Together the reactors will produce more power than the country’s existing 22 reactors.
India’s government announced last Wednesday (May 17) that the country will build 10 new nuclear reactors with a combined capacity of 7,000 megawatts (MW).
Together the new reactors will produce more power than the country’s current 22 reactors, which have a capacity of 6,780 MW. State-owned Nuclear Power Corporation of India operates the existing India-designed pressurized heavy water reactors.
India’s goal is for 25 percent of its electricity to come from nuclear power by 2050, the World Nuclear Association says. While reactors are expensive to build, they are relatively cheap to run, and the country believes they will help with its push to supply the growing Indian population with cleaner energy. India has pledged to reduce carbon emissions by one-third by 2030 under the Paris Agreement.
Other Indian reactors delayed
Prior to last week’s announcement, India had been looking to foreign companies for help building reactors in the country. France-based Areva (EPA: AREVA), which has been supplying India with uranium since December 2008, has been in talks to build six reactors.
However, some market watchers are concerned that those reactors will not be built. Ramamurti Rajaraman, emeritus professor of theoretical physics at Jawaharlal Nehru University, is not optimistic given Areva’s recent turmoil. He recently told Outlook, “Areva is in effect, already bankrupt and has already stopped issuing financial statements. It has been taken over by the government, which is trying to revive it.
He added, “[w]hen [India’s] Prime Minister Narendra Modi went to France, Areva’s financial disaster had happened and they were struggling to complete building two reactors, one in Finland and one in France. Both are six years behind schedule and the budget had tripled.”
Rajaraman also said that Russia is “the only reliable option right now,” though he noted that South Korea is another option to consider as it is building four reactors in United Arab Emirates.
Westinghouse Electric, an American nuclear reactor manufacturer owned by Toshiba (TSE:6502), was also in talks with Nuclear Power Corporation of India to construct six AP1000 reactors; however, Westinghouse recently filed for bankruptcy.
“India must not enter into a contract involving billions of dollars with an American company that has already declared bankruptcy,” A. Gopalakrishnan, former chairman of India’s Atomic Energy Regulatory Body, wrote in a March article in The Hindu. He said Westinghouse also has a history of project delays in the US and China, and noted that they have increased costs by 50 percent.
It is worth noting that one Canadian uranium firm appears to be taking a more cautious approach to building its relationship with India. Uranium miner Cameco (TSX:CCO,NYSE:CCJ) signed a supply agreement with the India’s Department of Atomic Energy in 2015 to provide 7.1 million pounds of uranium concentrate through 2020.
At the time, Cameco CEO Tim Gitzel said, “[t]he pounds here aren’t enormous, it’s really the importance of being able now to deal with the Indians and bid into their market.”
Indian uranium demand to grow
As more reactors come online, India’s need for imported uranium is expected to grow by over 40 percent. The country’s uranium reserves are modest — indeed, in 2015, India’s Department of Atomic Energy claimed that they stand at just 191,594 tonnes. In contrast, Australia has the largest reserves at 1,664,100 tonnes. India is developing technology to use its reserves of thorium as a nuclear fuel instead.
In total, India currently has six active uranium mines plus three processing mills, with more projects scheduled to open over the next few years. All uranium mining and processing is overseen by the Uranium Corporation of India. It is estimated that by 2025, India may supply enriched uranium from its own processing facilities.
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.