investment opportunities in the worldwide gold and uranium equity markets marino g. pieterse,...
TRANSCRIPT
Investment opportunities in the worldwide
gold and uranium equity markets
Marino G. Pieterse, publisher and editor
March 5 – 6, 2013
Goldletter II NN TT EE RR NN AA TT II OO NN AA LLthe in ternational independent in formation and advice bu lle t in for gold and rela ted inves tments
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Gold does not run its own course as a safe havenGold does not run its own course as a safe haven
Source: Goldletter International
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US Dollar Index
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Course of gold price particularly determined by change from hedging to dehedging since 2000:
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World official gold holdings and total monetary reservesWorld official gold holdings and total monetary reserves
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Why Uranium ?
Uranium is the most cost effective and environmental friendly large scale alternative for electricity generating as the only viable alternative to fossil fuels
Climate change : Kyoto protocol (1997) has paved the way for nuclear renaissance
Growing public concern over global warming will lead to increasing dependence on nuclear-fuelled power plants as power utilities and governments strive to reduce greenhouse gas emissions of C02 from fossil fuel power stations.
Nuclear power is one of the cleanest methods of producing electricity because it doesn’t produce greenhouse gas.
• 1 gram of uranium produces the same amount of electricity as 3 million tonnes of coal
• Burning 3 tonnes of coal leads to 7 tonnes of CO2 emission
An average cost of US$ 1.76 kWh for nuclear power compares to: US$ 2.47 kWh for coal fired and US$ 6.28 kWh for gas fired
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Nuclear Power provides 16% of the world’s total electricity and 28% of European Union’s needs, compared to:
fossil fuels 56%, water power 10%, wind 3%, biomass 3%
• France receives 78% of its electricity from nuclear energy, Belgium almost 56%, Sweden close to 50%, South Korea 40%, Switzerland 40%, Japan 29%, Germany 28% and the United States 20%
• China receives 1.9% of its electricity from nuclear, India 2.2%, Brasil 3% and Russia 8%.
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Shortage in future supply is expected to keep
uranium oxyde price (U3O8) rising
Production :
Primary supply:
International Nuclear’s most recent “Scheduled Uranium production Forecast” shows world-wide uranium production increasing from current levels of approximately 107 million pounds U3O8 to as much as 115 million pounds per year by 2010-2011, before declining as some mines reach reserve depletion.
Secundary supply : Growing demand temporarily met by secondary supply, particularly from down-blending of Russian weapons’ highly enriched uranium into commercial grade fueling being consumed in the United States (20 million pounds from 2009 to 2013).
Russia will not renew the HEU contract after 2013.
New agreement between Russia’s Fenex with US utilities firm Fuelco, worth a reported $ 1 billion. The deal will allow Fenex to supply uranium to US companies from 2014 to 2020.
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Looming Uranium shortage
• All uranium consumed today goes into electricity generating
Uranium demand utility-like in nature and only modestly impacted by economic weakness
• Nuclear power is competitive economically
- High capital costs of $ 4 billion (2-3 times as high as coal-fired and 5-6 times as high as gas-fired) are offset by low ongoing fuel, operating and maintenance costs
- If generated by other fuel sources, it would require: • Oil : 13.7 million barrels – 1 barrel yields 576 kWh • Coal : 3.4 million tonnes – 1 tonne yields 2,297 kWh • Natural gas : 68.5 bilion cubic feet – 100 cubic feet yields 12 kWh
• Amount of electricity generated by a 100-Mwe reactor at 90% capacity factor in one year: 7.9 billion kWh-enough to supply electricity for 740,000 households
• Unlike the alternatives, nuclear plans are fairly insensitive to feedstock pricing, as the costs of uranium accounts for less than 10% of the cost of producing electricity
An average cost of US$ 1.76/kWh for nuclear power compares to:US$ 2.47/kWh for coal fired and US$ 6.28/kWh for gas fired
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WORLD NUCLEAR ELECTRICITY GENERATION CAPACITY (as at December 31, 2012)
Country Operating % total electricity Under Planned * Proposed * Uranium required
reactors MWe net generation construction MWe net MWe net MWe net 2012 in tonnes *
North America:
USA 104 102,215 19 1 1,218 13 15,560 19 21,600 19,724
Canada 19 13,531 15 - - 2 1,500 3 3,800 1,694
Asia:
Japan 50 44,396 18 3 3,036 10 13,772 5 4,000 4,636
South Korea 23 20,787 35 4 5,205 5 7,000 - - 3,957
Taiwan 6 4,927 19 2 2,700 - - 1 1,350 810
China 16 12,918 1.8 29 29,990 51 59,800 120 123,000 6,550
India 20 4,385 3.7 7 5,300 18 15,100 40 45,000 937
Pakistan 3 725 3.8 2 680 - - 2 2,000 117
Western Europe:
France 58 63,130 78 1 1,720 1 1,720 1 1,100 9,254
Germany 9 12,003 18 - - - - - - 1,934
UK 16 10,038 18 - - 4 6,680 9 12,000 2,096
Sweden 10 9,399 40 - - - - - - 1,394
Spain 7 7,002 20 - - - - - - 1,355
Switzerland 5 3,252 41 - - - - 3 4,000 527
Finland 4 2,741 32 1 1,700 - - 2 3,000 471
Belgium 7 5,943 54 - - - - - - 995
Eastern Europe:
Russia 33 24,164 18 10 9,160 24 24,180 24 20,000 5,488
Ukraine 15 13,168 47 - - 2 1,900 11 12,000 2,348
Slovakia 4 1,816 54 2 880 - - 1 1,200 307
Latin America:
Brazil 2 1,901 3.2 1 1,405 - - 4 4,000 321
Argentina 2 935 5 1 745 1 33 1 1400 124
Mexico 2 1,600 3.6 - - - - 2 2,000 279
South Africa 2 1,800 5.2 - - - - 6 9,600 304
Others 18 11,332 1 1,400 36 37,170 66 88,605 2,368
___ _______ __ ______ ___ _______ ____ ______ _____
World 435 374,108 65 65,139 167 184,415 317 359,655 67,990
67,990 tU = 80,181 tU3O8 (uranium oxide) * Future reactors envisaged in specific plans and proposals and expected to be operating by 2030
** The 2011 WNA Market Report reference case has 156 reactors closing by 2030 and 298 new ones coming on line
source : WNA
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No material impact from Fukushima disaster
on future nuclear power demand
COUNTRIES with strongest world nuclear power growth compared to USA
Country Nuclear electricty in % Operable Under Planned Proposed Uranium
generating 2011 total electricity reactors construction required 2012
(billionkWh) consumption (in tonnes U)
(as at Year-end 2012)
China 82.6 1.8 16 29 51 120 6,550
India 28.9 3.7 20 7 18 39 937
Russia 162.0 17.6 33 10 24 20 5,488
USA 790.4 19.2 104 1 13 13 19,724
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Subtotal 1,063.9 173 47 106 192 32,699
World total 2,518.0 13.5 435 65 167 317 67,990
Top-4 in % world total : 40 42 40 70 63 60 48
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China
• China plans to quadruple its nuclear output by 2020 and to triple or quadruple output again by 2030
• China currently produces 10GWe through nuclear power (13 reactors), which supplies about 2.4% of the country’s electricity
• China expects to produce 58-60 GWe of capacity by 2020 (26 reactors under construction), possibly 200 GWe by 2030 (172 reactors planned or proposed)and 400 GWe by 2050
The US uses almost 20,000 tonnes (44 million pounds) U3O8 per year to produce 101 GWe from its 104 reactors.
China currently uses 6.5 million tonnes of U3O8 per year and will need more than 27,000 tonnes (60 million pounds ) U3O8 per year by 2030
(based on current uranium requirements)
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China’s power supply- total 3,800 billion kWh
in %Coal 78 70% transported by rail :
Domestic Hydro-Power 15 - 6% of world rail tracksOil 2 - 24% of global rail trafficNuclear energy 1,8Natural gas 1 Bottle necks in transport network will be Others (solar, windpower) 2.2 followed by regional power shortages
100.0% ▼ China has committed US$ 248 billion to rail expansion over the next 15
yearsEnvironmental pollution problems (economic loss due to polultion put by the World Bank almost 6% of GDP) ▼ Call for diversification away from coal ▼Plans to reduce coal’s contribution to power supply to around 60% by 2020 ▼Electricity consumption 2011: + 11.7% to 4,693 billion kWh(expected annual increase <10%)
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Nuclear energy must replace the share of natural gas in Russia’s energy balance
Federal Agency for Nuclear Power:
There is no alternative to the development of nuclear power in Russia, which must replace power generated using natural gas
Russia has the world's largest reserves of natural gas and has become a crucial exporter, particularly for Europe
Russia's reserves of coal and natural gas could be depleted in 50 years
Russia, currently has 10 operational nuclear plants with 33 reactors generating 162 billion kWh, but is would need another 300 billion kWh for new plants to cover a projected energy deficit in the next 30 years.
Russia is planning to build 54 nuclear power units for its own needs by 2030 and 40-50 units abroad in the next 30 years
With around 8% of the world's uranium output, Russia is planning to mine
60-70% of its uranium needs by 2015, with the remainder to come from joint ventures in former Soviet Republics, particularly Kazakhstan, which holds 18% of world's uranium reserves
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Postal address:Postal address:
P.O.Box 76988P.O.Box 76988
1070 KG Amsterdam1070 KG Amsterdam
the Netherlandsthe Netherlands
Telephone 0033 466 936 455Telephone 0033 466 936 455
MobileMobile 0031 651 194 562 0031 651 194 562
www.goldletterint.comwww.goldletterint.com
[email protected]@goldletterint.com
Goldletter II NN TT EE RR NN AA TT II OO NN AA LLthe in ternational independent in formation and advice bu lle t in for gold and rela ted inves tments