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The Growing Chorus Singing Nuclear Power’s Praises · Merryn Talks Money

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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Meren Talk's Money,
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Speaker 1: the podcast in which people who know the markets explain
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Speaker 1: the markets. I'm Meren zum zet Web.
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Speaker 2: Now.
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Speaker 1: This week we are focusing on a topic that you know,
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Speaker 1: John and I are both very interested in nuclear paramount
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Speaker 1: role it will pay or should pay in our future
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Speaker 1: energy systems. We talk about this a lot on this show.
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Speaker 1: As we push ourselves towards a world where we hope
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Speaker 1: to see better economic growth, better productivity, and as the
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Speaker 1: use of energy intensive technology such as AI increase, our
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Speaker 1: need for a better, more efficient, more secure energy supply
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Speaker 1: is only growing. So when we think about more energy,
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Speaker 1: we really do have to think very carefully about where
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Speaker 1: it is going to come from. According to report from
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Speaker 1: the World Nuclear Association, electricity demand is now increasing about
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Speaker 1: twice as fast as overall energy use and is going
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Speaker 1: to increase by good fifty percent, probably possibly between now
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Speaker 1: and twenty forty. So almost all reports on future energy
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Speaker 1: supply from all major organizations suggest that we do have
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Speaker 1: to think about an increasing role for nuclear energy. So
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Speaker 1: here to help us unpack that. Unpack what the world
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Speaker 1: looks like now, what it will look like or should
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Speaker 1: look like and what that means for your portfolio. We
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Speaker 1: have two brilliant guests. We have Jake Durrowitz, co founder
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Speaker 1: and CEO of Blue Energy. Blue Energy is commercializing an
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Speaker 1: innovative modular reactor agnostic power plant architecture to house the
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Speaker 1: next generation of nuclear reactors, and that we definitely have
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Speaker 1: to unpack that bit. And we have Nick Lawson, who
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Speaker 1: we have spoken to before, is CEO and co founder
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Speaker 1: of ocean Wall, which has three businesses corporate advisory, investment
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Speaker 1: and research. Nick has twenty five years of experience in
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Speaker 1: finance and is particularly interested in niche alternative investment opportunities.
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Speaker 1: And one of the things he is most interested right
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Speaker 1: now and here and I talk about a reasonable amount
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Speaker 1: is UCLAR energy. Nick, Jake, welcome, thank you for joining
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Speaker 1: us today.
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Speaker 2: Thank you lovely to be marrying and hijake you and Nick?
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Speaker 1: Right, Nick and Jake, Noick's other already which is extremely useful.
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Speaker 2: Right.
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Speaker 1: What we want to do is we want to set
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Speaker 1: the scene here. So Nick, let me ask you, can
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Speaker 1: you lay out for us as simply as possible the
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Speaker 1: case for nuclear energy in our changing energy world? And
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Speaker 1: I suppose the key thing to start with here is
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Speaker 1: just to say that abundant energy is the key to
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Speaker 1: pretty much everything. We talk a lot here about how
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Speaker 1: all economic activity is energy transformed. So the more abundant
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Speaker 1: we can make the energy that we survive on, and
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Speaker 1: the cheaper we can make it, the better. So how
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Speaker 1: can we make the case for nuclear in that context?
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Speaker 2: I think the point you made at the start merit
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Speaker 2: of the technological needs. I mean, the demand now on
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Speaker 2: a single request through an AI chat consumes two point
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Speaker 2: nine what hours? Now that's ten times more than a
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Speaker 2: Google search. Now, we as a country ten years ago
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Speaker 2: would have about fourteen percent of our power come from nuclear.
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Speaker 2: It's now about a little bit less than that. But
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Speaker 2: the reason there is a need for it is is
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Speaker 2: that stable and continuous energy source. And that's crucial. And
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Speaker 2: although I'm a big fan of wind and solar, the
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Speaker 2: intermittency is the issue. Now. The thing with nuclear is
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Speaker 2: there's no greenhouse gas emissions, so compared to fossil fuels,
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Speaker 2: it's a big plus there for combating climate change. But
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Speaker 2: I'd say in this very fragile world with so much
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Speaker 2: geopolitical risk, nuclear power offers domestically controlled energy. I mean
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Speaker 2: we're on big net importer now, particularly from Norway and
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Speaker 2: France of energy and this allows us that element of
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Speaker 2: national energy security. Also the safety issue. I know people
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Speaker 2: often conflate nuclear energy with nuclear weapons, and obviously the
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Speaker 2: memories of things like Chernobyl and through Mind Island for
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Speaker 2: Kushima still exists. But it is incredibly incredibly safe, efficient,
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Speaker 2: viable form of power and also at the same time
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Speaker 2: for the UK it drives technological innovation. I mean, we
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Speaker 2: have a company in Rolls Royce and other SMR developers
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Speaker 2: really really pushing forward to advance nuclear technologies which will
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Speaker 2: be good in terms of jobs, innovation and within their
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Speaker 2: overall UK supply chain. So I think for the UK's
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Speaker 2: long term sustainability, nuclear is the only answer.
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Speaker 1: All right, let's just unpack a little bit around the
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Speaker 1: use of renewable and low carbon energy sources. You say
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Speaker 1: that you're not against wind and SOL look great. But
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Speaker 1: the advantage that nuclear has over that, as I understand it,
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Speaker 1: is that a it's not intermittent, and B it can
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Speaker 1: be a nuclear plants, but whether they be big or small,
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Speaker 1: can be constructed where energy is required. So one of
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Speaker 1: the big problems with SOLO, which is mainly in the
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Speaker 1: south west of the UK. I'm just looking the UK
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Speaker 1: at the moment, and wind, which is mainly in the
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Speaker 1: very north of the UK is it not only as intermittent,
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Speaker 1: but it's far away from the areas where electricity demand
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Speaker 1: is the highest. And our grid is designed originally to
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Speaker 1: receive energy from a few large power plants relatively close
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Speaker 1: to where energy is required. Right, So renewables come with
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Speaker 1: two problems, distance and intermittency. I can see Jake wanting
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Speaker 1: to interrupt their Jake, Oh.
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Speaker 3: I add to that, I like wind and solar for
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Speaker 3: a lot of use cases, but in addition to the
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Speaker 3: reality that you have to build them where the wind is,
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Speaker 3: where the sun shines, and it's intermitute, it's not producing
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Speaker 3: twenty four seven through sixty five, which you need for
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Speaker 3: a modern economy. It's also low density, which means it
5:49
Speaker 3: just consumes a lot of land. You need a lot
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Speaker 3: of acreage to put down a lot of solar panels,
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Speaker 3: a lot of winterbines, particularly in an increasingly advancing, modernizing
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Speaker 3: economy where we're inventing new ways to consume power like
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Speaker 3: large language models, data centers, but also as we deal
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Speaker 3: with climate resiliency, and increasing installation of air conditioning, in
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Speaker 3: electrification of space eating electrification of industrial loads. We need
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Speaker 3: a lot of power in a growing economy, and we
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Speaker 3: have been very thoughtful about our use of land. You
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Speaker 3: need a lot of land to put down a lot
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Speaker 3: of win turbines and solar panels. You also need a
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Speaker 3: lot of land to connect all the transmission and battery
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Speaker 3: is required to harden that intermitted generation. So just it.
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Speaker 3: It kind of balloons some of the infrastructure costs and
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Speaker 3: balloons some of the space requirements to the entirely reliant
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Speaker 3: upon wind and soilar.
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Speaker 1: Yeah, and it is one of the big conversations in
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Speaker 1: the UK at the moment is that cost of infrastructure
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Speaker 1: and the problems of building new pylons in particular, and
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Speaker 1: new substations and the you know, I'm speaking to anecdotal
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Speaker 1: bit to friends the other day who suddenly find that,
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Speaker 1: having brought a nice house in the country, they're about
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Speaker 1: to be surrounded by ions, which was a surprise because
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Speaker 1: until recently that is not something that most people would
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Speaker 1: have considered to be a major risk when they buy
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Speaker 1: an isolated farmhouse, for example, I.
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Speaker 2: Don't mind pylons. I always think of the ted Hughes
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Speaker 2: poem iron Man. When I see them now, I actually
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Speaker 2: quite like them.
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Speaker 1: I'll let them know that, I'll let them know that's
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Speaker 1: an available buyer for their house.
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Speaker 2: Well, I went, I shot a shot the other day
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Speaker 2: at someone's estate. And apparently to bury a pylon cost
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Speaker 2: just shy of a million pounds.
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Speaker 1: Well it's not just burying them. The cost is later
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Speaker 1: to you know, if they need fixing, you've got to
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Speaker 1: dig them up. So it's an awful lot more efficient
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Speaker 1: to have them above ground, even if it is uglier.
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Speaker 1: And obviously some people believe it leads to health concerns.
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Speaker 1: We are getting sidetracked. We're getting side tracked. So what
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Speaker 1: nuclear does. It solves for all these problems. It solves
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Speaker 1: for the intermittency, and it solves for the distance. It
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Speaker 1: solves in large part, not completely, for the infrastructure problem
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Speaker 1: and the need to build out a grid in a
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Speaker 1: very expensive way. So it solves for those problems. But
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Speaker 1: many would say that it comes with its own problems.
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Speaker 1: There is, as you said, Nick, a lot of ern
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Speaker 1: about safety, although I think we do know if we
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Speaker 1: look at the numbers, that it's one of the safest
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Speaker 1: ways of generating electricity. In terms of actual death right.
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Speaker 2: That forth absolutely absolutely right. The big issue back in
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Speaker 2: the nineteen fifties when you had Haitiam and Hartley Pool
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Speaker 2: and the big reactors getting built was the nimb issue.
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Speaker 2: People really didn't want them. And now if you go
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Speaker 2: back to the sites of with the old British Energy
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Speaker 2: Fleet is even side. Well the benefit has been huge.
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Speaker 2: I mean you've got the movement of brilliant people to
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Speaker 2: the area. But again it becomes a legacy thing. Now
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Speaker 2: what we have is these sites with the permissioning on
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Speaker 2: them where we can add these small modular reactors. The
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Speaker 2: issue in the UK is we have seven bodies that
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Speaker 2: effectively are responsible for making a decision on Britain's nuclear policy.
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Speaker 2: It's nuts now. I gave evidence to the Energy Select
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Speaker 2: Committee last year around the decarbonization of power wack paper
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Speaker 2: and you know they listen and they hear, but very
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Speaker 2: little action. I feel very worried and luke. When we
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Speaker 2: were at this dinner recently, the representatives to the National
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Speaker 2: Grid spoke and said there's no point us thinking about
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Speaker 2: having an AI strategy when we can't supply domestic households. Now,
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Speaker 2: there was a power surge in January of this year
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Speaker 2: where power hit six thousand pounds of megawatt hour and
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Speaker 2: we are reliant on Norway for the import of power.
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Speaker 2: We have the lack of whether it's government guidance, but
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Speaker 2: we just do not have the infrastructure to supply our
9:27
Speaker 2: domestic needs, let alone those of a data center. And
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Speaker 2: Microsoft's Stargate Data center, which is a five gigawa data
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Speaker 2: center that takes down the power of five New York boroughs,
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Speaker 2: five New York boroughs twenty four to seven for one
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Speaker 2: five gigawatts Stargate center, and that's going to be that's
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Speaker 2: going to be around eight percent of their total data
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Speaker 2: center nees. So you need to have this ci of capacity.
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Speaker 2: And you're seeing now deals like Microsoft buying through Mile
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Speaker 2: Island that's eight hundred and nineteen megawatts, you know, buying
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Speaker 2: these states of themself. So you're going to have this
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Speaker 2: issue that's going to take place where who do you prioritize.
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Speaker 2: It will become an issue of moral turpitude if you're
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Speaker 2: not supplying your households but you are allowing Microsoft to
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Speaker 2: run a joint data stem.
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Speaker 1: Well, it's interest, I mean, there was I don't know
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Speaker 1: if you saw a little while back, there were some
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Speaker 1: mutterings in the EU about banning or limiting AI and
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Speaker 1: limiting the building and use of data centers specifically because
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Speaker 1: of the energy use. It's dangerous stoughf to talk about
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Speaker 1: in the UK because next thing you know, a Middle
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Speaker 1: vand will be out there banning data centers.
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Speaker 3: That's one of the things that kind of frustrates me,
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Speaker 3: is like since the nineteen seventies in the oil embargo,
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Speaker 3: there's been this big movement movement of energy efficiency. And
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Speaker 3: energy efficiency has been great for increasing the productivity of
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Speaker 3: certain technologies like refrigerators in your helm, but it's gotten
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Speaker 3: a little too far in the minds. I think of
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Speaker 3: certain politicians where they think, oh, we should just energy
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Speaker 3: efficiency our way out of this climate challenge, out of
10:53
Speaker 3: this energy consumption challenge. People start to conplaine the idea
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Speaker 3: of oh, consuming more energy is bad, and that's just
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Speaker 3: a fly way of thinking. There's many countries around the
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Speaker 3: world that are just now installing air conditioning, refrigeration for food,
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Speaker 3: putting in hospitals, putting in modern infrastructure based standard of
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Speaker 3: building requirements that are going to increase their energy intensity
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Speaker 3: per capita from developing nation levels just to European levels,
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Speaker 3: which are still which are of the energy conception per
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Speaker 3: capital of the United States. For Canada, who are we
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Speaker 3: to say that they shouldn't consume energy? And let's look
11:26
Speaker 3: at ourselves. The UK needs to continue to grow its economy.
11:30
Speaker 3: Europe needs to continue to grow it's economy. It can't
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Speaker 3: afford to fall behind on key technologies like AI, It
11:36
Speaker 3: can't afford to not electrify, transportation, industry, chemical synthesis, all
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Speaker 3: the new capabilities that are coming out from our universities
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Speaker 3: and labs. Are we going to say that we should
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Speaker 3: not invest in that infrastructure. Are we going to start
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Speaker 3: turning off people's hot showers. No, we have the technology,
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Speaker 3: We have the capability to build an energy supply infrastructure
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Speaker 3: that is both a zero carbon and affordable, liable enough
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Speaker 3: to meet the expectations that we've grown accustomed to over
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Speaker 3: the last one hundred years. So I get very frustrated
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Speaker 3: when I hear this rhetoric of oh, we should cut
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Speaker 3: things off because they consume too much energy. The water
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Speaker 3: desalination consumes a lot of energy. Should we not have
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Speaker 3: clean water?
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Speaker 1: Yeah, so we should affect it. We should celebrate increasing
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Speaker 1: energy use because with increasing energy use, comes economic growth
12:22
Speaker 1: and improve lifestyles. So we should celebrate it and find
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Speaker 1: a way to make it work. Right, absolutely, Jake, Let's
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Speaker 1: talk about what you do. When I described it in
12:30
Speaker 1: the introduction completely incomprehensible, accurate, but incomprehensible. So will you
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Speaker 1: explain to us what your product is, how it works.
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Speaker 2: Yeah?
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Speaker 3: Shall I'll describe in very simple terms. What we're doing
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Speaker 3: is designing a modular plant architecture that is compatible with
12:45
Speaker 3: multiple nuclear actor vendors that allows us to basically cut
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Speaker 3: the costs and cut the deployment time roughly in hats.
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Speaker 3: And the way that we're doing that is that we're
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Speaker 3: designing the plant so it can be entirely prefabricated in
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Speaker 3: offshore oil and gas fab yards, offshore wind fabyards and
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Speaker 3: shipyards from around the North of Britain, North and Europe,
13:07
Speaker 3: and other facilities around the world. The advantages for the
13:10
Speaker 3: same reason a prefabricated home can be built on a
13:13
Speaker 3: more predictable cost schedule and at lower price and on
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Speaker 3: a faster schedule than a stick built home on site.
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Speaker 3: We're just taking advantage of the big factories that already
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Speaker 3: exist that have done this for large energy infrastructure before,
13:28
Speaker 3: particularly for north sea oil and offshore wind. A little
13:31
Speaker 3: known fact about nuclear power. If you look at Hinckley
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Speaker 3: Point C or Flamanville, oklode O, Vogel, or any other
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Speaker 3: major nuclear plant that's been built in the last forty
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Speaker 3: to fifty years in the West, about only about seven
13:44
Speaker 3: percent of the cost of that plant is the actual
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Speaker 3: nuclear actor. Ninety three percent of the cost of building
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Speaker 3: a nuclear plant is the accrude interest on debt because
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Speaker 3: it takes so long to build it, usually about ten
13:55
Speaker 3: to fifteen years. Hence the construction overhead. It's the cost
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Speaker 3: of training and relooking about ten thousand skilled workers to
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Speaker 3: a place like Inkley Point and hosting them and their families,
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Speaker 3: retaining them, mobilizing large thousand ton cranes, putting in performance bonds,
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Speaker 3: how contingency, the litigation that happens between trades. It's all
14:15
Speaker 3: that overhead. And it's the same overhead that occurs when
14:18
Speaker 3: you try and build a big international airport or other
14:20
Speaker 3: big SIBL infrastructure projects. So if we're trying to make
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Speaker 3: nuclear look less like building a big international airport and
14:27
Speaker 3: more like buying an airbus a three forty, we can
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Speaker 3: do that using the existing supply chain from off for
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Speaker 3: wind and offshore oil and gas, using the existing labor
14:36
Speaker 3: force that is already skilled and trained to do heavy
14:39
Speaker 3: steel fabrication. So we've designed the plant to minimize the
14:45
Speaker 3: amount of what's called kind of nuclear QA nuclear grade
14:49
Speaker 3: work so that we can have most of it done
14:51
Speaker 3: by the labor that's already trained. There's a big labor
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Speaker 3: challenge for building nuclear and for building a lot of
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Speaker 3: large infrastructure around the West. So part of the exercise
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Speaker 3: here is thinking about how the best leverage the supply
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Speaker 3: chain and the labor resources we do have so that
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Speaker 3: we can go faster. It's critical that we think about
15:09
Speaker 3: how to move quickly onto playing new nuclear. If we
15:13
Speaker 3: were to starting clean Point C you know today, we
15:16
Speaker 3: wouldn't and we built it the same way, we wouldn't
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Speaker 3: be seeing the power come online until maybe twenty forty,
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Speaker 3: and that is just too far for most companies to
15:26
Speaker 3: make investment decisions. The Microsoft's Googles Amazons in the world
15:30
Speaker 3: who are thinking about where the put Ai data centers,
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Speaker 3: they're making shorter time scale decisions. They need power sooner.
15:36
Speaker 3: Governments every need to make decisions sooner. So the way
15:41
Speaker 3: that we're designing this plant is specifically to attract project
15:45
Speaker 3: finance so that commercial banks can get back into the
15:48
Speaker 3: business of investing in nuclear power infrastructure instead of relying
15:53
Speaker 3: on government substitutes, which has been the process to date
15:55
Speaker 3: and tends to be very slow.
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Speaker 1: Okay, so you can make one of these things in
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Speaker 1: Aberdeen and ship it out to wherever it needs to go.
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Speaker 3: Yep, that's the idea.
16:06
Speaker 1: How much space does it require? How much power does
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Speaker 1: it provide?
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Speaker 3: So the reactors we're working with can range in size
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Speaker 3: from approximately seven to seven megalots to three hundred megalots
16:20
Speaker 3: per reactor. Per unit, each unit takes up approximately two
16:26
Speaker 3: to three acres when you take into account the full system,
16:30
Speaker 3: the steam plant, the balance of plant, switch yard. So
16:33
Speaker 3: it's a very space efficient, very power dense way to
16:37
Speaker 3: produce power. We are designing it so that it can
16:41
Speaker 3: tuck into places along the coast, rivers, lakes, canals, or
16:47
Speaker 3: go further offshore, out of sight, out of mind, over
16:50
Speaker 3: the horizon line. Most of our design is below the
16:54
Speaker 3: water line, so you don't have a large two hundred
16:56
Speaker 3: meters mast sticking above the horizon line taking up your
16:59
Speaker 3: whole shed. If you own some property on the coastline
17:02
Speaker 3: and you're like looking at them to see we're designing
17:05
Speaker 3: it to blend into the environment.
17:07
Speaker 1: Okay, just to remind everybodycuse we're not talking to an
17:09
Speaker 1: expert audience here. The reason that all these plants are
17:12
Speaker 1: on the water is because the water is used for cooling,
17:14
Speaker 1: so they're automatically on a lake on the sea, et cetera.
17:17
Speaker 3: Well, yeah, particularly in the UK, you know, the UK's
17:19
Speaker 3: and islands, so a lot of the tower plants are
17:21
Speaker 3: along the coast. We like to have water for cooling
17:24
Speaker 3: the condenser, so yeah, it's used for cooling.
17:26
Speaker 2: Okay.
17:26
Speaker 1: And price wise, that Hankley is costing as what thirty
17:30
Speaker 1: four billion or something after being ten years late and
17:32
Speaker 1: seven thousand changes, etc. That's the kind of price point
17:35
Speaker 1: we'd really really like to avoid all of us everywhere,
17:38
Speaker 1: isn't it.
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Speaker 3: Yeah, I think thirty four billion and growing. We don't
17:41
Speaker 3: know what the final number is until it's all said
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Speaker 3: and done. It's just not a sustainable number for any
17:48
Speaker 3: sort of financing for anybody to kind of buy an ass.
17:51
Speaker 3: It's even challenging for the government to do it. You're
17:53
Speaker 3: getting basically a negotiation between the UK government and the
17:56
Speaker 3: French government to try to figure out how to get
17:57
Speaker 3: that thing financed. We're doing is designing a plant where
18:01
Speaker 3: you can build a unit for on the order of
18:04
Speaker 3: about half a billion so far less than a billion dollars,
18:07
Speaker 3: which enables private sources of capital to come in and
18:11
Speaker 3: tryance it.
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Speaker 1: Okay, well, this sounds absolutely fantastic. When can we have them?
18:16
Speaker 1: It went outside every small town in the UK immediately,
18:19
Speaker 1: when's the first one going up?
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Speaker 3: And where we're targeting a commercial operation for our first
18:25
Speaker 3: unit of twenty thirty one, it's specifically chosen a site
18:29
Speaker 3: where it can have a more accelerated path to permitting.
18:31
Speaker 3: I would say permitting and regulation that Nick brought up
18:34
Speaker 3: earlier is probably the main source of friction for moving faster.
18:39
Speaker 3: If we had a more stream aligned permitting process for
18:43
Speaker 3: nuclear not just in the UK but other parts of
18:45
Speaker 3: the world, we can deploy it much more quickly using
18:49
Speaker 3: this supply chain method that we're pursuable energy. So twenty
18:54
Speaker 3: thirty one, we're in discussions about possibly pulling that's forward
18:58
Speaker 3: a couple of years with with an AI data center
19:01
Speaker 3: partner who has a lot of appetite for power and
19:04
Speaker 3: then once the first one's online, everybody wants to be
19:07
Speaker 3: in line for the second, so it's very quickly, very
19:10
Speaker 3: quick to ask that.
19:12
Speaker 1: Okay, so it is It really is the AI providers
19:15
Speaker 1: who are transformation all in the space, isn't it. They're
19:17
Speaker 1: the ones who are going to provide the finance to
19:19
Speaker 1: get this kicked off. And once the first couple are up,
19:22
Speaker 1: every other industry and every government is going to go, wow,
19:24
Speaker 1: why didn't we do this before? I'll have one of
19:26
Speaker 1: those two, and then Nick, we run into a problem,
19:29
Speaker 1: don't we, because everyone's going to want the same bit
19:32
Speaker 1: of uranium.
19:34
Speaker 2: Correct, And that's the premise of our thesis for the
19:36
Speaker 2: last five years. What Jake was saying about the timeline,
19:39
Speaker 2: I mean it's the same for Bill Gates and samill
19:43
Speaker 2: On with their SMR designs. But a lot of this
19:46
Speaker 2: is permissioning, as Jake says, I mean, Russia already has
19:49
Speaker 2: a floating swarm water to reactor academic loominofs which provides
19:53
Speaker 2: energy for remote locations. The Chinese also have them as well.
19:57
Speaker 2: The issue now is the size of the not just
20:00
Speaker 2: the swarmwer directors, but to have these sort of one
20:03
Speaker 2: plus gigawatt reactors, and all these require fuel. That fuel
20:08
Speaker 2: is uranium. Uranium is the only the only inputs to
20:13
Speaker 2: a nuclear fuel rod. And I often give analogies to
20:16
Speaker 2: people that it's a little bit like a glass of water.
20:19
Speaker 2: What price would you pay for a glass of water? Now, well,
20:22
Speaker 2: probably a pound? What price would you pay in a
20:24
Speaker 2: week if you haven't had any well edit all your wealth,
20:27
Speaker 2: then you'll probably kill me and everyone around you to
20:30
Speaker 2: achieve it. And that inelasticity that exists within uranium means
20:34
Speaker 2: that if a power plant doesn't have uranium, they have
20:37
Speaker 2: to shutter, and that shuttering can take years to restart.
20:42
Speaker 2: But also it costs an excess of a million dollars
20:45
Speaker 2: a day. But the most important issue is, and particularly
20:48
Speaker 2: in areas like the US, we're one in four households
20:50
Speaker 2: on the Western seaboard take power from nuclear is societal unrest.
20:56
Speaker 2: If you turn off the nuclear power station, it doesn't
20:59
Speaker 2: take much in the US get people on the streets
21:01
Speaker 2: with guns anyway. But you know, we saw in two
21:04
Speaker 2: thousand and six the price of uranium spike seven times
21:08
Speaker 2: in six months. And that was the time when you
21:12
Speaker 2: had half the world was against nuclear. You didn't have
21:14
Speaker 2: iPhones or AI data centers and the price because fuel
21:18
Speaker 2: buyers will pay anything, and I mean anything, because the
21:23
Speaker 2: input of the fuel in the oval cost of nuclear
21:26
Speaker 2: power plant is between three and five percent, which means
21:29
Speaker 2: they will pay anything to secure the fuel. The issue
21:32
Speaker 2: we miss in the West is is this whole idea
21:35
Speaker 2: of the inelasticity of demand but also the issue of supply.
21:39
Speaker 2: There is one country that is responsible for forty percent
21:44
Speaker 2: of the output, and that is Kazakhstan, and that effectively
21:48
Speaker 2: makes it in uranium terms, the equivalent of OPEC plus
21:53
Speaker 2: one country. And that country is bordered by two other
21:55
Speaker 2: countries Kazakhstan Russia to the north and China to the east.
22:00
Speaker 2: And if you look at the history of Kazakhstan, it
22:02
Speaker 2: never had its colored revolution from Russia. I won't use
22:06
Speaker 2: the word apparatchic, but if you look at the way
22:08
Speaker 2: in which the fuel rights took place in twenty twenty
22:11
Speaker 2: two and Astana, they were quelled by Russian paratroopers. We
22:15
Speaker 2: study trade data that comes out of Kazakhstan, and eighty
22:18
Speaker 2: percent of their uranium exports in the last quarter went
22:21
Speaker 2: to Russia and China. We are seeing a bifurcation of
22:24
Speaker 2: supply from the world's biggest producer away from the West
22:29
Speaker 2: and to the east. We study and track all the
22:32
Speaker 2: MIT state visits that take place. President She's first trip
22:36
Speaker 2: after COVID was to see present Tokev of Kazakhstan when
22:40
Speaker 2: Makron took Framatone and Arano out to Astana to meet
22:45
Speaker 2: Present Tokerev last November, who turned up the following week. Putin,
22:50
Speaker 2: this is the hottest, hottest person at the disco Kazakhstan,
22:55
Speaker 2: and everyone wants them now if you can't. The only
22:58
Speaker 2: way in which uranium moves properly out of kazakhstanis through Russia,
23:02
Speaker 2: so Petez on the Baltic and then it goes out.
23:05
Speaker 2: We've looked at other roots to see if it can
23:07
Speaker 2: move out through the East. It can't through to China,
23:10
Speaker 2: and whether it can move through the Caspian Sea, the
23:13
Speaker 2: Black Sea and the Bosphorus. It's almost impossible to do so.
23:17
Speaker 2: Putin owns all the cards in this in this trade
23:21
Speaker 2: at the moment, and Russia has been pioneering Uranian enrichment
23:25
Speaker 2: using gas interfugia since the sixties. They're responsible for fifty
23:28
Speaker 2: percent of the world's enrichment. So you take the fuel
23:31
Speaker 2: out of the ground in Kazakhstan as the oxide. Then
23:34
Speaker 2: you have to turn it into a gas. Then you
23:35
Speaker 2: turn it into the pellets that go into the fuel rods.
23:38
Speaker 2: That is done by Russia, but.
23:40
Speaker 1: Not only Russian. It because you say forty percent comes
23:42
Speaker 1: from the Kazakhsan where's the other sixty percent? I mean,
23:44
Speaker 1: I love Canada. We like Canada.
23:47
Speaker 2: Yeah, well it's really it's a really good if you
23:49
Speaker 2: look at the world. So Russia have a policy called
23:52
Speaker 2: Near and Beyond are very similar to the Wings Belt
23:56
Speaker 2: and Road initiative in China, which is to take control
23:58
Speaker 2: of people that have or to go and build the plants,
24:02
Speaker 2: run the plants, fuel the plants in countries that mine
24:06
Speaker 2: the uranium. So if you look at the coups that
24:09
Speaker 2: have gone from West to East Africa, Niche is the
24:12
Speaker 2: fourth biggest producer of uranium that now is under the
24:16
Speaker 2: qu Daeta and the friendship being kicked out and the
24:19
Speaker 2: Russians are now in there. If you look at the
24:21
Speaker 2: other big producer, the Mibia is really controlled by China
24:25
Speaker 2: through the Wings program. The other biggest producers Uzbekistan. So
24:29
Speaker 2: you can get a picture. Now, Yes, Canada is a
24:32
Speaker 2: producer of uranium habi Athabasca Basin in Saskatchewan. It produces
24:37
Speaker 2: twelve percent of the world's uranium. But to give you
24:40
Speaker 2: an example, we financed the company that found discovered uranium
24:45
Speaker 2: in twenty ten. They get it out to the ground
24:49
Speaker 2: in twenty thirty two. Because everything in uranium exactly the
24:53
Speaker 2: same is what Jate was saying around building plants is glacial.
24:57
Speaker 2: Everything is glacial. Nothing moves quickly, and so the idea
25:01
Speaker 2: of being able to ramp up production in uranium is
25:04
Speaker 2: dis impossible. So uranium has gone up three times in
25:07
Speaker 2: the last four years, and the supply response it's gone down. Now,
25:12
Speaker 2: what other commodity can you think of with a supply
25:14
Speaker 2: response to a tripling in the price is going down.
25:17
Speaker 2: I think the price of uranium could be moving so
25:20
Speaker 2: exponentially that there will have to be almost like a
25:23
Speaker 2: forced measure from governments, and that won't stop the price
25:26
Speaker 2: going higher.
25:27
Speaker 1: My worry here is that one of the things that
25:29
Speaker 1: we started talking about was energy security and how we
25:33
Speaker 1: don't really get much of that from renewables, and we
25:35
Speaker 1: certainly don't go much better from fossil fuels given we
25:37
Speaker 1: refuse to explore and produce our own but I had
25:41
Speaker 1: thought that maybe nuclear was a place we could get
25:43
Speaker 1: a little energy security from. But from what you say,
25:46
Speaker 1: absolutely not.
25:48
Speaker 2: Not So the advice I gave to the government and
25:50
Speaker 2: I still live to the government cause I advised the
25:52
Speaker 2: treasury and number ten is the idea of having our
25:56
Speaker 2: own sort of sequestering vehicle for uranium. Now, we are
26:00
Speaker 2: very fortunate that with Urenko we have enrichment facilities in
26:03
Speaker 2: the UK, and they do exist, but it's not the
26:08
Speaker 2: amount of the levels of enrichment that we need. And
26:10
Speaker 2: there's a fundamental reason for this is that after nineteen
26:13
Speaker 2: ninety three, when Yeltsin and Bush signed the mega tons
26:17
Speaker 2: to megawatts program, this was the idea of the down
26:20
Speaker 2: blending of Russian weapons grade uranium to be sold as
26:23
Speaker 2: an energy source. The world became hooked on cheap down
26:28
Speaker 2: blended Russian uranium, which meant that they stopped investing in
26:31
Speaker 2: their own centrifuges and enrichment facilities, and so by dint
26:35
Speaker 2: of that, we don't have them. So Russia controls that game.
26:39
Speaker 2: So there is only one operational conversion facility in the
26:42
Speaker 2: US that's in New Mexico, and it's run by Urenko, Right.
26:46
Speaker 1: We've really got to stop getting hooked on Russian gear,
26:48
Speaker 1: haven't we. We have to Jaco, Are you worried about
26:50
Speaker 1: the supply of uranium to your plant?
26:53
Speaker 3: Yeah, I guess I want to add a few things here,
26:56
Speaker 3: so don't want to in an inaccurate or so mystic picture.
27:01
Speaker 3: I got to work with one of the largest nuclear
27:03
Speaker 3: fuel park camroutines at Excellon when I was there on
27:05
Speaker 3: the corporate strategy for six years. Excellent owned well now
27:10
Speaker 3: constellations about I think it's twenty two to twenty three
27:14
Speaker 3: reactors in the US. They'd buy a more nuclear fuel
27:16
Speaker 3: than pretty much anybody, and we would buy pretty far
27:19
Speaker 3: out in the future. As part of the supply chain.
27:22
Speaker 3: Uranium has not been a huge concern, largely because there
27:28
Speaker 3: are major uranium supplies in the US, in Canada and Australia,
27:32
Speaker 3: and not just in Kazakhstan. It's just that it's been
27:35
Speaker 3: such a steady state supply and demand that there hasn't
27:39
Speaker 3: been a lot of investment in new supply, and over
27:42
Speaker 3: the years the supply is just slowly shuttered. If the
27:45
Speaker 3: price really spiked, just like anything, you'd see a lot
27:47
Speaker 3: of new supply come online. In uranium mine.
27:52
Speaker 2: Way would you? But Jake, I hear what you're saying
27:55
Speaker 2: that a uranium mine is not like you don't take
27:59
Speaker 2: it out of muffball and restart it. The inflatory break
28:02
Speaker 2: even costs of restarting a US miners around ninety dollars
28:05
Speaker 2: a pound, But then you've got to go through the permissioning.
28:08
Speaker 2: I mean, we the US mine five hundred thousand pounds
28:12
Speaker 2: of uranium a year. The global need is fifty million.
28:15
Speaker 2: You know, this is almost impossible. And all the rigs
28:18
Speaker 2: that were used in Why I'm in Utah have all
28:20
Speaker 2: moved to oil and gas. The people, the geologists, the scientists,
28:23
Speaker 2: they've all disappeared. It sounds so obvious to restart production,
28:30
Speaker 2: but it's impossible to do in actual effect.
28:33
Speaker 3: I fully disagree. I complete.
28:36
Speaker 2: Why Why do you disagree? Why do you disagree? Tell
28:39
Speaker 2: me in mine that you can restart now?
28:42
Speaker 3: Well, so mining uranium isn't like mining most stays. And
28:45
Speaker 3: that's because like a lot of people think about, oh,
28:47
Speaker 3: it's a fuel, like it's like like coal or like gas,
28:50
Speaker 3: and they think about roughly the ratio of how much
28:52
Speaker 3: of it you need? You need to feed a lot
28:54
Speaker 3: of coal a lot of gas, a lot of other
28:56
Speaker 3: kind of manner into these types of enter production for
29:00
Speaker 3: nuclear nuclear is about one hundred million times more energy
29:03
Speaker 3: against premium mass than anything else. You don't need you
29:06
Speaker 3: to very much uranium to make a maguad hour, which
29:09
Speaker 3: means that you can actually it's valuable to pour uranium
29:14
Speaker 3: out of extremely dilute sources. You can extract uranium out
29:17
Speaker 3: of seawater.
29:18
Speaker 2: How much does that cost?
29:19
Speaker 3: The Japanese have shown you can do this for about
29:21
Speaker 3: four hundred dollars a kilogram, four.
29:23
Speaker 2: Hundred dollars a killer so four hundred dollars a killer one.
29:25
Speaker 2: What's the price at the moment? It's sixty three dollars
29:27
Speaker 2: a pound the cost of extraction from seawater. So that
29:31
Speaker 2: means the price of uranium is going to have to
29:33
Speaker 2: absolutely raw to make the extractional costs from it.
29:36
Speaker 1: Isn't that part of your point?
29:37
Speaker 2: It doesn't.
29:38
Speaker 1: Isn't that part of your point. It doesn't matter if
29:40
Speaker 1: it rules, because it's such a tiny part of the
29:42
Speaker 1: process that it doesn't matter if your uranium cost you
29:45
Speaker 1: four hundred dollars. It's just a matter of it. Is
29:47
Speaker 1: there uranium out there that we can get to keep
29:50
Speaker 1: the plants rolling.
29:51
Speaker 2: I'm going to play the expert here to uranium in
29:55
Speaker 2: terms of the world needs two hundred million pounds as
29:58
Speaker 2: it stands at the moment of side. When you mind
30:01
Speaker 2: uranium at one hundred and fifty meters below ground, it
30:04
Speaker 2: has non conformity. It's a bit like a pearl necklace
30:06
Speaker 2: with different sized pearls. The absolute amounts are tiny. The
30:10
Speaker 2: way in which geologists find it is they look for
30:12
Speaker 2: radioactive samples in small boulders and they triangulate them from
30:16
Speaker 2: where they would have moved from the thawing of the
30:18
Speaker 2: last ice Age ten thousand years ago. They then have
30:21
Speaker 2: to vector into very very very specific areas to find
30:24
Speaker 2: those scenes. There's two big seams that run radioactive seams
30:27
Speaker 2: that run through the Athabasca basin. Then the timing of
30:31
Speaker 2: being able to extract it, permissioning from indigenous people, finding
30:34
Speaker 2: the geologists, the cost of the rigs, everything about it
30:38
Speaker 2: has to have a break even price to know that
30:40
Speaker 2: you can sell that uranium at a future point in
30:42
Speaker 2: time of ninety dollars a pound. The current price is
30:45
Speaker 2: sixty five. So we're now in a point where no
30:48
Speaker 2: way is going to restart. If you wanted to restart
30:50
Speaker 2: any mine in the world, it's going to take you
30:53
Speaker 2: four to five years of permissioning from an existing site
30:56
Speaker 2: where broke US to uranium Nager Corporation, who are the
30:59
Speaker 2: biggest US producer at the moment, they are waiting. They
31:02
Speaker 2: sit on pounds and they're waiting. Of course they're waiting
31:05
Speaker 2: because they have to be contracted at something norms of
31:07
Speaker 2: one hundred to make it economically viable.
31:10
Speaker 1: Okay, So I think we can agree on one thing,
31:12
Speaker 1: which is that uranium price will probably go up.
31:15
Speaker 2: Okay, yes, yes, okay.
31:17
Speaker 1: So we can disagree about how the supply demand imbalance
31:20
Speaker 1: may or may not be solved over the next five
31:23
Speaker 1: to ten years, but we can agree that in the
31:26
Speaker 1: short to medium term we would expect to see the
31:28
Speaker 1: uranium price rise significantly. And we can also agree that
31:32
Speaker 1: that shouldn't make any difference to the ongoing process of
31:37
Speaker 1: producing a SMRs and bumping up the production of nuclear
31:40
Speaker 1: energy globally.
31:41
Speaker 2: Is that fair? I'm going to say one thing, and
31:43
Speaker 2: I think the issue that we're seeing with Bill Gates
31:47
Speaker 2: and Sam Altman securing the fuel, as Jake said, is
31:51
Speaker 2: because when they started modeling the cost of small modulary
31:54
Speaker 2: actors buck. In twenty sixteen, twenty seventeen, the cost of
31:58
Speaker 2: enriched uranium was around six one thousand dollars a kilogram,
32:02
Speaker 2: that IRR was around fourteen to fifteen percent. It's now
32:06
Speaker 2: thirty two thousand dollars a kilogram, which means that IRR
32:10
Speaker 2: is zero. They need to find a way to secure
32:13
Speaker 2: in rich uranium and a cost that brings the irs
32:16
Speaker 2: back up to where they were when they started modeling.
32:18
Speaker 2: Small modulor reacted.
32:19
Speaker 1: Jake, anything that we've missed? Do you think that you
32:21
Speaker 1: would like to add this conversation.
32:23
Speaker 3: As a species, we need to figure out how to
32:26
Speaker 3: come groupes of nuclear power pretty much every every power
32:29
Speaker 3: source in universe. Ultimately it stems from nuclear. Wind and
32:32
Speaker 3: solar are just indirect ways of extracting energy from the Sun.
32:36
Speaker 3: And then if we're going to embrace this future of
32:39
Speaker 3: energy abundance, not just for AI, but for any other
32:42
Speaker 3: innovation that we're going to drive forward in our economy,
32:46
Speaker 3: we've got to figure out how to build how to
32:48
Speaker 3: build more nuclear power, and how to build out the
32:51
Speaker 3: supply chain for nuclear power. Fuel included, labor included, still included, and.
32:57
Speaker 1: That is the path to cheap, abundant energy and fastising
33:01
Speaker 1: living standards around the world, which of course is everyone's ultimate.
33:04
Speaker 3: Aim, right, Absolutely brilliant.
33:07
Speaker 1: Thank you both so much, Nick, anything else you want
33:09
Speaker 1: to add.
33:11
Speaker 2: I'll say this, China have built thirty seven one gigawatt
33:14
Speaker 2: reactors since Fukushima. They're building one hundred and fifty reactors
33:19
Speaker 2: over the next decade. Now. That is effectively their demand
33:23
Speaker 2: is to create two hundred gigawatts, which is twelve Beijing's
33:27
Speaker 2: of power. So I think if when we look at
33:31
Speaker 2: what the UK is doing and contextualize it, it's the
33:33
Speaker 2: command economies that are really really going to drive this
33:36
Speaker 2: further forward because they are building at a rate that
33:39
Speaker 2: we can't even conceptualize.
33:41
Speaker 1: Yeah, and we should start thinking more about that. Thank you,
33:44
Speaker 1: Thank you, Nick, Thank you, Jake, very very kind of
33:47
Speaker 1: you both too, join.
33:48
Speaker 3: Us, Thank you, Thank you.
33:55
Speaker 1: Right before we go, As you know here on Marrin
33:57
Speaker 1: talks money, we like to leave you with a takeaway
34:00
Speaker 1: or two. So I know that after all this discussion
34:02
Speaker 1: about uranium, uranium mining and uculear power, you will want
34:06
Speaker 1: to know how you can invest. Now, obviously there is
34:08
Speaker 1: not investment advice or anything remotely like that, but we
34:12
Speaker 1: just wanted to let you know roughly where you can look.
34:14
Speaker 1: There are a couple of investment trusts in the space.
34:16
Speaker 1: There's Yellowcake and there's Giga Counter. Yellowcake actually holds physical
34:21
Speaker 1: uranium oxide concentrate. Geiga Counter investment in exploration development production
34:26
Speaker 1: companies in the sector. You can also look at the ETF.
34:29
Speaker 1: There are quite a few of these. There's the Sprott
34:32
Speaker 1: Uranium Miners ETF and there's the Global x Uranium ETF.
34:35
Speaker 1: That's just a couple. There are several more, and the
34:39
Speaker 1: performance of everything that I just mentioned should of course
34:42
Speaker 1: be pretty closely linked to the uranium price. Thanks for
34:46
Speaker 1: listening to this week's Marin Talks Money. If you like us, show, rate, review,
34:49
Speaker 1: and subscribe wherever you listen to podcasts, and keep sending
34:51
Speaker 1: questions or comments some Merri Money at Bloomberg dot net.
34:54
Speaker 1: You can also follow me and John on Twitter or
34:56
Speaker 1: xim marins w and John is John Underscore Step. Episode
35:00
Speaker 1: was hosted by Mimare and some Upweb. It was produced
35:02
Speaker 1: by Somesadi Moses and Amantala Amadi. Sound designed by Blake Naples.
35:07
Speaker 1: Special thanks to Jake and to Nick