May 2, 2025 • 35 mins
Not long ago, it was seen as too slow, too expensive and too controversial to play a major role in the future energy mix. Not anymore.
Nick Lawson, chief executive of investment firm Ocean Wall, and Jake Jurewicz, CEO and co-founder of modular reactor startup Blue Energy, join this week’s Merryn Talks Money to explain why they think nuclear power is becoming one of the most compelling long-term energy bets.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Meren Talk's Money,
the podcast in which people who know the markets explain
the markets. I'm Meren zum zet Web.
Speaker 2 (00:19):
Now.
Speaker 1 (00:19):
This week we are focusing on a topic that you know,
John and I are both very interested in nuclear paramount
role it will pay or should pay in our future
energy systems. We talk about this a lot on this show.
As we push ourselves towards a world where we hope
to see better economic growth, better productivity, and as the
use of energy intensive technology such as AI increase, our
(00:40):
need for a better, more efficient, more secure energy supply
is only growing. So when we think about more energy,
we really do have to think very carefully about where
it is going to come from. According to report from
the World Nuclear Association, electricity demand is now increasing about
twice as fast as overall energy use and is going
to increase by good fifty percent, probably possibly between now
(01:02):
and twenty forty. So almost all reports on future energy
supply from all major organizations suggest that we do have
to think about an increasing role for nuclear energy. So
here to help us unpack that. Unpack what the world
looks like now, what it will look like or should
look like and what that means for your portfolio. We
have two brilliant guests. We have Jake Durrowitz, co founder
(01:25):
and CEO of Blue Energy. Blue Energy is commercializing an
innovative modular reactor agnostic power plant architecture to house the
next generation of nuclear reactors, and that we definitely have
to unpack that bit. And we have Nick Lawson, who
we have spoken to before, is CEO and co founder
of ocean Wall, which has three businesses corporate advisory, investment
and research. Nick has twenty five years of experience in
(01:49):
finance and is particularly interested in niche alternative investment opportunities.
And one of the things he is most interested right
now and here and I talk about a reasonable amount
is UCLAR energy. Nick, Jake, welcome, thank you for joining
us today.
Speaker 2 (02:04):
Thank you lovely to be marrying and hijake you and Nick?
Speaker 1 (02:08):
Right, Nick and Jake, Noick's other already which is extremely useful.
Speaker 2 (02:12):
Right.
Speaker 1 (02:13):
What we want to do is we want to set
the scene here. So Nick, let me ask you, can
you lay out for us as simply as possible the
case for nuclear energy in our changing energy world? And
I suppose the key thing to start with here is
just to say that abundant energy is the key to
pretty much everything. We talk a lot here about how
(02:34):
all economic activity is energy transformed. So the more abundant
we can make the energy that we survive on, and
the cheaper we can make it, the better. So how
can we make the case for nuclear in that context?
Speaker 2 (02:48):
I think the point you made at the start merit
of the technological needs. I mean, the demand now on
a single request through an AI chat consumes two point
nine what hours? Now that's ten times more than a
Google search. Now, we as a country ten years ago
would have about fourteen percent of our power come from nuclear.
(03:11):
It's now about a little bit less than that. But
the reason there is a need for it is is
that stable and continuous energy source. And that's crucial. And
although I'm a big fan of wind and solar, the
intermittency is the issue. Now. The thing with nuclear is
there's no greenhouse gas emissions, so compared to fossil fuels,
it's a big plus there for combating climate change. But
(03:33):
I'd say in this very fragile world with so much
geopolitical risk, nuclear power offers domestically controlled energy. I mean
we're on big net importer now, particularly from Norway and
France of energy and this allows us that element of
national energy security. Also the safety issue. I know people
(03:53):
often conflate nuclear energy with nuclear weapons, and obviously the
memories of things like Chernobyl and through Mind Island for
Kushima still exists. But it is incredibly incredibly safe, efficient,
viable form of power and also at the same time
for the UK it drives technological innovation. I mean, we
have a company in Rolls Royce and other SMR developers
(04:16):
really really pushing forward to advance nuclear technologies which will
be good in terms of jobs, innovation and within their
overall UK supply chain. So I think for the UK's
long term sustainability, nuclear is the only answer.
Speaker 1 (04:32):
All right, let's just unpack a little bit around the
use of renewable and low carbon energy sources. You say
that you're not against wind and SOL look great. But
the advantage that nuclear has over that, as I understand it,
is that a it's not intermittent, and B it can
be a nuclear plants, but whether they be big or small,
can be constructed where energy is required. So one of
(04:55):
the big problems with SOLO, which is mainly in the
south west of the UK. I'm just looking the UK
at the moment, and wind, which is mainly in the
very north of the UK is it not only as intermittent,
but it's far away from the areas where electricity demand
is the highest. And our grid is designed originally to
(05:15):
receive energy from a few large power plants relatively close
to where energy is required. Right, So renewables come with
two problems, distance and intermittency. I can see Jake wanting
to interrupt their Jake, Oh.
Speaker 3 (05:30):
I add to that, I like wind and solar for
a lot of use cases, but in addition to the
reality that you have to build them where the wind is,
where the sun shines, and it's intermitute, it's not producing
twenty four seven through sixty five, which you need for
a modern economy. It's also low density, which means it
just consumes a lot of land. You need a lot
(05:51):
of acreage to put down a lot of solar panels,
a lot of winterbines, particularly in an increasingly advancing, modernizing
economy where we're inventing new ways to consume power like
large language models, data centers, but also as we deal
with climate resiliency, and increasing installation of air conditioning, in
(06:12):
electrification of space eating electrification of industrial loads. We need
a lot of power in a growing economy, and we
have been very thoughtful about our use of land. You
need a lot of land to put down a lot
of win turbines and solar panels. You also need a
lot of land to connect all the transmission and battery
is required to harden that intermitted generation. So just it.
(06:34):
It kind of balloons some of the infrastructure costs and
balloons some of the space requirements to the entirely reliant
upon wind and soilar.
Speaker 1 (06:41):
Yeah, and it is one of the big conversations in
the UK at the moment is that cost of infrastructure
and the problems of building new pylons in particular, and
new substations and the you know, I'm speaking to anecdotal
bit to friends the other day who suddenly find that,
having brought a nice house in the country, they're about
to be surrounded by ions, which was a surprise because
(07:02):
until recently that is not something that most people would
have considered to be a major risk when they buy
an isolated farmhouse, for example, I.
Speaker 2 (07:09):
Don't mind pylons. I always think of the ted Hughes
poem iron Man. When I see them now, I actually
quite like them.
Speaker 1 (07:14):
I'll let them know that, I'll let them know that's
an available buyer for their house.
Speaker 2 (07:19):
Well, I went, I shot a shot the other day
at someone's estate. And apparently to bury a pylon cost
just shy of a million pounds.
Speaker 1 (07:27):
Well it's not just burying them. The cost is later
to you know, if they need fixing, you've got to
dig them up. So it's an awful lot more efficient
to have them above ground, even if it is uglier.
And obviously some people believe it leads to health concerns.
We are getting sidetracked. We're getting side tracked. So what
nuclear does. It solves for all these problems. It solves
for the intermittency, and it solves for the distance. It
(07:47):
solves in large part, not completely, for the infrastructure problem
and the need to build out a grid in a
very expensive way. So it solves for those problems. But
many would say that it comes with its own problems.
There is, as you said, Nick, a lot of ern
about safety, although I think we do know if we
look at the numbers, that it's one of the safest
ways of generating electricity. In terms of actual death right.
Speaker 2 (08:07):
That forth absolutely absolutely right. The big issue back in
the nineteen fifties when you had Haitiam and Hartley Pool
and the big reactors getting built was the nimb issue.
People really didn't want them. And now if you go
back to the sites of with the old British Energy
Fleet is even side. Well the benefit has been huge.
I mean you've got the movement of brilliant people to
(08:29):
the area. But again it becomes a legacy thing. Now
what we have is these sites with the permissioning on
them where we can add these small modular reactors. The
issue in the UK is we have seven bodies that
effectively are responsible for making a decision on Britain's nuclear policy.
It's nuts now. I gave evidence to the Energy Select
(08:50):
Committee last year around the decarbonization of power wack paper
and you know they listen and they hear, but very
little action. I feel very worried and luke. When we
were at this dinner recently, the representatives to the National
Grid spoke and said there's no point us thinking about
having an AI strategy when we can't supply domestic households. Now,
(09:10):
there was a power surge in January of this year
where power hit six thousand pounds of megawatt hour and
we are reliant on Norway for the import of power.
We have the lack of whether it's government guidance, but
we just do not have the infrastructure to supply our
domestic needs, let alone those of a data center. And
(09:31):
Microsoft's Stargate Data center, which is a five gigawa data
center that takes down the power of five New York boroughs,
five New York boroughs twenty four to seven for one
five gigawatts Stargate center, and that's going to be that's
going to be around eight percent of their total data
center nees. So you need to have this ci of capacity.
(09:52):
And you're seeing now deals like Microsoft buying through Mile
Island that's eight hundred and nineteen megawatts, you know, buying
these states of themself. So you're going to have this
issue that's going to take place where who do you prioritize.
It will become an issue of moral turpitude if you're
not supplying your households but you are allowing Microsoft to
(10:13):
run a joint data stem.
Speaker 1 (10:14):
Well, it's interest, I mean, there was I don't know
if you saw a little while back, there were some
mutterings in the EU about banning or limiting AI and
limiting the building and use of data centers specifically because
of the energy use. It's dangerous stoughf to talk about
in the UK because next thing you know, a Middle
vand will be out there banning data centers.
Speaker 3 (10:31):
That's one of the things that kind of frustrates me,
is like since the nineteen seventies in the oil embargo,
there's been this big movement movement of energy efficiency. And
energy efficiency has been great for increasing the productivity of
certain technologies like refrigerators in your helm, but it's gotten
a little too far in the minds. I think of
certain politicians where they think, oh, we should just energy
efficiency our way out of this climate challenge, out of
(10:53):
this energy consumption challenge. People start to conplaine the idea
of oh, consuming more energy is bad, and that's just
a fly way of thinking. There's many countries around the
world that are just now installing air conditioning, refrigeration for food,
putting in hospitals, putting in modern infrastructure based standard of
building requirements that are going to increase their energy intensity
(11:14):
per capita from developing nation levels just to European levels,
which are still which are of the energy conception per
capital of the United States. For Canada, who are we
to say that they shouldn't consume energy? And let's look
at ourselves. The UK needs to continue to grow its economy.
Europe needs to continue to grow it's economy. It can't
afford to fall behind on key technologies like AI, It
(11:36):
can't afford to not electrify, transportation, industry, chemical synthesis, all
the new capabilities that are coming out from our universities
and labs. Are we going to say that we should
not invest in that infrastructure. Are we going to start
turning off people's hot showers. No, we have the technology,
We have the capability to build an energy supply infrastructure
(11:56):
that is both a zero carbon and affordable, liable enough
to meet the expectations that we've grown accustomed to over
the last one hundred years. So I get very frustrated
when I hear this rhetoric of oh, we should cut
things off because they consume too much energy. The water
desalination consumes a lot of energy. Should we not have
clean water?
Speaker 1 (12:16):
Yeah, so we should affect it. We should celebrate increasing
energy use because with increasing energy use, comes economic growth
and improve lifestyles. So we should celebrate it and find
a way to make it work. Right, absolutely, Jake, Let's
talk about what you do. When I described it in
the introduction completely incomprehensible, accurate, but incomprehensible. So will you
explain to us what your product is, how it works.
Speaker 2 (12:38):
Yeah?
Speaker 3 (12:38):
Shall I'll describe in very simple terms. What we're doing
is designing a modular plant architecture that is compatible with
multiple nuclear actor vendors that allows us to basically cut
the costs and cut the deployment time roughly in hats.
And the way that we're doing that is that we're
designing the plant so it can be entirely prefabricated in
(13:00):
offshore oil and gas fab yards, offshore wind fabyards and
shipyards from around the North of Britain, North and Europe,
and other facilities around the world. The advantages for the
same reason a prefabricated home can be built on a
more predictable cost schedule and at lower price and on
a faster schedule than a stick built home on site.
(13:21):
We're just taking advantage of the big factories that already
exist that have done this for large energy infrastructure before,
particularly for north sea oil and offshore wind. A little
known fact about nuclear power. If you look at Hinckley
Point C or Flamanville, oklode O, Vogel, or any other
major nuclear plant that's been built in the last forty
to fifty years in the West, about only about seven
(13:44):
percent of the cost of that plant is the actual
nuclear actor. Ninety three percent of the cost of building
a nuclear plant is the accrude interest on debt because
it takes so long to build it, usually about ten
to fifteen years. Hence the construction overhead. It's the cost
of training and relooking about ten thousand skilled workers to
a place like Inkley Point and hosting them and their families,
(14:06):
retaining them, mobilizing large thousand ton cranes, putting in performance bonds,
how contingency, the litigation that happens between trades. It's all
that overhead. And it's the same overhead that occurs when
you try and build a big international airport or other
big SIBL infrastructure projects. So if we're trying to make
nuclear look less like building a big international airport and
(14:27):
more like buying an airbus a three forty, we can
do that using the existing supply chain from off for
wind and offshore oil and gas, using the existing labor
force that is already skilled and trained to do heavy
steel fabrication. So we've designed the plant to minimize the
amount of what's called kind of nuclear QA nuclear grade
(14:49):
work so that we can have most of it done
by the labor that's already trained. There's a big labor
challenge for building nuclear and for building a lot of
large infrastructure around the West. So part of the exercise
here is thinking about how the best leverage the supply
chain and the labor resources we do have so that
we can go faster. It's critical that we think about
how to move quickly onto playing new nuclear. If we
(15:13):
were to starting clean Point C you know today, we
wouldn't and we built it the same way, we wouldn't
be seeing the power come online until maybe twenty forty,
and that is just too far for most companies to
make investment decisions. The Microsoft's Googles Amazons in the world
who are thinking about where the put Ai data centers,
(15:33):
they're making shorter time scale decisions. They need power sooner.
Governments every need to make decisions sooner. So the way
that we're designing this plant is specifically to attract project
finance so that commercial banks can get back into the
business of investing in nuclear power infrastructure instead of relying
on government substitutes, which has been the process to date
(15:55):
and tends to be very slow.
Speaker 1 (15:58):
Okay, so you can make one of these things in
Aberdeen and ship it out to wherever it needs to go.
Speaker 3 (16:04):
Yep, that's the idea.
Speaker 1 (16:06):
How much space does it require? How much power does
it provide?
Speaker 3 (16:11):
So the reactors we're working with can range in size
from approximately seven to seven megalots to three hundred megalots
per reactor. Per unit, each unit takes up approximately two
to three acres when you take into account the full system,
the steam plant, the balance of plant, switch yard. So
(16:33):
it's a very space efficient, very power dense way to
produce power. We are designing it so that it can
tuck into places along the coast, rivers, lakes, canals, or
go further offshore, out of sight, out of mind, over
the horizon line. Most of our design is below the
(16:54):
water line, so you don't have a large two hundred
meters mast sticking above the horizon line taking up your
whole shed. If you own some property on the coastline
and you're like looking at them to see we're designing
it to blend into the environment.
Speaker 1 (17:07):
Okay, just to remind everybodycuse we're not talking to an
expert audience here. The reason that all these plants are
on the water is because the water is used for cooling,
so they're automatically on a lake on the sea, et cetera.
Speaker 3 (17:17):
Well, yeah, particularly in the UK, you know, the UK's
and islands, so a lot of the tower plants are
along the coast. We like to have water for cooling
the condenser, so yeah, it's used for cooling.
Speaker 2 (17:26):
Okay.
Speaker 1 (17:26):
And price wise, that Hankley is costing as what thirty
four billion or something after being ten years late and
seven thousand changes, etc. That's the kind of price point
we'd really really like to avoid all of us everywhere,
isn't it.
Speaker 3 (17:38):
Yeah, I think thirty four billion and growing. We don't
know what the final number is until it's all said
and done. It's just not a sustainable number for any
sort of financing for anybody to kind of buy an ass.
It's even challenging for the government to do it. You're
getting basically a negotiation between the UK government and the
French government to try to figure out how to get
that thing financed. We're doing is designing a plant where
(18:01):
you can build a unit for on the order of
about half a billion so far less than a billion dollars,
which enables private sources of capital to come in and
tryance it.
Speaker 1 (18:12):
Okay, well, this sounds absolutely fantastic. When can we have them?
It went outside every small town in the UK immediately,
when's the first one going up?
Speaker 3 (18:20):
And where we're targeting a commercial operation for our first
unit of twenty thirty one, it's specifically chosen a site
where it can have a more accelerated path to permitting.
I would say permitting and regulation that Nick brought up
earlier is probably the main source of friction for moving faster.
If we had a more stream aligned permitting process for
(18:43):
nuclear not just in the UK but other parts of
the world, we can deploy it much more quickly using
this supply chain method that we're pursuable energy. So twenty
thirty one, we're in discussions about possibly pulling that's forward
a couple of years with with an AI data center
partner who has a lot of appetite for power and
(19:04):
then once the first one's online, everybody wants to be
in line for the second, so it's very quickly, very
quick to ask that.
Speaker 1 (19:12):
Okay, so it is It really is the AI providers
who are transformation all in the space, isn't it. They're
the ones who are going to provide the finance to
get this kicked off. And once the first couple are up,
every other industry and every government is going to go, wow,
why didn't we do this before? I'll have one of
those two, and then Nick, we run into a problem,
don't we, because everyone's going to want the same bit
(19:32):
of uranium.
Speaker 2 (19:34):
Correct, And that's the premise of our thesis for the
last five years. What Jake was saying about the timeline,
I mean it's the same for Bill Gates and samill
On with their SMR designs. But a lot of this
is permissioning, as Jake says, I mean, Russia already has
a floating swarm water to reactor academic loominofs which provides
energy for remote locations. The Chinese also have them as well.
(19:57):
The issue now is the size of the not just
the swarmwer directors, but to have these sort of one
plus gigawatt reactors, and all these require fuel. That fuel
is uranium. Uranium is the only the only inputs to
a nuclear fuel rod. And I often give analogies to
people that it's a little bit like a glass of water.
(20:19):
What price would you pay for a glass of water? Now, well,
probably a pound? What price would you pay in a
week if you haven't had any well edit all your wealth,
then you'll probably kill me and everyone around you to
achieve it. And that inelasticity that exists within uranium means
that if a power plant doesn't have uranium, they have
to shutter, and that shuttering can take years to restart.
(20:42):
But also it costs an excess of a million dollars
a day. But the most important issue is, and particularly
in areas like the US, we're one in four households
on the Western seaboard take power from nuclear is societal unrest.
If you turn off the nuclear power station, it doesn't
take much in the US get people on the streets
with guns anyway. But you know, we saw in two
(21:04):
thousand and six the price of uranium spike seven times
in six months. And that was the time when you
had half the world was against nuclear. You didn't have
iPhones or AI data centers and the price because fuel
buyers will pay anything, and I mean anything, because the
input of the fuel in the oval cost of nuclear
(21:26):
power plant is between three and five percent, which means
they will pay anything to secure the fuel. The issue
we miss in the West is is this whole idea
of the inelasticity of demand but also the issue of supply.
There is one country that is responsible for forty percent
of the output, and that is Kazakhstan, and that effectively
(21:48):
makes it in uranium terms, the equivalent of OPEC plus
one country. And that country is bordered by two other
countries Kazakhstan Russia to the north and China to the east.
And if you look at the history of Kazakhstan, it
never had its colored revolution from Russia. I won't use
the word apparatchic, but if you look at the way
in which the fuel rights took place in twenty twenty
(22:11):
two and Astana, they were quelled by Russian paratroopers. We
study trade data that comes out of Kazakhstan, and eighty
percent of their uranium exports in the last quarter went
to Russia and China. We are seeing a bifurcation of
supply from the world's biggest producer away from the West
and to the east. We study and track all the
(22:32):
MIT state visits that take place. President She's first trip
after COVID was to see present Tokev of Kazakhstan when
Makron took Framatone and Arano out to Astana to meet
Present Tokerev last November, who turned up the following week. Putin,
this is the hottest, hottest person at the disco Kazakhstan,
(22:55):
and everyone wants them now if you can't. The only
way in which uranium moves properly out of kazakhstanis through Russia,
so Petez on the Baltic and then it goes out.
We've looked at other roots to see if it can
move out through the East. It can't through to China,
and whether it can move through the Caspian Sea, the
Black Sea and the Bosphorus. It's almost impossible to do so.
(23:17):
Putin owns all the cards in this in this trade
at the moment, and Russia has been pioneering Uranian enrichment
using gas interfugia since the sixties. They're responsible for fifty
percent of the world's enrichment. So you take the fuel
out of the ground in Kazakhstan as the oxide. Then
you have to turn it into a gas. Then you
turn it into the pellets that go into the fuel rods.
(23:38):
That is done by Russia, but.
Speaker 1 (23:40):
Not only Russian. It because you say forty percent comes
from the Kazakhsan where's the other sixty percent? I mean,
I love Canada. We like Canada.
Speaker 2 (23:47):
Yeah, well it's really it's a really good if you
look at the world. So Russia have a policy called
Near and Beyond are very similar to the Wings Belt
and Road initiative in China, which is to take control
of people that have or to go and build the plants,
run the plants, fuel the plants in countries that mine
the uranium. So if you look at the coups that
(24:09):
have gone from West to East Africa, Niche is the
fourth biggest producer of uranium that now is under the
qu Daeta and the friendship being kicked out and the
Russians are now in there. If you look at the
other big producer, the Mibia is really controlled by China
through the Wings program. The other biggest producers Uzbekistan. So
(24:29):
you can get a picture. Now, Yes, Canada is a
producer of uranium habi Athabasca Basin in Saskatchewan. It produces
twelve percent of the world's uranium. But to give you
an example, we financed the company that found discovered uranium
in twenty ten. They get it out to the ground
in twenty thirty two. Because everything in uranium exactly the
(24:53):
same is what Jate was saying around building plants is glacial.
Everything is glacial. Nothing moves quickly, and so the idea
of being able to ramp up production in uranium is
dis impossible. So uranium has gone up three times in
the last four years, and the supply response it's gone down. Now,
what other commodity can you think of with a supply
(25:14):
response to a tripling in the price is going down.
I think the price of uranium could be moving so
exponentially that there will have to be almost like a
forced measure from governments, and that won't stop the price
going higher.
Speaker 1 (25:27):
My worry here is that one of the things that
we started talking about was energy security and how we
don't really get much of that from renewables, and we
certainly don't go much better from fossil fuels given we
refuse to explore and produce our own but I had
thought that maybe nuclear was a place we could get
a little energy security from. But from what you say,
absolutely not.
Speaker 2 (25:48):
Not So the advice I gave to the government and
I still live to the government cause I advised the
treasury and number ten is the idea of having our
own sort of sequestering vehicle for uranium. Now, we are
very fortunate that with Urenko we have enrichment facilities in
the UK, and they do exist, but it's not the
amount of the levels of enrichment that we need. And
(26:10):
there's a fundamental reason for this is that after nineteen
ninety three, when Yeltsin and Bush signed the mega tons
to megawatts program, this was the idea of the down
blending of Russian weapons grade uranium to be sold as
an energy source. The world became hooked on cheap down
blended Russian uranium, which meant that they stopped investing in
(26:31):
their own centrifuges and enrichment facilities, and so by dint
of that, we don't have them. So Russia controls that game.
So there is only one operational conversion facility in the
US that's in New Mexico, and it's run by Urenko, Right.
Speaker 1 (26:46):
We've really got to stop getting hooked on Russian gear,
haven't we. We have to Jaco, Are you worried about
the supply of uranium to your plant?
Speaker 3 (26:53):
Yeah, I guess I want to add a few things here,
so don't want to in an inaccurate or so mystic picture.
I got to work with one of the largest nuclear
fuel park camroutines at Excellon when I was there on
the corporate strategy for six years. Excellent owned well now
constellations about I think it's twenty two to twenty three
(27:14):
reactors in the US. They'd buy a more nuclear fuel
than pretty much anybody, and we would buy pretty far
out in the future. As part of the supply chain.
Uranium has not been a huge concern, largely because there
are major uranium supplies in the US, in Canada and Australia,
and not just in Kazakhstan. It's just that it's been
(27:35):
such a steady state supply and demand that there hasn't
been a lot of investment in new supply, and over
the years the supply is just slowly shuttered. If the
price really spiked, just like anything, you'd see a lot
of new supply come online. In uranium mine.
Speaker 2 (27:52):
Way would you? But Jake, I hear what you're saying
that a uranium mine is not like you don't take
it out of muffball and restart it. The inflatory break
even costs of restarting a US miners around ninety dollars
a pound, But then you've got to go through the permissioning.
I mean, we the US mine five hundred thousand pounds
(28:12):
of uranium a year. The global need is fifty million.
You know, this is almost impossible. And all the rigs
that were used in Why I'm in Utah have all
moved to oil and gas. The people, the geologists, the scientists,
they've all disappeared. It sounds so obvious to restart production,
but it's impossible to do in actual effect.
Speaker 3 (28:33):
I fully disagree. I complete.
Speaker 2 (28:36):
Why Why do you disagree? Why do you disagree? Tell
me in mine that you can restart now?
Speaker 3 (28:42):
Well, so mining uranium isn't like mining most stays. And
that's because like a lot of people think about, oh,
it's a fuel, like it's like like coal or like gas,
and they think about roughly the ratio of how much
of it you need? You need to feed a lot
of coal a lot of gas, a lot of other
kind of manner into these types of enter production for
nuclear nuclear is about one hundred million times more energy
(29:03):
against premium mass than anything else. You don't need you
to very much uranium to make a maguad hour, which
means that you can actually it's valuable to pour uranium
out of extremely dilute sources. You can extract uranium out
of seawater.
Speaker 2 (29:18):
How much does that cost?
Speaker 3 (29:19):
The Japanese have shown you can do this for about
four hundred dollars a kilogram, four.
Speaker 2 (29:23):
Hundred dollars a killer so four hundred dollars a killer one.
What's the price at the moment? It's sixty three dollars
a pound the cost of extraction from seawater. So that
means the price of uranium is going to have to
absolutely raw to make the extractional costs from it.
Speaker 1 (29:36):
Isn't that part of your point?
Speaker 2 (29:37):
It doesn't.
Speaker 1 (29:38):
Isn't that part of your point. It doesn't matter if
it rules, because it's such a tiny part of the
process that it doesn't matter if your uranium cost you
four hundred dollars. It's just a matter of it. Is
there uranium out there that we can get to keep
the plants rolling.
Speaker 2 (29:51):
I'm going to play the expert here to uranium in
terms of the world needs two hundred million pounds as
it stands at the moment of side. When you mind
uranium at one hundred and fifty meters below ground, it
has non conformity. It's a bit like a pearl necklace
with different sized pearls. The absolute amounts are tiny. The
way in which geologists find it is they look for
(30:12):
radioactive samples in small boulders and they triangulate them from
where they would have moved from the thawing of the
last ice Age ten thousand years ago. They then have
to vector into very very very specific areas to find
those scenes. There's two big seams that run radioactive seams
that run through the Athabasca basin. Then the timing of
being able to extract it, permissioning from indigenous people, finding
(30:34):
the geologists, the cost of the rigs, everything about it
has to have a break even price to know that
you can sell that uranium at a future point in
time of ninety dollars a pound. The current price is
sixty five. So we're now in a point where no
way is going to restart. If you wanted to restart
any mine in the world, it's going to take you
four to five years of permissioning from an existing site
(30:56):
where broke US to uranium Nager Corporation, who are the
biggest US producer at the moment, they are waiting. They
sit on pounds and they're waiting. Of course they're waiting
because they have to be contracted at something norms of
one hundred to make it economically viable.
Speaker 1 (31:10):
Okay, So I think we can agree on one thing,
which is that uranium price will probably go up.
Speaker 2 (31:15):
Okay, yes, yes, okay.
Speaker 1 (31:17):
So we can disagree about how the supply demand imbalance
may or may not be solved over the next five
to ten years, but we can agree that in the
short to medium term we would expect to see the
uranium price rise significantly. And we can also agree that
that shouldn't make any difference to the ongoing process of
(31:37):
producing a SMRs and bumping up the production of nuclear
energy globally.
Speaker 2 (31:41):
Is that fair? I'm going to say one thing, and
I think the issue that we're seeing with Bill Gates
and Sam Altman securing the fuel, as Jake said, is
because when they started modeling the cost of small modulary
actors buck. In twenty sixteen, twenty seventeen, the cost of
enriched uranium was around six one thousand dollars a kilogram,
(32:02):
that IRR was around fourteen to fifteen percent. It's now
thirty two thousand dollars a kilogram, which means that IRR
is zero. They need to find a way to secure
in rich uranium and a cost that brings the irs
back up to where they were when they started modeling.
Small modulor reacted.
Speaker 1 (32:19):
Jake, anything that we've missed? Do you think that you
would like to add this conversation.
Speaker 3 (32:23):
As a species, we need to figure out how to
come groupes of nuclear power pretty much every every power
source in universe. Ultimately it stems from nuclear. Wind and
solar are just indirect ways of extracting energy from the Sun.
And then if we're going to embrace this future of
energy abundance, not just for AI, but for any other
innovation that we're going to drive forward in our economy,
(32:46):
we've got to figure out how to build how to
build more nuclear power, and how to build out the
supply chain for nuclear power. Fuel included, labor included, still included, and.
Speaker 1 (32:57):
That is the path to cheap, abundant energy and fastising
living standards around the world, which of course is everyone's ultimate.
Speaker 3 (33:04):
Aim, right, Absolutely brilliant.
Speaker 1 (33:07):
Thank you both so much, Nick, anything else you want
to add.
Speaker 2 (33:11):
I'll say this, China have built thirty seven one gigawatt
reactors since Fukushima. They're building one hundred and fifty reactors
over the next decade. Now. That is effectively their demand
is to create two hundred gigawatts, which is twelve Beijing's
of power. So I think if when we look at
what the UK is doing and contextualize it, it's the
(33:33):
command economies that are really really going to drive this
further forward because they are building at a rate that
we can't even conceptualize.
Speaker 1 (33:41):
Yeah, and we should start thinking more about that. Thank you,
Thank you, Nick, Thank you, Jake, very very kind of
you both too, join.
Speaker 3 (33:48):
Us, Thank you, Thank you.
Speaker 1 (33:55):
Right before we go, As you know here on Marrin
talks money, we like to leave you with a takeaway
or two. So I know that after all this discussion
about uranium, uranium mining and uculear power, you will want
to know how you can invest. Now, obviously there is
not investment advice or anything remotely like that, but we
just wanted to let you know roughly where you can look.
There are a couple of investment trusts in the space.
(34:16):
There's Yellowcake and there's Giga Counter. Yellowcake actually holds physical
uranium oxide concentrate. Geiga Counter investment in exploration development production
companies in the sector. You can also look at the ETF.
There are quite a few of these. There's the Sprott
Uranium Miners ETF and there's the Global x Uranium ETF.
That's just a couple. There are several more, and the
(34:39):
performance of everything that I just mentioned should of course
be pretty closely linked to the uranium price. Thanks for
listening to this week's Marin Talks Money. If you like us, show, rate, review,
and subscribe wherever you listen to podcasts, and keep sending
questions or comments some Merri Money at Bloomberg dot net.
You can also follow me and John on Twitter or
xim marins w and John is John Underscore Step. Episode
(35:00):
was hosted by Mimare and some Upweb. It was produced
by Somesadi Moses and Amantala Amadi. Sound designed by Blake Naples.
Special thanks to Jake and to Nick
Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Meren Talk's Money,
the podcast in which people who know the markets explain
the markets. I'm Meren zum zet Web.
Speaker 2 (00:19):
Now.
Speaker 1 (00:19):
This week we are focusing on a topic that you know,
John and I are both very interested in nuclear paramount
role it will pay or should pay in our future
energy systems. We talk about this a lot on this show.
As we push ourselves towards a world where we hope
to see better economic growth, better productivity, and as the
use of energy intensive technology such as AI increase, our
(00:40):
need for a better, more efficient, more secure energy supply
is only growing. So when we think about more energy,
we really do have to think very carefully about where
it is going to come from. According to report from
the World Nuclear Association, electricity demand is now increasing about
twice as fast as overall energy use and is going
to increase by good fifty percent, probably possibly between now
(01:02):
and twenty forty. So almost all reports on future energy
supply from all major organizations suggest that we do have
to think about an increasing role for nuclear energy. So
here to help us unpack that. Unpack what the world
looks like now, what it will look like or should
look like and what that means for your portfolio. We
have two brilliant guests. We have Jake Durrowitz, co founder
(01:25):
and CEO of Blue Energy. Blue Energy is commercializing an
innovative modular reactor agnostic power plant architecture to house the
next generation of nuclear reactors, and that we definitely have
to unpack that bit. And we have Nick Lawson, who
we have spoken to before, is CEO and co founder
of ocean Wall, which has three businesses corporate advisory, investment
and research. Nick has twenty five years of experience in
(01:49):
finance and is particularly interested in niche alternative investment opportunities.
And one of the things he is most interested right
now and here and I talk about a reasonable amount
is UCLAR energy. Nick, Jake, welcome, thank you for joining
us today.
Speaker 2 (02:04):
Thank you lovely to be marrying and hijake you and Nick?
Speaker 1 (02:08):
Right, Nick and Jake, Noick's other already which is extremely useful.
Speaker 2 (02:12):
Right.
Speaker 1 (02:13):
What we want to do is we want to set
the scene here. So Nick, let me ask you, can
you lay out for us as simply as possible the
case for nuclear energy in our changing energy world? And
I suppose the key thing to start with here is
just to say that abundant energy is the key to
pretty much everything. We talk a lot here about how
(02:34):
all economic activity is energy transformed. So the more abundant
we can make the energy that we survive on, and
the cheaper we can make it, the better. So how
can we make the case for nuclear in that context?
Speaker 2 (02:48):
I think the point you made at the start merit
of the technological needs. I mean, the demand now on
a single request through an AI chat consumes two point
nine what hours? Now that's ten times more than a
Google search. Now, we as a country ten years ago
would have about fourteen percent of our power come from nuclear.
(03:11):
It's now about a little bit less than that. But
the reason there is a need for it is is
that stable and continuous energy source. And that's crucial. And
although I'm a big fan of wind and solar, the
intermittency is the issue. Now. The thing with nuclear is
there's no greenhouse gas emissions, so compared to fossil fuels,
it's a big plus there for combating climate change. But
(03:33):
I'd say in this very fragile world with so much
geopolitical risk, nuclear power offers domestically controlled energy. I mean
we're on big net importer now, particularly from Norway and
France of energy and this allows us that element of
national energy security. Also the safety issue. I know people
(03:53):
often conflate nuclear energy with nuclear weapons, and obviously the
memories of things like Chernobyl and through Mind Island for
Kushima still exists. But it is incredibly incredibly safe, efficient,
viable form of power and also at the same time
for the UK it drives technological innovation. I mean, we
have a company in Rolls Royce and other SMR developers
(04:16):
really really pushing forward to advance nuclear technologies which will
be good in terms of jobs, innovation and within their
overall UK supply chain. So I think for the UK's
long term sustainability, nuclear is the only answer.
Speaker 1 (04:32):
All right, let's just unpack a little bit around the
use of renewable and low carbon energy sources. You say
that you're not against wind and SOL look great. But
the advantage that nuclear has over that, as I understand it,
is that a it's not intermittent, and B it can
be a nuclear plants, but whether they be big or small,
can be constructed where energy is required. So one of
(04:55):
the big problems with SOLO, which is mainly in the
south west of the UK. I'm just looking the UK
at the moment, and wind, which is mainly in the
very north of the UK is it not only as intermittent,
but it's far away from the areas where electricity demand
is the highest. And our grid is designed originally to
(05:15):
receive energy from a few large power plants relatively close
to where energy is required. Right, So renewables come with
two problems, distance and intermittency. I can see Jake wanting
to interrupt their Jake, Oh.
Speaker 3 (05:30):
I add to that, I like wind and solar for
a lot of use cases, but in addition to the
reality that you have to build them where the wind is,
where the sun shines, and it's intermitute, it's not producing
twenty four seven through sixty five, which you need for
a modern economy. It's also low density, which means it
just consumes a lot of land. You need a lot
(05:51):
of acreage to put down a lot of solar panels,
a lot of winterbines, particularly in an increasingly advancing, modernizing
economy where we're inventing new ways to consume power like
large language models, data centers, but also as we deal
with climate resiliency, and increasing installation of air conditioning, in
(06:12):
electrification of space eating electrification of industrial loads. We need
a lot of power in a growing economy, and we
have been very thoughtful about our use of land. You
need a lot of land to put down a lot
of win turbines and solar panels. You also need a
lot of land to connect all the transmission and battery
is required to harden that intermitted generation. So just it.
(06:34):
It kind of balloons some of the infrastructure costs and
balloons some of the space requirements to the entirely reliant
upon wind and soilar.
Speaker 1 (06:41):
Yeah, and it is one of the big conversations in
the UK at the moment is that cost of infrastructure
and the problems of building new pylons in particular, and
new substations and the you know, I'm speaking to anecdotal
bit to friends the other day who suddenly find that,
having brought a nice house in the country, they're about
to be surrounded by ions, which was a surprise because
(07:02):
until recently that is not something that most people would
have considered to be a major risk when they buy
an isolated farmhouse, for example, I.
Speaker 2 (07:09):
Don't mind pylons. I always think of the ted Hughes
poem iron Man. When I see them now, I actually
quite like them.
Speaker 1 (07:14):
I'll let them know that, I'll let them know that's
an available buyer for their house.
Speaker 2 (07:19):
Well, I went, I shot a shot the other day
at someone's estate. And apparently to bury a pylon cost
just shy of a million pounds.
Speaker 1 (07:27):
Well it's not just burying them. The cost is later
to you know, if they need fixing, you've got to
dig them up. So it's an awful lot more efficient
to have them above ground, even if it is uglier.
And obviously some people believe it leads to health concerns.
We are getting sidetracked. We're getting side tracked. So what
nuclear does. It solves for all these problems. It solves
for the intermittency, and it solves for the distance. It
(07:47):
solves in large part, not completely, for the infrastructure problem
and the need to build out a grid in a
very expensive way. So it solves for those problems. But
many would say that it comes with its own problems.
There is, as you said, Nick, a lot of ern
about safety, although I think we do know if we
look at the numbers, that it's one of the safest
ways of generating electricity. In terms of actual death right.
Speaker 2 (08:07):
That forth absolutely absolutely right. The big issue back in
the nineteen fifties when you had Haitiam and Hartley Pool
and the big reactors getting built was the nimb issue.
People really didn't want them. And now if you go
back to the sites of with the old British Energy
Fleet is even side. Well the benefit has been huge.
I mean you've got the movement of brilliant people to
(08:29):
the area. But again it becomes a legacy thing. Now
what we have is these sites with the permissioning on
them where we can add these small modular reactors. The
issue in the UK is we have seven bodies that
effectively are responsible for making a decision on Britain's nuclear policy.
It's nuts now. I gave evidence to the Energy Select
(08:50):
Committee last year around the decarbonization of power wack paper
and you know they listen and they hear, but very
little action. I feel very worried and luke. When we
were at this dinner recently, the representatives to the National
Grid spoke and said there's no point us thinking about
having an AI strategy when we can't supply domestic households. Now,
(09:10):
there was a power surge in January of this year
where power hit six thousand pounds of megawatt hour and
we are reliant on Norway for the import of power.
We have the lack of whether it's government guidance, but
we just do not have the infrastructure to supply our
domestic needs, let alone those of a data center. And
(09:31):
Microsoft's Stargate Data center, which is a five gigawa data
center that takes down the power of five New York boroughs,
five New York boroughs twenty four to seven for one
five gigawatts Stargate center, and that's going to be that's
going to be around eight percent of their total data
center nees. So you need to have this ci of capacity.
(09:52):
And you're seeing now deals like Microsoft buying through Mile
Island that's eight hundred and nineteen megawatts, you know, buying
these states of themself. So you're going to have this
issue that's going to take place where who do you prioritize.
It will become an issue of moral turpitude if you're
not supplying your households but you are allowing Microsoft to
(10:13):
run a joint data stem.
Speaker 1 (10:14):
Well, it's interest, I mean, there was I don't know
if you saw a little while back, there were some
mutterings in the EU about banning or limiting AI and
limiting the building and use of data centers specifically because
of the energy use. It's dangerous stoughf to talk about
in the UK because next thing you know, a Middle
vand will be out there banning data centers.
Speaker 3 (10:31):
That's one of the things that kind of frustrates me,
is like since the nineteen seventies in the oil embargo,
there's been this big movement movement of energy efficiency. And
energy efficiency has been great for increasing the productivity of
certain technologies like refrigerators in your helm, but it's gotten
a little too far in the minds. I think of
certain politicians where they think, oh, we should just energy
efficiency our way out of this climate challenge, out of
(10:53):
this energy consumption challenge. People start to conplaine the idea
of oh, consuming more energy is bad, and that's just
a fly way of thinking. There's many countries around the
world that are just now installing air conditioning, refrigeration for food,
putting in hospitals, putting in modern infrastructure based standard of
building requirements that are going to increase their energy intensity
(11:14):
per capita from developing nation levels just to European levels,
which are still which are of the energy conception per
capital of the United States. For Canada, who are we
to say that they shouldn't consume energy? And let's look
at ourselves. The UK needs to continue to grow its economy.
Europe needs to continue to grow it's economy. It can't
afford to fall behind on key technologies like AI, It
(11:36):
can't afford to not electrify, transportation, industry, chemical synthesis, all
the new capabilities that are coming out from our universities
and labs. Are we going to say that we should
not invest in that infrastructure. Are we going to start
turning off people's hot showers. No, we have the technology,
We have the capability to build an energy supply infrastructure
(11:56):
that is both a zero carbon and affordable, liable enough
to meet the expectations that we've grown accustomed to over
the last one hundred years. So I get very frustrated
when I hear this rhetoric of oh, we should cut
things off because they consume too much energy. The water
desalination consumes a lot of energy. Should we not have
clean water?
Speaker 1 (12:16):
Yeah, so we should affect it. We should celebrate increasing
energy use because with increasing energy use, comes economic growth
and improve lifestyles. So we should celebrate it and find
a way to make it work. Right, absolutely, Jake, Let's
talk about what you do. When I described it in
the introduction completely incomprehensible, accurate, but incomprehensible. So will you
explain to us what your product is, how it works.
Speaker 2 (12:38):
Yeah?
Speaker 3 (12:38):
Shall I'll describe in very simple terms. What we're doing
is designing a modular plant architecture that is compatible with
multiple nuclear actor vendors that allows us to basically cut
the costs and cut the deployment time roughly in hats.
And the way that we're doing that is that we're
designing the plant so it can be entirely prefabricated in
(13:00):
offshore oil and gas fab yards, offshore wind fabyards and
shipyards from around the North of Britain, North and Europe,
and other facilities around the world. The advantages for the
same reason a prefabricated home can be built on a
more predictable cost schedule and at lower price and on
a faster schedule than a stick built home on site.
(13:21):
We're just taking advantage of the big factories that already
exist that have done this for large energy infrastructure before,
particularly for north sea oil and offshore wind. A little
known fact about nuclear power. If you look at Hinckley
Point C or Flamanville, oklode O, Vogel, or any other
major nuclear plant that's been built in the last forty
to fifty years in the West, about only about seven
(13:44):
percent of the cost of that plant is the actual
nuclear actor. Ninety three percent of the cost of building
a nuclear plant is the accrude interest on debt because
it takes so long to build it, usually about ten
to fifteen years. Hence the construction overhead. It's the cost
of training and relooking about ten thousand skilled workers to
a place like Inkley Point and hosting them and their families,
(14:06):
retaining them, mobilizing large thousand ton cranes, putting in performance bonds,
how contingency, the litigation that happens between trades. It's all
that overhead. And it's the same overhead that occurs when
you try and build a big international airport or other
big SIBL infrastructure projects. So if we're trying to make
nuclear look less like building a big international airport and
(14:27):
more like buying an airbus a three forty, we can
do that using the existing supply chain from off for
wind and offshore oil and gas, using the existing labor
force that is already skilled and trained to do heavy
steel fabrication. So we've designed the plant to minimize the
amount of what's called kind of nuclear QA nuclear grade
(14:49):
work so that we can have most of it done
by the labor that's already trained. There's a big labor
challenge for building nuclear and for building a lot of
large infrastructure around the West. So part of the exercise
here is thinking about how the best leverage the supply
chain and the labor resources we do have so that
we can go faster. It's critical that we think about
how to move quickly onto playing new nuclear. If we
(15:13):
were to starting clean Point C you know today, we
wouldn't and we built it the same way, we wouldn't
be seeing the power come online until maybe twenty forty,
and that is just too far for most companies to
make investment decisions. The Microsoft's Googles Amazons in the world
who are thinking about where the put Ai data centers,
(15:33):
they're making shorter time scale decisions. They need power sooner.
Governments every need to make decisions sooner. So the way
that we're designing this plant is specifically to attract project
finance so that commercial banks can get back into the
business of investing in nuclear power infrastructure instead of relying
on government substitutes, which has been the process to date
(15:55):
and tends to be very slow.
Speaker 1 (15:58):
Okay, so you can make one of these things in
Aberdeen and ship it out to wherever it needs to go.
Speaker 3 (16:04):
Yep, that's the idea.
Speaker 1 (16:06):
How much space does it require? How much power does
it provide?
Speaker 3 (16:11):
So the reactors we're working with can range in size
from approximately seven to seven megalots to three hundred megalots
per reactor. Per unit, each unit takes up approximately two
to three acres when you take into account the full system,
the steam plant, the balance of plant, switch yard. So
(16:33):
it's a very space efficient, very power dense way to
produce power. We are designing it so that it can
tuck into places along the coast, rivers, lakes, canals, or
go further offshore, out of sight, out of mind, over
the horizon line. Most of our design is below the
(16:54):
water line, so you don't have a large two hundred
meters mast sticking above the horizon line taking up your
whole shed. If you own some property on the coastline
and you're like looking at them to see we're designing
it to blend into the environment.
Speaker 1 (17:07):
Okay, just to remind everybodycuse we're not talking to an
expert audience here. The reason that all these plants are
on the water is because the water is used for cooling,
so they're automatically on a lake on the sea, et cetera.
Speaker 3 (17:17):
Well, yeah, particularly in the UK, you know, the UK's
and islands, so a lot of the tower plants are
along the coast. We like to have water for cooling
the condenser, so yeah, it's used for cooling.
Speaker 2 (17:26):
Okay.
Speaker 1 (17:26):
And price wise, that Hankley is costing as what thirty
four billion or something after being ten years late and
seven thousand changes, etc. That's the kind of price point
we'd really really like to avoid all of us everywhere,
isn't it.
Speaker 3 (17:38):
Yeah, I think thirty four billion and growing. We don't
know what the final number is until it's all said
and done. It's just not a sustainable number for any
sort of financing for anybody to kind of buy an ass.
It's even challenging for the government to do it. You're
getting basically a negotiation between the UK government and the
French government to try to figure out how to get
that thing financed. We're doing is designing a plant where
(18:01):
you can build a unit for on the order of
about half a billion so far less than a billion dollars,
which enables private sources of capital to come in and
tryance it.
Speaker 1 (18:12):
Okay, well, this sounds absolutely fantastic. When can we have them?
It went outside every small town in the UK immediately,
when's the first one going up?
Speaker 3 (18:20):
And where we're targeting a commercial operation for our first
unit of twenty thirty one, it's specifically chosen a site
where it can have a more accelerated path to permitting.
I would say permitting and regulation that Nick brought up
earlier is probably the main source of friction for moving faster.
If we had a more stream aligned permitting process for
(18:43):
nuclear not just in the UK but other parts of
the world, we can deploy it much more quickly using
this supply chain method that we're pursuable energy. So twenty
thirty one, we're in discussions about possibly pulling that's forward
a couple of years with with an AI data center
partner who has a lot of appetite for power and
(19:04):
then once the first one's online, everybody wants to be
in line for the second, so it's very quickly, very
quick to ask that.
Speaker 1 (19:12):
Okay, so it is It really is the AI providers
who are transformation all in the space, isn't it. They're
the ones who are going to provide the finance to
get this kicked off. And once the first couple are up,
every other industry and every government is going to go, wow,
why didn't we do this before? I'll have one of
those two, and then Nick, we run into a problem,
don't we, because everyone's going to want the same bit
(19:32):
of uranium.
Speaker 2 (19:34):
Correct, And that's the premise of our thesis for the
last five years. What Jake was saying about the timeline,
I mean it's the same for Bill Gates and samill
On with their SMR designs. But a lot of this
is permissioning, as Jake says, I mean, Russia already has
a floating swarm water to reactor academic loominofs which provides
energy for remote locations. The Chinese also have them as well.
(19:57):
The issue now is the size of the not just
the swarmwer directors, but to have these sort of one
plus gigawatt reactors, and all these require fuel. That fuel
is uranium. Uranium is the only the only inputs to
a nuclear fuel rod. And I often give analogies to
people that it's a little bit like a glass of water.
(20:19):
What price would you pay for a glass of water? Now, well,
probably a pound? What price would you pay in a
week if you haven't had any well edit all your wealth,
then you'll probably kill me and everyone around you to
achieve it. And that inelasticity that exists within uranium means
that if a power plant doesn't have uranium, they have
to shutter, and that shuttering can take years to restart.
(20:42):
But also it costs an excess of a million dollars
a day. But the most important issue is, and particularly
in areas like the US, we're one in four households
on the Western seaboard take power from nuclear is societal unrest.
If you turn off the nuclear power station, it doesn't
take much in the US get people on the streets
with guns anyway. But you know, we saw in two
(21:04):
thousand and six the price of uranium spike seven times
in six months. And that was the time when you
had half the world was against nuclear. You didn't have
iPhones or AI data centers and the price because fuel
buyers will pay anything, and I mean anything, because the
input of the fuel in the oval cost of nuclear
(21:26):
power plant is between three and five percent, which means
they will pay anything to secure the fuel. The issue
we miss in the West is is this whole idea
of the inelasticity of demand but also the issue of supply.
There is one country that is responsible for forty percent
of the output, and that is Kazakhstan, and that effectively
(21:48):
makes it in uranium terms, the equivalent of OPEC plus
one country. And that country is bordered by two other
countries Kazakhstan Russia to the north and China to the east.
And if you look at the history of Kazakhstan, it
never had its colored revolution from Russia. I won't use
the word apparatchic, but if you look at the way
in which the fuel rights took place in twenty twenty
(22:11):
two and Astana, they were quelled by Russian paratroopers. We
study trade data that comes out of Kazakhstan, and eighty
percent of their uranium exports in the last quarter went
to Russia and China. We are seeing a bifurcation of
supply from the world's biggest producer away from the West
and to the east. We study and track all the
(22:32):
MIT state visits that take place. President She's first trip
after COVID was to see present Tokev of Kazakhstan when
Makron took Framatone and Arano out to Astana to meet
Present Tokerev last November, who turned up the following week. Putin,
this is the hottest, hottest person at the disco Kazakhstan,
(22:55):
and everyone wants them now if you can't. The only
way in which uranium moves properly out of kazakhstanis through Russia,
so Petez on the Baltic and then it goes out.
We've looked at other roots to see if it can
move out through the East. It can't through to China,
and whether it can move through the Caspian Sea, the
Black Sea and the Bosphorus. It's almost impossible to do so.
(23:17):
Putin owns all the cards in this in this trade
at the moment, and Russia has been pioneering Uranian enrichment
using gas interfugia since the sixties. They're responsible for fifty
percent of the world's enrichment. So you take the fuel
out of the ground in Kazakhstan as the oxide. Then
you have to turn it into a gas. Then you
turn it into the pellets that go into the fuel rods.
(23:38):
That is done by Russia, but.
Speaker 1 (23:40):
Not only Russian. It because you say forty percent comes
from the Kazakhsan where's the other sixty percent? I mean,
I love Canada. We like Canada.
Speaker 2 (23:47):
Yeah, well it's really it's a really good if you
look at the world. So Russia have a policy called
Near and Beyond are very similar to the Wings Belt
and Road initiative in China, which is to take control
of people that have or to go and build the plants,
run the plants, fuel the plants in countries that mine
the uranium. So if you look at the coups that
(24:09):
have gone from West to East Africa, Niche is the
fourth biggest producer of uranium that now is under the
qu Daeta and the friendship being kicked out and the
Russians are now in there. If you look at the
other big producer, the Mibia is really controlled by China
through the Wings program. The other biggest producers Uzbekistan. So
(24:29):
you can get a picture. Now, Yes, Canada is a
producer of uranium habi Athabasca Basin in Saskatchewan. It produces
twelve percent of the world's uranium. But to give you
an example, we financed the company that found discovered uranium
in twenty ten. They get it out to the ground
in twenty thirty two. Because everything in uranium exactly the
(24:53):
same is what Jate was saying around building plants is glacial.
Everything is glacial. Nothing moves quickly, and so the idea
of being able to ramp up production in uranium is
dis impossible. So uranium has gone up three times in
the last four years, and the supply response it's gone down. Now,
what other commodity can you think of with a supply
(25:14):
response to a tripling in the price is going down.
I think the price of uranium could be moving so
exponentially that there will have to be almost like a
forced measure from governments, and that won't stop the price
going higher.
Speaker 1 (25:27):
My worry here is that one of the things that
we started talking about was energy security and how we
don't really get much of that from renewables, and we
certainly don't go much better from fossil fuels given we
refuse to explore and produce our own but I had
thought that maybe nuclear was a place we could get
a little energy security from. But from what you say,
absolutely not.
Speaker 2 (25:48):
Not So the advice I gave to the government and
I still live to the government cause I advised the
treasury and number ten is the idea of having our
own sort of sequestering vehicle for uranium. Now, we are
very fortunate that with Urenko we have enrichment facilities in
the UK, and they do exist, but it's not the
amount of the levels of enrichment that we need. And
(26:10):
there's a fundamental reason for this is that after nineteen
ninety three, when Yeltsin and Bush signed the mega tons
to megawatts program, this was the idea of the down
blending of Russian weapons grade uranium to be sold as
an energy source. The world became hooked on cheap down
blended Russian uranium, which meant that they stopped investing in
(26:31):
their own centrifuges and enrichment facilities, and so by dint
of that, we don't have them. So Russia controls that game.
So there is only one operational conversion facility in the
US that's in New Mexico, and it's run by Urenko, Right.
Speaker 1 (26:46):
We've really got to stop getting hooked on Russian gear,
haven't we. We have to Jaco, Are you worried about
the supply of uranium to your plant?
Speaker 3 (26:53):
Yeah, I guess I want to add a few things here,
so don't want to in an inaccurate or so mystic picture.
I got to work with one of the largest nuclear
fuel park camroutines at Excellon when I was there on
the corporate strategy for six years. Excellent owned well now
constellations about I think it's twenty two to twenty three
(27:14):
reactors in the US. They'd buy a more nuclear fuel
than pretty much anybody, and we would buy pretty far
out in the future. As part of the supply chain.
Uranium has not been a huge concern, largely because there
are major uranium supplies in the US, in Canada and Australia,
and not just in Kazakhstan. It's just that it's been
(27:35):
such a steady state supply and demand that there hasn't
been a lot of investment in new supply, and over
the years the supply is just slowly shuttered. If the
price really spiked, just like anything, you'd see a lot
of new supply come online. In uranium mine.
Speaker 2 (27:52):
Way would you? But Jake, I hear what you're saying
that a uranium mine is not like you don't take
it out of muffball and restart it. The inflatory break
even costs of restarting a US miners around ninety dollars
a pound, But then you've got to go through the permissioning.
I mean, we the US mine five hundred thousand pounds
(28:12):
of uranium a year. The global need is fifty million.
You know, this is almost impossible. And all the rigs
that were used in Why I'm in Utah have all
moved to oil and gas. The people, the geologists, the scientists,
they've all disappeared. It sounds so obvious to restart production,
but it's impossible to do in actual effect.
Speaker 3 (28:33):
I fully disagree. I complete.
Speaker 2 (28:36):
Why Why do you disagree? Why do you disagree? Tell
me in mine that you can restart now?
Speaker 3 (28:42):
Well, so mining uranium isn't like mining most stays. And
that's because like a lot of people think about, oh,
it's a fuel, like it's like like coal or like gas,
and they think about roughly the ratio of how much
of it you need? You need to feed a lot
of coal a lot of gas, a lot of other
kind of manner into these types of enter production for
nuclear nuclear is about one hundred million times more energy
(29:03):
against premium mass than anything else. You don't need you
to very much uranium to make a maguad hour, which
means that you can actually it's valuable to pour uranium
out of extremely dilute sources. You can extract uranium out
of seawater.
Speaker 2 (29:18):
How much does that cost?
Speaker 3 (29:19):
The Japanese have shown you can do this for about
four hundred dollars a kilogram, four.
Speaker 2 (29:23):
Hundred dollars a killer so four hundred dollars a killer one.
What's the price at the moment? It's sixty three dollars
a pound the cost of extraction from seawater. So that
means the price of uranium is going to have to
absolutely raw to make the extractional costs from it.
Speaker 1 (29:36):
Isn't that part of your point?
Speaker 2 (29:37):
It doesn't.
Speaker 1 (29:38):
Isn't that part of your point. It doesn't matter if
it rules, because it's such a tiny part of the
process that it doesn't matter if your uranium cost you
four hundred dollars. It's just a matter of it. Is
there uranium out there that we can get to keep
the plants rolling.
Speaker 2 (29:51):
I'm going to play the expert here to uranium in
terms of the world needs two hundred million pounds as
it stands at the moment of side. When you mind
uranium at one hundred and fifty meters below ground, it
has non conformity. It's a bit like a pearl necklace
with different sized pearls. The absolute amounts are tiny. The
way in which geologists find it is they look for
(30:12):
radioactive samples in small boulders and they triangulate them from
where they would have moved from the thawing of the
last ice Age ten thousand years ago. They then have
to vector into very very very specific areas to find
those scenes. There's two big seams that run radioactive seams
that run through the Athabasca basin. Then the timing of
being able to extract it, permissioning from indigenous people, finding
(30:34):
the geologists, the cost of the rigs, everything about it
has to have a break even price to know that
you can sell that uranium at a future point in
time of ninety dollars a pound. The current price is
sixty five. So we're now in a point where no
way is going to restart. If you wanted to restart
any mine in the world, it's going to take you
four to five years of permissioning from an existing site
(30:56):
where broke US to uranium Nager Corporation, who are the
biggest US producer at the moment, they are waiting. They
sit on pounds and they're waiting. Of course they're waiting
because they have to be contracted at something norms of
one hundred to make it economically viable.
Speaker 1 (31:10):
Okay, So I think we can agree on one thing,
which is that uranium price will probably go up.
Speaker 2 (31:15):
Okay, yes, yes, okay.
Speaker 1 (31:17):
So we can disagree about how the supply demand imbalance
may or may not be solved over the next five
to ten years, but we can agree that in the
short to medium term we would expect to see the
uranium price rise significantly. And we can also agree that
that shouldn't make any difference to the ongoing process of
(31:37):
producing a SMRs and bumping up the production of nuclear
energy globally.
Speaker 2 (31:41):
Is that fair? I'm going to say one thing, and
I think the issue that we're seeing with Bill Gates
and Sam Altman securing the fuel, as Jake said, is
because when they started modeling the cost of small modulary
actors buck. In twenty sixteen, twenty seventeen, the cost of
enriched uranium was around six one thousand dollars a kilogram,
(32:02):
that IRR was around fourteen to fifteen percent. It's now
thirty two thousand dollars a kilogram, which means that IRR
is zero. They need to find a way to secure
in rich uranium and a cost that brings the irs
back up to where they were when they started modeling.
Small modulor reacted.
Speaker 1 (32:19):
Jake, anything that we've missed? Do you think that you
would like to add this conversation.
Speaker 3 (32:23):
As a species, we need to figure out how to
come groupes of nuclear power pretty much every every power
source in universe. Ultimately it stems from nuclear. Wind and
solar are just indirect ways of extracting energy from the Sun.
And then if we're going to embrace this future of
energy abundance, not just for AI, but for any other
innovation that we're going to drive forward in our economy,
(32:46):
we've got to figure out how to build how to
build more nuclear power, and how to build out the
supply chain for nuclear power. Fuel included, labor included, still included, and.
Speaker 1 (32:57):
That is the path to cheap, abundant energy and fastising
living standards around the world, which of course is everyone's ultimate.
Speaker 3 (33:04):
Aim, right, Absolutely brilliant.
Speaker 1 (33:07):
Thank you both so much, Nick, anything else you want
to add.
Speaker 2 (33:11):
I'll say this, China have built thirty seven one gigawatt
reactors since Fukushima. They're building one hundred and fifty reactors
over the next decade. Now. That is effectively their demand
is to create two hundred gigawatts, which is twelve Beijing's
of power. So I think if when we look at
what the UK is doing and contextualize it, it's the
(33:33):
command economies that are really really going to drive this
further forward because they are building at a rate that
we can't even conceptualize.
Speaker 1 (33:41):
Yeah, and we should start thinking more about that. Thank you,
Thank you, Nick, Thank you, Jake, very very kind of
you both too, join.
Speaker 3 (33:48):
Us, Thank you, Thank you.
Speaker 1 (33:55):
Right before we go, As you know here on Marrin
talks money, we like to leave you with a takeaway
or two. So I know that after all this discussion
about uranium, uranium mining and uculear power, you will want
to know how you can invest. Now, obviously there is
not investment advice or anything remotely like that, but we
just wanted to let you know roughly where you can look.
There are a couple of investment trusts in the space.
(34:16):
There's Yellowcake and there's Giga Counter. Yellowcake actually holds physical
uranium oxide concentrate. Geiga Counter investment in exploration development production
companies in the sector. You can also look at the ETF.
There are quite a few of these. There's the Sprott
Uranium Miners ETF and there's the Global x Uranium ETF.
That's just a couple. There are several more, and the
(34:39):
performance of everything that I just mentioned should of course
be pretty closely linked to the uranium price. Thanks for
listening to this week's Marin Talks Money. If you like us, show, rate, review,
and subscribe wherever you listen to podcasts, and keep sending
questions or comments some Merri Money at Bloomberg dot net.
You can also follow me and John on Twitter or
xim marins w and John is John Underscore Step. Episode
(35:00):
was hosted by Mimare and some Upweb. It was produced
by Somesadi Moses and Amantala Amadi. Sound designed by Blake Naples.
Special thanks to Jake and to Nick
Host
Merryn Somerset Webb
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