India Conference Confirms Commitment to Nuclear Future

Presently, as much as 50 percent of India’s 1.2 billion citizens do not have access to electricity. A rapidly growing economy has placed a heavy demand on energy sources and electric power, but while reforms to improve efficiency and competitiveness in the power sector have been developing over several years, a continuing power access shortage is a major constriction for industrial capacity.

India only consumes the sixth-highest amount of electricity despite being the second most populous country in the world. As a comparison, this represents only 8.5 percent more electricity than Canada, which as a country consumed the seventh-largest amount of electricity in the world. On a per capita basis, the average Canadian consumes 32 times as much electricity as an Indian citizen.

A green environment

Introducing nuclear power on such a large scale represents a greener policy for India. Currently as much as 56 percent of the country’s energy solution is reliant on coal burning operations. The growing expectation for energy demand and population forecasts give insight into the significant challenges posed for a country with a massive population and concern for secure, safe, and reliable sources of energy.

The objective for India is to supply as much as 25 percent of its electricity through nuclear power by 2050. The country generates approximately 2.9 percent of its electricity from nuclear power, so future demand on global uranium and nuclear industry expertise will be considerable. A forecast from the International Energy Agency indicates that India will be adding between 600 and 1,200 GW of additional new power generation capacity to meet targets for 2050. The country expects to import light-water reactors in order to supplement a domestic three-stage fuel cycle that will eventually bring in thorium to complement current uranium-fuelled units.

Uranium mining implications

Australian Prime Minister Julia Gillard has made efforts to change the country’s current policy, which does not permit uranium sales to India. As the policy change is still in its infancy, it will require a special safeguards framework and bilateral treaty to be developed between Australia and India. The arrangement will continue to evolve over time, and India will be sourcing supplies from other countries as the relationship progresses. Australia already produces approximately eleven percent of the world’s supply of uranium, and reducing trade impediments with India should see increased interest in the country’s uranium assets.

The increase in demand and the inevitable supply deficit should benefit major producers by increasing both uranium prices and interest in the broader uranium industry. With the value of underlying uranium deposits being recognized by the market, junior mining exploration companies will also benefit considerably. Major exploration budgets will increase, with interest and capital investment likely reflecting higher valuations for junior exploration companies and a growing appetite for merger and acquisition activity.

Domestic source

India is expecting to commission a new uranium mine and related processing plant in the very near future. The Mouldih mine could produce up to 500 tonnes of uranium ore per day. The ore will be processed at the Turamdih mill, which has the capacity to process 3,000 tonnes of uranium ore per day.

Recognizing the importance and opportunity of the emerging nuclear market, in the fall of 2009, uranium giant Cameco (TSX:CCO,NYSE:CCJ) established an office in India in order to build a presence within the country’s nuclear community.

Securities Disclosure: I, Dave Brown, hold no direct investment interest in any company mentioned in this article.