Year
2008
Abstract
A lot has happened since HEU-derived supplies were introduced into the commercial nuclear fuel market. In the 1990s, the market was stagnant and already had considerable supplies from inventories and from the recently dissolved Soviet Union. HEU supplies further added to the supply overhang, further depressing prices (especially for uranium), and additional enrichment supplies contained in the HEU eventually led to a reduction in enrichment production capacity. Looking forward, the situation is far different. Most of the inventories have now been liquidated, and nuclear power is growing worldwide, and as a result a huge demand for new production has been created. Spot prices in uranium have increased from $10 to $136 this decade before falling back to below $100, as production growth has not met its targets. Enrichment prices have about doubled during this same timeframe as supplies in that market remain tight. Before the concern was that an influx of HEU-derived supplies would overwhelm the limited uncovered demand that was available and destroy the commercial market. Now market participants are concerned whether the pending loss of HEU supplies can be overcome, as there is considerable pressure on the nuclear fuel infrastructure to meet future demand even while HEU supplies are still available. Availability of uranium and enrichment is also an issue for countries embarking on nuclear power programs, and this makes the issue of supply assurance more crucial as the nuclear renaissance takes hold. This paper will examine the dramatic changes that have taken place in the nuclear fuel market and the role HEU supplies have played in the past and can be expected to play in the future, along with the evolution of industry views of HEU supplies. It will also examine policy implications with respect to continued blend down in light of the need to fuel new nuclear reactor builds as well as to offer fuel assurances to achieve nonproliferation goals.