese program is under stress right now”–short of expertise at a time of fast expansion–and doesn’t need another massive challenge, he says.
The French reprocessing system is highly developed.
But other countries have struggled to commercialize the process, including Russia and Japan.
Japan uses reprocessed fuel at its Rokkasho reactor. Japan’s spent uranium is transported to France for reprocessing and then back, all on a three-vessel fleet operated by Pacific Nuclear Transport Ltd.
The U.S. nuclear industry considers it more financially sensible to produce fuel with virgin uranium and to store spent uranium.
China’s claim appears to signal little about nuclear weapons policy. Mr. Hibbs estimates China has more than 1 metric ton of plutonium stockpiled for its weapons program, while a nuclear weapon requires only 5 to 10 kilograms. “They have a lot of plutonium in their inventory,” he says.
Still, the historic ties between China’s military nuclear program and its more recent commercial push may beg for transparency as the country seeks foreign help to move forward, from French power plant technology to American know-how in storage.
Transparency is also needed for another reason: China’s eight-year sentence last July for American geologist Xue Feng on charges that his possession of information about the country’s oil wells constituted theft of state secrets has caused widespread anxiety among foreigners working in China’s nuclear power sector. In interviews, these people reason that China’s nuclear program is so secretive already that any involvement could put them at risk given what happened to Mr. Xue.
In one case, the head of an American-backed company that supplies equipment to the nuclear industry said that, following Mr. Xue’s conviction, he would stop providing his foreign clients summary market news items gleaned from Chinese newspapers. Separately, a Shanghai lawyer said one of his nuclear industry clients decided to reexamine its exposure in China after hearing about Mr. Xue’s case. And an editor at a foreign trade magazine that looks at the power industry said that twice last year a new staff researcher inexplicably quit after just a few days, each time citing the industry’s sensitivity.
But the market now turns on China, which has tiny reserves of uranium but a looming demand. In fact, hopes about China’s rising demand is helping make uranium into a commodity traded by hedge funds and other investors. “It’s being treated quite a bit more like other commodities,” according to Fletcher Newton, a U.S.-based representative of Moscow’s Armz Uranium Holding Co.
The uranium market’s confidence was unaffected by China’s reprocessing claims. Uranium was trading around $63.50 per pound on Tuesday in New York, about $1 above the price at the end of 2010 according to brokers ICAP Plc. It is up about 20% since early 2009.
For prices, “it’s a non-event,” said Joe Kelly, the New York-based manager of nuclear fuel markets at ICAP.