Could Thorium and the God of Thunder Save Your Portfolio?
Erin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The topic of nuclear energy invokes a wide range of responses from the dangers of a meltdown to sustainable energy sources. All sides of the nuclear energy argument must be considered- society requires energy in order to function, but the side effects must not be overlooked. For roughly the past five years thorium has slowly gained attention as a form of nuclear energy. Thorium provides an alternative that has the potential to assuage all sides of the argument.
Named for the Norse god of thunder, Thor, Thorium offers an abundant, safer, and cleaner nuclear power. Thorium is as common as lead and is less radioactive than uranium (which has always powered U.S. nuclear plants). There is more thorium than uranium in the Earth’s crust. The most common source of thorium is the rare earth phosphate mineral, monazite. World monazite resources are estimated to be about 12 million tons. India is the home to about 25% of the world’s thorium reserves. Norway, Brazil, and Idaho also contain large vein deposits of thorium. Norway has so much thorium that Oslo is planning a post-oil era where thorium might drive the country’s next great phase of wealth. The world has an estimated 4.4 million tons of total known and estimated Thorium resources, according to the International Atomic Energy Association’s 2007 Red Book. The U.S. has buried tons of thorium as a by-product of rare earth metals mining for decades.
Advocates of thorium are pushing for a new type of U.S. nuclear plant with thorium fueled reactors that would produce less waste, and is more difficult to turn into a nuclear weapon. Thorium-fueled reactors burn hotter than uranium reactors, consuming more of the fuel. Nearly all of the thorium (99%) is burned up in the reactor. Instead of 10,000 pounds of waste, there is only 300 pounds of waste. This new kind of reactor called a liquid-fluoride thorium reactor, or LFTR (pronounced “lifter”), would use a mixture of molten chemical salts to cool the reactor and to transfer energy from the fission reaction to a turbine. (Because the molten salt reactor does not use water for cooling, it removes the possibility of a hydrogen explosion, such as the one in Fukushima, Japan.) Ironically, one of the reasons thorium was not more invested in and researched in the past (fifty-sixty years ago) was because it did not produce a by-product to aid nuclear weaponry.
U.S. power plants are aging, most are at least 25 years old, some nearer to 50. A U.S. Nuclear Regulatory Commission task force recommended one year ago that the commission implement rules to improve safety at the 104 U.S. operating reactors. It is time for utilities to prepare to build new reactors to replace the aging ones. Some utilities are looking to thorium instead of uranium. (Earlier this year, the Nuclear Regulatory Commission approved Southern Company's (NYSE: SO) proposal to build the first two (uranium) reactors in 34 years.)
Lightbridge Corporation (formerly Thorium Power) is a small corporation primarily focused and heavily involved in thorium development. Lightbridge is a nuclear-energy start-up company based in McLean, VA. Alongside Russian researchers, it has developed the Radkowsky Thorium Reactor. The company is developing nuclear fuel designs featuring thorium as a fuel alternative to uranium. The company has developed a new type of fuel assembly that differs from (but can directly replace) conventional fuel rod arrays. The company claims that use of its thorium-based design could lead to a 50% reduction in the volume of used fuel compared with standard uranium. Additionally, the design could result in a 90% reduction in long-term radio-toxicity. Most importantly, as an all-metal fuel, Lightbridge’s thorium technology could increase reactor power by 30% compared with conventional oxide nuclear fuels, thereby lowering the capital cost per megawatt of energy generated. This is one company to watch as the thorium movement becomes more popular.
Several other rare earth mineral production companies are also involved in thorium production. Both Cameco Corp (NYSE: CCJ) and Molycorp (NYSE: MCP) are active around the world in several different types of mining and mineral production.
Denver-based Molycorp has invested nearly $1 billion in rare earth mineral production at Mountain Pass Summit in California, where thorium has been produced (among other minerals). Rare earth elements are also used in the creation of super magnets, missile-guidance systems, compact fluorescent lights, wind turbines, and more. There are 17 rare earth elements found scattered around the world. China has 97% of the world's supply of rare earth minerals. Production and export quotas from China control the costs of rare earth minerals around the world.
Cameco is one of the world's largest uranium producers accounting for about 16% of the world's production from its mines in Canada and the US. If thorium were able to knock uranium out of its coveted spot, Cameco would have a lot to lose in uranium production. However, because the company is already involved in thorium production, with the right management and transition (if it were to ever come to that), the company would not have to suffer. Cameco has already proven its mettle in survival rebounding nicely after the Fukushima disaster resulted in reduced expectations and orders for the company last year.
From an investment standpoint, companies invested in thorium production can be a temptation. The potential uses and extent of use of the element could really make or break a portfolio. However, before investing, it is essential to understand the different factors affecting the industry. First, there is the effect China's control has on the market. Second, falling prices of the minerals (again, see China's control of costs due to exports), particularly that of cerium (which is also found in monazite). Some of the companies involved in thorium production have had financing difficulties, and the stocks can be erratic. However, the stocks are also fairly cheap. Because of the volatility of the market, it may be a yellow or red flag to some investors. However, as a long term investment, it has greater potential as more people become aware of the benefits of thorium.
Special thanks to Driving Force Radio and ICOSA Magazine for much of the research found in this article.
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