On April 17, the Chinese are blasting off an unmanned lunar orbiter. Next year, they will send astronauts up to orbit the Earth ... Two years later (2010), they'll aim to put a rover on the moon ... And by 2020 -- 13 years from now -- China plans to bring back lunar samples. For now, the Chinese are just talking about sending up astronauts. But eventually, they may send up mining crews. They might even try to catapult moon rocks into the East China Sea, where they can recover and process them on the cheap. All this may sound like something from a science fiction movie, but China's space race is another sign that the natural resources bull market is just getting started.
WHY CHINA IS MAKING A LONG MARCH TO THE MOON: NUCLEAR POWER China's actual date for putting people on the moon isn't set yet, but it's definitely doable according to experts like Jim Benson, president of private space- exploration company SpaceDev. As he told Newsweek magazine, "Their timetable is absolutely realistic ... some of it actually seems a little conservative." Now, China isn't going to the moon just to make moon- dust angels and play golf. They're after the stable isotope helium-3 (3He), a potential fuel for nuclear fusion. Helium-3 is constantly spit out by the sun. It bounces off the Earth's magnetic field, but the moon -- which has no magnetic field -- soaks it up. This is why the moon's crust is saturated with helium-3. Used in a fusion reactor -- which China says it tested successfully last year -- helium-3 will produce a clean, potentially limitless source of power. And at least in theory, just 40 tons of helium-3 could keep on all the lights in the U.S. for a year. Nuclear fusion may be the long-term solution for our energy needs, and it galls me that the Chinese might do it before we do. Think about China's timetable -- if we'd built on the success of Apollo 11's 1969 landing, it's conceivable that we might be energy independent right now!
--> China is on track to build two new nuclear reactors every year for the next 14 years. --> By 2010, its annual uranium demand will triple -- from 3 million pounds currently to more than 10 million pounds. --> By 2020, China plans to import 5.5 million pounds of Australian uranium per year as it builds 24 to 30 new atomic power plants. --> At the same time, China's total uranium demand will soar to 16.5 million pounds per year! Even with its incredibly ambitious nuclear power program, China also builds a new coal-fired power plant every week! So you see, China has no choice but to keep accelerating its investment in nuclear power. It's either that or choke to death on coal smoke.
Just to meet current projections of power needs, the world needs to build about 900 new nuclear power plants by 2050. And if we're taking global warming seriously, we're going to have to stop building coal-fired plants altogether. Your average coal plant spews 3.7 million tons of carbon dioxide (a greenhouse gas) into the air every year, along with hundreds of tons of heavy-metal laden ash. An operating nuclear power plant produces zero greenhouse gases. So we're probably going to have to build a lot more than 900 nuclear power plants. And that means the demand for uranium is just going to be huge! About 30 new nuclear plants have been proposed in the U.S. And I think there are going to be a lot more, both here and abroad ... Japan, which is only the size of California, is building 11 new nuke plants ... India wants to build up to 20 new plants ... and Russia is shooting for at least 42. Even in Australia, which currently has no nuclear power, the Prime Minister is pushing a plan to build 25 nuclear power plants.
The uranium mining industry is as underdeveloped as the oil industry was in 1900. Mine supply fell 40% short of demand last year, and this gap probably won't be closed anytime soon. In other words, future supply will come at much higher prices. I think uranium should hit $100 per pound this year, up from $75 currently. And it should go much higher after that. Will that hurt demand for uranium from utilities? Not much, because the cost of uranium makes up such a small portion of the cost of electricity from a nuke power plant. (The cost of coal or natural gas, in contrast, makes up a far larger share of the cost of producing electricity.) If the price of natural gas doubles, the cost of electricity from a gas-powered plant would increase by about 40%. But if the price of uranium doubles, electricity from a nuclear power plant would go up about 5%. So, the price of uranium could double -- or triple -- and utilities would still line up to buy it. That makes China's plan to go to the moon for helium-3 look perfectly sensible. In the next twenty or thirty years, however, the world will need a lot of additional uranium supplies, which will come from fledgling miners. Some are close to actually producing uranium; others have a longer road ahead of them. |
