Admiral Rickover Missed the Boat on Thorium and Doomed Us All
Thorium: A Contrarian Investment
Never before has such a powerful source of energy been discovered.
It’s the kind of thing you’d see in a science fiction movie... only this time it’s for real.
I'm talking about thorium. It’s an element that was first discovered in 1828 by a Norwegian priest who named it after the old-world god of thunder.
In a minute, I'll tell you how it could solve the energy needs of America and the world for all time.
First, I'll tell you this: this element is found all over the world. In fact, one of the largest deposits sits underneath the Lemhi Pass in Idaho. There is so much thorium right on the surface that this plot of land has been dubbed the "Wonder Vein."
Utah Senator Orrin Hatch recently said, "We have abundant domestic supplies of thorium... We certainly want to make sure it is a viable option in our nation’s energy mix.”
Ed Cowle, an expert in the mineral field, stated, "Thorium will prove beneficial to the future of nuclear energy, and through our work we know that the U.S. has a high-quality thorium reserve fully capable of meeting demand.”
And Bruce Blair of Global Zero (an initiative aimed at the elimination of nuclear weapons) labeled this new thorium surge "the most promising innovation on the horizon for reducing the proliferation risk of a flourishing nuclear power industry.”
So why all the excitement?
Well, thorium is three to four times more plentiful than uranium, and it’s found all over the world (with the biggest deposits in Australia and America).
It costs around $80 per kilogram to recover thorium, while it costs more than $110 per kilogram to mine uranium.
And since it takes 200 tons of uranium to produce the same amount of energy as just a single ton of thorium... the cost implications are enormous.
If you do the math, you’ll find it takes nearly $2 million worth of uranium to produce the same energy that $72,560 of thorium can produce.
Bottom line: thorium is 99.9% cheaper to mine than uranium.
But perhaps I'm getting ahead of myself. First, a little history...
The idea of using thorium for nuclear energy has been around for decades. But it has always taken second place to uranium because — get this — it is hard to make bombs out of it.
That's right; when the world's superpowers were waging the Cold War, the last thing they wanted was nuclear power that wouldn't destroy their enemies. The result of this was that Admiral Rickover, the father of the nuclear navy, pushed uranium over thorium.
The scientists who worked for the military went on to civilian life after the war and replicated what they knew, and that was uranium-based reactors.
The sad part is that thorium beats uranium in all aspects of electricity production. It is cheaper, safer, faster, scalable, more efficient, and produces much less waste.
Now we are at a stage in human history where the price of hydrocarbons continues to go up along with the global demand for energy. Even the environmentalists are siding with the low-cost, low-emissions properties of nuclear energy and especially thorium-based nuclear energy as a solution. 74% of Americans want nuclear power in the energy mix. 70% believe it is safe and secure.
Not that U.S.-based politics matters anymore. Two of the world’s rising industrial powers, India and China, demand huge amounts of energy and are looking to build reactors that run on thorium.
India has abundant thorium reserves and a robust nuclear program that will provide a third of its energy needs over the next two decades. This is up from 3% currently.
The Indira Gandhi Centre for Atomic Research already runs a small research reactor in Kalpakkam, Tamil Nadu, and the Bhabha Atomic Research Centre in Mumbai plans to follow this up with a thorium-powered heavy-water reactor that will be ready in the next six or seven years.
Chinese Nuke Drill
China is facing a heavy air pollution problem due to burning brown coal, and the nation is in dire need of clean and abundant energy. So it is looking to build thorium reactors.
According to The Economist:
“The Chinese Academy of Sciences claims the country now has “the world’s largest national effort on thorium”, employing a team of 430 scientists and engineers, a number planned to rise to 750 by 2015. This team, moreover, is headed by Jiang Mianheng, an engineering graduate of Drexel University in the United States who is the son of China’s former leader, Jiang Zemin (himself an engineer). Some may question whether Mr Jiang got his job strictly on merit. His appointment, though, does suggest the project has political clout. The team plan to fire up a prototype thorium reactor in 2015. Like India’s, this will use solid fuel. But by 2017 the Shanghai Institute of Applied Physics expects to have one that uses a trickier but better fuel, molten thorium fluoride.”
Easy to Mine and Refine
Thorium is cheaper and easier to refine that uranium or plutonium.
Only 0.7% of natural uranium is the fissionable isotope 235U. The rest is 238U, which is heavier due to three more neutrons and does not undergo fission because of the stability these neutrons bring. This is why uranium has to be enriched by the process of centrifugation.
Plutonium is made by bombarding 238U with neutrons in a manner similar to the conversion of thorium into 233U. Thorium, on the other hand, only has to be extracted from its ore, which, as we noted above, is plentiful and near the surface.
On a side note, you do need a bit of uranium or plutonium to start the fission for a thorium-based nuclear power plant, but once started, it will continue until the fuel is used up.
Another upside to thorium is that thorium reactors can run for years, while uranium reactors must be shut down every 18 months to replace fuel rods. Shutdowns cost money.
The nuclear waste produced by thorium reactors is 1,000 times less radioactive than that of a uranium reactor, with a half-life counted in centuries rather than millennia. There is also much less waste, and much of what is left behind can be recycled.
Furthermore, a molten salt reactor (thorium) does not require the massive amounts of pressure that water-cooled reactors (uranium) do, so you can't have a Fukushima-style meltdown.
This is because plutonium and uranium reactors, when shut down, cannot cool off on their own. They need water systems to cool them down. If these systems fail, the reactor melts down.
Thorium, due to the fact that it is a lighter element, doesn't have that problem. If you have an emergency in a thorium reactor, you shut it off, and it cools down on its own.
The idea behind contrarian investing is buying when stocks are low — i.e. when nobody wants them — and selling when they are high — i.e. when they are the darlings of Wall Street.
About seven years ago, you couldn't cross the street without someone telling you about uranium and nuclear power. Today, it is arguably the most hated industry in the world.
The price of uranium has been dropping since the 2007 top, but it really fell off a cliff after the Fukushima accident in Japan in 2011.
That said, it is starting to look like it has hit the floor. The price of uranium has bounced off of $28 — well below its all-time high of $140 in 2007.
On the supply side, Japan will restart its 14 reactors, and China is building 27 new reactors. Worldwide, 72 reactors are under construction in 14 countries including the U.S., another 173 reactors are planned, and an additional 309 reactors have been proposed, according to the most current data gathered by the World Nuclear Association.
I won't go into too much detail here, but when I researched and wrote the chapters in Energy Investing for Dummies on nuclear power and uranium, it became clear to me that there would be strong demand for clean, efficient, and safe thorium-based nuclear power plants over the next five, ten, and fifty years.
All the best,
Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor's page.
Energy Demand will Increase 58% Over the Next 25 Years
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