ATOMIC ENERGY O F CANADA LIMITED

- . L O N G TERM URANIUM DEMAND AND SUPPLY . . IN CANADA

M.F. Ouret

. Chalk River ~ u c l e a r Laboratories

Chalk River, Ontario KOJ 1JO

1979 October

ATOMIC E N E R G Y OF CANADA LIMITED

LONG TERM URANIUM DEMAND AND SUPPLY

IN CANADA

by

M.F. Ouret

ABSTRACT

Many projections of world demand f o r uranium have been made in t he

past. A general fea ture of these projections i s t h a t they decrease with

time; t h e l a t e r t he projection i s made, t he lower i s the projected

demand. The long term uranium supply has not been given t h e same

a t ten t ion . However, t he supply picture is affected by real delays and

indus t r ia l momentum i n t he same way as t he demand picture and f o r t h i s

reason I be1 i eve i t is useful t o develop a model, however crude, t o

provide perspective on the long term uranium supply-demand s i t ua t ion .

This report suggests such a model and examines the supply-demand

s i t ua t ion in Canada. The r e su l t s presented are not a p ro jec t ion ; a

parametric survey presents instead a range of possible developments.

Chalk River Nuclear Laboratories

Chalk River, Ontario KOJ 1JO

1979 October

... .. ... .. IN CONADA . . .

Many projections of world demafid f o r uranium have been made in t he -pas t . (')(') Ageneral fea ture of these projections i s t h a t they

decrease with,.time; t h e l a t e r t he projection i s made, t he lower i s t h e

projected demand. The long term uranium supply has not been given the

same a t ten t ion . Rowever, t h e supply picture i s affected by real delays

and indus t r i a l momentum i n t he same way as the demand picture and f o r

t h i s reason I believe i t i s useful t o develop a model, however crude, t o

provide perspective on the long term uranium supply-demand s i tua t ion .

This report ' suggests such model and examines the supply-demand

s i t v a t i o n in.Canada. The r e s u l t s presented Are not a project ion; a

parametric survey presents instead a range of possible developments

Perhaps t h e best analogy t o use as a guide in developing a model i s

t h e petroleum industry. ( 3 ) I n i t i a l l y , commercial energy in Canada

came mostly from wood. Later coal with i t s greater energy densi ty . . supplanted wood. 'Shortly a f t e r , t he low cost and conven<ence'of o i l and

hydyoelectr'icity led t o t h e i r very rapid growth, and the roles of both

wood and coal have declined dramatically i n recent years even though coal

'resources., a t l e a s t , are f a r from being exhausted. The most recent . .

primary energy sources are natural gas and nuc lear power, both of which

a r e penetrating Yhe market rapidly. The timing and extent of these

subs t i t u t ions of one energy source f o r another in Canada are shown in

Figure 1. During t h i s period petroleum has advanced from a new and e.xpanding source of energy t o a s i t ua t ion where production i s being

affected by resouice depletion.

. .

. The use of "conventional" 'petroleum as a primary world energy source

; . increased rapidly during t h i s century. However, t he discovery r a t e has . . , f a l l e n o f f , while 'production i s s t i l l increasing, so that"res&-ves a re

' now. declini'ng. ( 3 ) I n the United, S ta tes from 1918 t o 1948 cumulative

0 discover ies were increasing a t an exponential ra te . From 1949 t o 1975

' the 'g rowth was l inear . Since the ul t imately recoverable resources a r e

' f i n i t e th i s ' t r end ' sugges t s a gradual reduction i n di.scovery r a t e so t h a t

cumui a t i v e d i sco ie r ies will converge t o t he ul t imately recoverabl e

'resource.. A sa tura t ing law which f i t s t h e U.S. case well i~

. . . . where

..,

f = cumulative discoveries . . ul t imately recoverable resource

a * i n i t i a l exponential discovery r a t e when f i s small.

C '

4 s imi la r pic ture probably applies t o uranium. I n i t i a l l y when t h e

discovery r a t e i s l o w and improved prospecting techniques a r e being . .developed, t h e discovery r a t e will increase exponent ia l ly , reach a peak

and eventually dec'l i ne a s more and more of the' commercially i n t e r e s t i ng

deposi ts a re discovered.

As new mines a re discovered, they will be exploited. Some will be

developed rapidly and other l a rge r lower grade deposi ts will be developed

more slowly. Cumulative discover ies l e s s cumulative production

represents t h e reserves which a re being exploited a t any given time. The,

r a t i o of annual production t o these reserves represents what I wi l l c a l l

t h e explo i ta t ion r a t e , B. This r a t e will depend on the type of mine, t h e

o re grade, s i z e of t he deposit and other .technical f ea tu re s of t he

deposi ts being exploited. Economic considerations suggest t h a t a .

reasonable average f o r t h i s r a t i o would be i n the range of 4-6%

representing roughly a 16-25 year forward supply of uranium.

These considerations form the components of t he model. The

parameter n i s estimated from the i n i t i a l discovery r a t e when cumulative

discover ies a re growing exponentially. The t o t a l recoverable resource i s

of course, 'not known. I t i s t r ea t ed as a parameter. The discovery r a t e

and explo i ta t ion r a t e a re assumed t o be constants. T h u s , t he annual

production depen'ds only on t he technical capaci ty with no cons t ra in t s due

t o demand o r po l i t i c a l considerations.

. . . . . . .

Canada1sReasbnab1y Assured ~ e s o u r c e s ' ~ ) increased by about 15% from '

t h e end of 1974 to . June 1977. Allowing f o r production d u r i n g t h e

interval ' t h i s represents an annual increase bf about 6%. Continuation of

t h i s trend suggests t h a t Reasonably Assured Resources would amount t o

. about 210,OO.O megag.rams in 1980. Cumulative production t o 1976 was

112,000 megagrams and production t o 1980 i s expected t o be about 130,000

, . megagrams. Estimated additional resources amount t o 600,000 - 700,000

megagrams suggesting t h a t something of t he order of 1 mill ion megagrams

might be a reasondble estimate of t he ul t imately recoverable resources ,

UT. Using these round numbers f o r i n i t i a l values, cumulative uranium

: production can be calculated as a function of time. Results f o r

pa r t i cu l a r values of a, 6 and UT a re compared in Figure 2 with t he

cumulative demand corresponding t o t h a t generated using scenar io 3 from ' .. AECL-6202. A descr ipt ion of t h i s scenario is' given i n t h e Appendix.

. 1 . -

: . '- 5 . -

. . . : Lo

. . i. . Cumu1,atiye production exceeds demand during t h e whole period, suggesting

t h a t an ul t imately recoverable resource of about 1 mil l ion megagrams i s

qu i t e s u f f i c i e n t t o provide uranium f o r t he domestic nuclear program

' envisaged in scenario 3 unt i l about 2050. . .

. Another way t o make t h i s comparison which has been used i.n t h e past

i s t o compare recoverable uranium in t h e ground' (equivalent t o cumulative

discover i6s) with urani um commi tments f o r operating reactors. This

comparison is.-shown in Figure 3 and again t he implication i s tha t ' a

resoupce of 1 mill ion megagrams i s adequate t o s a t i s f y t he demands

a r i s i ng i n scenario 3. . .

:.

* - 6.- . :

. . .i\n important f ea tu re lacking i n both these assessment methods i s t he

timing of the uranium production. Figure 4 shows annual uranium . .

p r o d ~ c t i o h ' c u r v e s assuming a discovery r a t e of 6%, a n exploi ta t ion r a t e . . of 4% f o r a range of ult imately recoverable resources varying from 1 t o 2 . . m i l l ion megagrams. The l a rge r t he ul t imately ' recoverable uranium '

resource, t he la rger t h e annual production ra te . Larger resources a l so 1ead:to a more peaked production curve, with t he peak occurring somewhat l a t e r i n iime. he production r a t e a t t he peak amounts t o about 1.2% of t h e ul t imately recoverable resource.

* .

. . , In F!9urp 5 SOW typical annual demand curves are superinlposed on

t h e supply curves of Figure 4. I n i t i a l l y , production exceeds domestic

demand by a l a r g e margin and presumably t h i s uranium could be exported.

I t would be uneconomic t o s tockpi le t he excess outpvt f o r long periods of

time. ~ s t k dom&tic nuclear prograln grdws nlore uraniunt i s required.

The point a t which the supply and demand curves cross represents the date

: a t which Canada w u l d need t o begin iillporting uraniuin t o supply the

donrsl ic buclear yropra:il l o r the 3 scenarios sliown. These L t e r are

sunlmarized. in t he t ab l e below

TABLE 1 . .

DATE AT WHICH URANIUM IMPORTING BEGINS . .

. . Scenario Ultimately Recoverable Uranium

(See ~ ~ b e n d i x ) lo6 Mg 1 . 5 ~ 1 0 Mg 2 x 1 0 ~ Mg 6

PHW on1 y 0 . (Scenario 3) 201 1 2020 2028

High B u r n u p Th

(scenar io 3) 201 3 2025 Beyond 2050

. . I

. . Self ~ u f f i c i en t Th (Low Growth 2018 2042 Beyond 2050

t a r g e t scenario)

Fr6m Figure.5 i t can be seen tha t introducing the thorium cycle in 2000

i n scenario '3 n i l 1 require an ult imately recoverable resource of Inore . .

t h a n 1.5 mill ion megagrams. Since the supply and demand curves do not

match', more 'uran'iuln i s required than one would have expected from Figures

2 and '3 - possibly almost a f ac to r of 2 higher. The d i f fe rence , of

cours.e, i s due t o exported uranium. I n i t i a l l y , l a rge production excesses . .

. a r e exported, leading t o t he possible occurrence of l a t e r shortages. The

benef i t of t he production model i s t ha t i t gives some perspective t o t he . . .. .

' t im ing of these possible fu tu re shortages. Of course, i t i s not expected

t h a t i'n real l i f e t h e demand and suppiy will folldw the smooth curves

shorw. However, these general t rends are r e a l i s t i c . I n i t i a l l x uranium

will be re1 a t ive ly 'easy t o discover and As more and more i s . .

used, commercially exploitable resources will become scarcer 'and the

discovery' r a t e will , f a l l off . Production will peak and begin t o decline.

This t rend c8n be countered t o some extent by increasing expenditures on

explorat ion and mine development. However, spending money w i 11 not . A.

c rea t e uranium deposi ts , t he ult imately 1 iniiting parameter. A recent

assessment of Canaoa's uranium supply and suggests t h a t

speculat ive resources, which are addit ional t o those c l a s s i f i ed in t h e

measured, indicated, inferred and prognosticated category may amount t o

about 1 mil l ion megagrams. Thus the range shown in Figures 4 and 5 i s

probably real i s t i c .

UGURE 6 : E F F E C T O F O ISCOYERY ANO E X P L O I I A I I O N R I r E s ON ANNUAL PRODUCT 1011

": . RECOYLRAOLE U RESOURCE : 2 X 1 0 1 U%

Figure G shows.the e f f e c t s of varying the discovery and explo i ta t ion . :>. .,

ra tes . Increasing the explo i ta t ion f rom4% t o 5% increases ea r ly

production with g more rapid l a t e r decline. Increasing the discovery

r a t e from 5% t o 6 % has t he same e f f ec t . Figure 7 shows the e f f e c t of

increasing the explo i ta t ion r a t e by 25% from 4% t o 5% in 2030. In the

period from 2030 to.2060, 44,000 megagrams more uranium i s produced. . 7

ECONOMIC CONSIDERRTIONS

Nothi.ng has been mentioned in the production 111odel concerning economics. . The pr ice of uraniuni will depend on supply and demand. I~owever, demand

on Canadian resources wi 11 be internat ional and therefore wi 11. depend on

nuclear programs in. foreign countries as well as in Canada. While i t i s

d i f f i 'd 'h l t t o predict the actual level' of'demand which will a r i s e in t he

f i r s t part of t h e next century, i t i s unl ikely t h a t i t will be .affected

s ign i f i can t ly by comniercialization of the f a s t breeder reac tor , pa r t l y . .

because of i n e r t i a in t he e l ec t r i ca l generating system. ~ o n v e r t e r s wi 11

provide the bulk o f , t h e world's nuclear power well i n to the next century.

Uranium demahd a t present and higher pr ices i s therefore l i k e l y t o

explo i ta t ion costs. increase only gradually. We have already seen rapid increases i n the petroleum pr ice due t o expected fu ture scarc i ty .

continue. C

Future cos t s .of producing uranium a re l i k e l y t o increase .gradual ly

in real terms as a r e s u l t of increased regulatory requirements, increased

explorat ion expendi tures , e tc . Costs wi 11 a1 so depend on ore grades and

other technical aspects of ore bodies such as s i ze , a cces s ib i l i t y , e tc .

If t he dis t r4but ion of these cha rac t e r i s t i c i s smooth one could expect a

smooth . . e.scalation of costs. I f , however, the, d i s t r i bu t ion i s i r r e g u l a r

(which i s the s i t u a t i o n with gas and o i l ' f i e l d s ) one may be-faced with

sudden la rge jumps i n exp lo i ta t ion costs.

Increases in pr ices due t o s ca rc i t y a re even more d i f f i c u l t t o

predict . Figure 5 suggests t h a t s c a r c i t i e s may become apparent ea r ly i n

' , t h e next century. Because the cost of nuclear e l ec t r i ca l 'energy i s

in3ens i t ive . to , . the pr ice of uranium, t he re may be a tendency f o r t h i s

price. t o increase rapidly ea r ly i n the next century, even though the

These comments. a r e not meant t o serve as projections; they ~nerely

ind ica te t h a t t h e ,fuel cycle costs o i a given fue l cycle a re f a r from

being the only c r i t e r i o n on which t o judge i t s economic d e s i r a b i l i t y .

Another way of saying t h i s i s t h a t one should not expect progressive

implementation o f .nuclear fuel cycles according t o the fuel cycle costs .

Probably of more importance i s the length of time a fuel cycle can be

expected t o Femain viable. Figure 5 suggests t ha t f ue l cycles giving t h e

grea tes t reduction in uranium demand will be of most i n t e r e s t . Other

f a c t o r s a f fec t ing the choice of fuel cycle will be the cos t . o f disposing

.of nuclear wastes and the e f f e c t of mining on the environment; For

example, i t may be cheaper t o deal with low volume, highly concentrated

wastes than with low concentrations of highiy dispersed wastes.

DISCUSSION

. . !

The range of uranium resources, 1 -2 'mill ion megagrams, used t o

ca l cu l a t e t h e curves i n Figure 5 represent t he best est imates i t i s

possible t o make a t t h i s time. However even the lower l imi t i s f a r from

assured, and the upper l i m i t i s estimated on the basis of very i nd i r ec t

information. I t would not be prudent t o base a power program on the high

', ej t imates i ' .

. . ' .Figure 's suggests t h a t system expansion based on Candu-PHW reac tors . .

w i n g t h e natural urani urn cycle will 1 ikely require importation of

uranium earl'y i tYthe next century, possibly a s ea r ly as 2010. Fuel

suppl'ies f o r reactors commissioned in t he ea r ly 1980's could thus be

affected. Under these circumstances i t i s i ~ ~ ~ p o s s i b l e t o predict the . price of uranium and i t would be highly des i rab le t o have some a l t e r n a t i v e

system which could provide a ce i l i ng t o t h i s price. Ideally such a

systeni should be avail able now since t he f u l l bcncfi t s of an a1 t c r n a t i v c

fuel cycle a re not s i gn i f i can t unt i l t he new system supplies a subst'ariti+l part .o+ t h e market. In Figure 5 important reductions i n

uranium consumption occur some 35 years a f t e r introduction of the. new

system.

a . ' ' ~ i g u r e '8 shows the e f fec t o i introducing a s l i gh t ly enriched uranium

~(1.2% ~ 2 3 5 ) cycle . i n 1995. For t he low growth " ta rge t" scenario t he

.effect of t t i i s ihtroduction i s most pronounced during the years 2015 t o

2035.' The postponement of the date a t which uranium importation i s

reqoired var ies from about 2 years t o 10 yea r s , depending on the . . . magnitude of t he ultimate uranium resource. The effectiveness of t h i s

cycle.would not be as large f o r a more rapid growth scenario. . . .. '

'' SUMMARY AND' C O N ~ L U S I O N

'": This ' report has taken a ' p r e l iminary look a t the long term . uranium

. . supply-demand picture in Canada. These preliminary r e s u l t s suggest a

. . wide.range of dates a t which demand will exceed supply, varying from 2010

t o 2045.. The l a t e r dates correspond, in my opinion, t o a n . .

unreal i s t i c a l l y 1 ow energy demand picture and an unreal i s t i c a l 1 y high

f a i t h i n t h e amounts of uranium t o be discovered. Some a l t e rna t ive t o

t h e natural u_ranium fuel cycle i s required i f f i s s i o n energy i s t o make a

s ign i f i can t contribution t o Canada's fu tu re energy supply. The decision

. t o commercialize another fuel cycle must be taken many years before t he

d a t e a t which sYpply and demand a re equal, possibly by as much as 40 , .

years i f the change i s t o be f u l l y e f f e c t i v e . ' Before any decision

concerning commercialization can be taken, t he fuel cycle technology must

be i n place. This i s f a r from the case i n Canada a t t he moment. Even

though a much more thorough analysis i s required, I believe t h i s report

demonstrates an extremely urgent. need f o r devel opment of advanced fuel

cycle techno1 ogy.

REFERENCES

1) Duret, M.F. ; Williams, R.M. e t a1 : "The Contribution of Noclear

Power t o World Energy Supply, 1975 t o 2020"; IPC Science and

Techno1 ogy Press (July 1978).

2) ENEA/IAEA, Uranium-Resources, Production and Demand s e r i e s , 'OECD,

Par is .

' 3 ) Desprair ies , P. , McCormick, W.T. J r . e t a l : "Oil and Gas Resources" ;

IPC Science and Technology Press (July 1978).

4) Steward, F.R.: "A Survey of Energy Consumption within Canada Since

confederation" . . I

5) . ENEA/IAEA, Uranium-Resources, Production and Demand (December 1977)

6 ) Department of Energy, Mines and Resources: Report EP79-3: "1978

Assessment of Canada's Uranium Supply and Demand" (June 1979)

APPENDIX

Two t o t a l energy growth scenarios have been considered i n s t h i s

report. ' Both are conservative by h is tor ica l ' s tandards . Scenario 3, with

an average annual'growth r a t e of 2.7% i s well below the long term growth

of energy use in Canada of about 3.8% per annum. The scenario re fe r red

. t o as the "Target Scenario" has a t o t a l energy growth r a t e of 2.7% unt i l

t h e year 2000,and 2% thereaf te r . I t i s ca l led the "Target Scenario" t o

emphasize t he f a c t t ha t s ta ted government policy i s t o l imi t growth t o 2%

per annum. This has not ye t been achieved.

Figure A-1 shows the t o t a l nuclea; i n s t a l l ed power corresponding t o

these two growth scenarios. This i s derived as follows. The

r e l a t i v e growth ra tes of e l ec t r i ca l energy has been about 3% higher than

the-growth r a t e of t o t a l energy f o r many yeals. This penetration i s

continued with t he asymptotic 1 imit of 60%. That i s , the f r ac t ion of

primary energy sources devoted t o e l e c t r i c i t y production will tend

towards 0.6 i n the future. A t present the f r ac t ion i s 0.3. Nuclear

e l e c t r i c i t y penetrates the t o t a l e l ec t r i ca l market with a penetration

r a t e of 11% which f i t s the planned expansion t o 1990 very k~el l . Nuclear

power i s most' suit'ed t o base load operations; i t i s assumed a r b i t r a r i l y

t h a t nuclear e l e c t r i c i t y will tepd asymptotically t o provide 60% of t he

tot.ai , e l ec t r i c i t y .

" ~ t pre5'ent 'the commercial nuclear systenl i n Canada cons is t s of CANDU

PHW reactors operating on natural uranium. In t he fu ture , i t may be - necessary. t o use more advanced fuel cycles. Several examples . have . been

used in t h i s report. . Aside from the uraniuln consumption f igures f o r a

givewadvanced cycle, the two parameters of no st concern are t h e date of

commercial i ntrodi~ction and the penetration' rate.

. .

The scenarios i n 'figure 5 a re label 1 ed: . .

. . (1) Scenario 3 - PHW only. This i s a ,continuation of present

. . practice. No advanced fuel cycles a r e introduced and the ins ta l led . nuclear power shown i n Figure A-1 r e f e r s only t o CANDU-PHW'S operating on

natural uranium. This scenario i s t he l e a s t demanding from a reactor

design po'int,of view, b u t the most demanding from the uranium supply

point of view. .

(2) Scenario 3 - H.B. Thorium. In t h i s scenario the nuclear power

i n Figure A-1 i s supplied by both natural uranium CANDU's and by CANDU's operating on the thorium cycle using plutonium t o i n i t i a t e and sus ta in

t h e thorium cycles. The burnup i s about 30 MW.d/kg H.E. The advanced

cycle i s introduced i n t he year 2000 with a penetration r a t e of 9%,

r e f l ec t ing the probabili ty t h a t commercialization of a system containing

fuel processing and ac t ive fuel fabr ica t ion in addit ion t o s ign i f i can t

changes i n reactor design will be more d i f f i c u l t technical ly than the

present reactor system. In f a c t , t he f i gu re of 9% was chosen ra ther

a r b i t r a r i l y t o l imi t uranium consumption t o about 1 mill ion megagrams by

2050 and i s probably qu i te op t imis t ic considering t h a t t he re a r e

i n s t i t u t i ona l d i f f i c u l t i e s t o overcome as. well as technical ones. 0.

( 3 ) Target Scenario - SST. This i s t h e most op t imis t ic of t he

scenarios. A low energy growth has been selected and a more advanced

thorium cycle has been introduced i n t he year 2000 with a penetration

r a t e of 9%. The thorium cycle i s introduced using plutonium. After

i n i t i a l s ta r t -up no fur ther plutonium is required. This c a l l s f o r a very

high level of technical achievement which i s unlikely t o take place on

t h e time sca le shown but i s included t o provide a lower l imi t t o the

uranium demand.

. Because of current i n t e r e s t , t he low enriched uranium once through

cycle"has been chosen f o r 'special a t t en t ion in Figure 8. The' uranium

enrichment i s I.?!, giving a fuel b u r n u p of about 20,000 MW.d/t. and a

reduction i n mined . . urani um requirements of aboit 30%.

The th r ee dema,nd curves a re l abe l led

).

Scenario 3 - Natural Uranium - This i s t he same as t he f i r s t

curve described f o r Figure 5.

'. Target Scenario - Natural Uranium - This curve compared t o the

f i r s t curve in Figure 8 shows the e f f ec t of reducing the t o t a l

energy growth r a t e from 2.7% t o 2% a f t e r the year 2000.

Target Scenario - 1.2% u~~~ - This ,curve shows the e f f ec t

introducing in 1995 t h e LEU cycle with a very high penetration

r a t e - 25%. This high penetration r a t e was chosen t o provide

t he grea tes t possible impact on uranium consumption. If t he re

. a r e few technical problems in reac tor design and operation

a r i s ing from t h i s change in concept an ear ly introduction and

hTgh penetration r a t e may be possible, s ince no processing i s

involved, and enriched fuel i s commercially avai lable .

. . . . . . ... . . . . . . . . zao '

. . 260 - FIGURE 4.1 . . . . . . . . INSTALLED NUCLEAR POWER IN CANADA . . . . . . . . .... 2CO - . . LDAO FACIOR = 0 . 8 0 . . 220 r--