China’s Uranium Quest Part I: Domestic Shortages Fuel Global Ambition

China’s plans to construct more nuclear power plants in coming years than any other country have to surmount a major obstacle: China lacks sufficient domestic uranium to power them. China’ s cadre of scientists and engineers are busy seeking to develop alternative nuclear fuel cycles that use less or even no uranium, but these efforts are unlikely to yield major advances in the foreseeable future. China will need to reduce this growing gap between domestic uranium production and consumption by purchasing uranium abroad. By 2020, as much as 60 percent of the uranium needed in China’s nuclear power plants will need to be imported. China’s imports have indeed surged in recent years, with China building up a sizable stockpile due to recent downturns in the price of uranium. 

This is the first part in a two part series examining the feasibility of China’s nuclear ambitions by evaluating its access to uranium. The second part will analyze China’s efforts internationally to acquire uranium to resolve the domestic bottlenecks explored below.

China first began using uranium for electricity generation in 1991, when it constructed its first nuclear power plant, the Qinshan I, that started operating in 1995. Since then, China has constructed 13 more nuclear reactors with another 50 planned and nearly 100 proposed (World Nuclear Association, June 2011). Though nuclear power accounts for only two percent of current energy production, China hopes to increase that percentage to five percent of its electricity supply by 2020. At that level, China’s nuclear power plants would require over 7,000 tons of uranium per year to sustain the desired total power output of more than 40,000 megawatts (MW) (China Daily, March 8).

The Chinese approach to securing the raw material for nuclear power can be described as a three-pronged policy base on broad domestic exploration, development of alternative nuclear power methods, and expansive foreign acquisition through securing of long-term contracts. Domestic mines under the direction of state-owned China National Nuclear Corporation (CNNC) and China Guangdong Nuclear Power Group (CGNPG) have been developed across the country, but known domestic supplies of uranium are too scarce to support this project (WISE Uranium Project, May 14). Efforts to develop alternative techniques to use less uranium remain at an early stage. Meanwhile, several state-run corporations import the majority of uranium. Uranium imports tripled in 2010 to 17,136 tons  (Wall Street Journal, January 21). Given the progress China has made in the domestication of the rest of the nuclear fuel cycle, uranium supply appears to be a principal limiting factor for China’s expanding nuclear industry.

Although Chinese leaders initially emphasized self-reliance and domestic production as a principle of its nuclear energy program, they now espouse an energy security policy of “Three One-Third” to ensure stable long-term supply: one third from its domestic supply, one third from overseas acquisitions and the last third from direct international purchases (China Wire, April 2008). A similar idea is captured in the 11th National Five-Year Nuclear Industry Plan (2006-2011) with a policy called “Self-Development and Search-Out.” China’s business transactions support this ambitious trajectory of nuclear power provision as its government-controlled companies scramble to negotiate long-term contracts and acquire uranium assets in emerging uranium-export countries.

Domestic Supplies Already Insufficient

To supply the fuel required for its nuclear reactors, China has mined uranium from mines in China since the late 1950s. Throughout the decades, a number of mines were established and subsequently closed. China’s uranium deposits are largely concentrated in three regions: Southeast China, Northeast China-Inner Mongolia and Northwest China, including Tibet [1]. Recently, China announced two new mines are to be built, which should begin operation in 2013 and could boost uranium production by 1,000 tons per year, which would more than double the production of the 26 mines currently operating (Xinhua, May 14; Nuclear Threat Initiative, 2007).

The government controls nuclear power and uranium businesses in China, through the use of state-owned corporations that report to the State Council, China’s main governing body. One such company, CNNC is the only domestic supplier of uranium and supplies half of China’s uranium demand yearly of around 1,800.  The resources (in order of greatest region of concentration) are in Jiangxi, Guangdong, Hunan, Guangxi, Xinjiang, Liaoning, Yunnan, Hebei, Inner Mongolia, Zhejiang and Gansu, though another 12 provinces have small uranium deposits as well. (China Mining Association, September 2006).

China has historically relied primarily on traditional mining techniques to extract uranium from hard rock formations, but it began experimenting with less expensive in situ leach mining (ISL) in the 1990s. In 1996, China was responsible for 2.1 percent of the world’s ISL (in comparison to 35.2 percent in the United States and 25.5 percent in Kazakhstan), despite the fact that a quarter of China’s deposits are sandstone [2]. This investment has allowed China to expand increasingly into the extraction of uranium ore from sandstone deposits, which are lower grade but an economically viable option with ISL (China Mining Association, September 2006). The CNNC-owned Yining ISL facility, is on a sandstone deposit mine opened in 1993 that serves as an example of the added uranium materials ISL gives China, providing 300 tons per year (tU/yr). CNNC’s ISL pilot projects may yield additional tonnage (World Nuclear Association, July 2010).

Together, CNNC’s Bureau of Geology and the Beijing Research Institute of Uranium Geology are primarily responsible for the increase in exploration effort over the last decade and the ratcheting up of production in newer mines as older ones close. The duo has focused on sandstone deposits amenable to ISL in Xinjiang and Inner Mongolia where the Ordos Basin contains an estimated 30,000 tons of uranium. China Nuclear Uranium Corporation—one of CNNC’s subsidiaries—plans to bring into production a new 200 tU/yr mine at Fuzhou while doubling production at the Yining ISL mine to 300 tU/yr (China Mining Association, September 2006). CGNPG is more involved in the foreign acquisition of uranium assets, but a subsidiary announced in May 2011 that it was developing two 500 tU/yr mines in Xinjiang, beginning in 2013. 

Nevertheless, China has poor domestic uranium sources, accounting for at most 1 percent of the world’s known recoverable uranium or about 68,000 tons of uranium  (World Nuclear Association, April 2011). The small and medium size deposits are spread unevenly and the uranium itself is of low to medium grade (0.05-0.3% account for the majority of resources), with the highest grade deposits constituting less than one fifth of deposits (China Mining Association, September 2006).  Many large deposits contain only low-grade uranium, which is difficult and costly to extract, making it unsuitable for fueling nuclear power plants. Some reports speculate that China has vast undiscovered reserves of uranium—speculatively up to 70,000 tons—but their exact location, quantity and grade quality are undetermined. The current known deposits add up to 100,000 tons and could be depleted by 2020 (World Nuclear Association, December 2010; China Daily, March 8). Even factoring in new discoveries in uranium exploration, demand would continue to outstrip supply due to the lag between exploration and production [3]. While Wang Zhongtang, a senior official with the State Environment Protection Administration, claims that domestic uranium deposits amount to about 100,000 tons based on a survey of 4.3 million square km of the country’s territory and meet China’s energy needs for the next decade, others are skeptical (Xinhua, July 9, 2007). In contrast to Chinese ambitions, the country’s uranium output in 2008 was only 769 tons, or 1.8 percent of global production.

Alternatives Still Unproven

In addition to developing domestic mines, the Chinese government has also pursued “unconventional” methods of extending its uranium resources or reduce its uranium needs. These alternatives to greater domestic development have a faster turnover rate on an investment and a lower per unit cost for fuel than developing new mines.  As World Finance points out, “the historical average lead-time from discovery to production for a conventional uranium deposit is 10 to 14 years. However, after the identification of a uranium-bearing waste deposit and its evaluation and testing, production can be underway in less than three years (World Finance, June 18, 2010).

In the mid-1980s, China selected a closed fuel cycle strategy to reprocess spent fuel, and has recently accelerated its nuclear development in pursuit of this strategy. The first fast breeder reactors’ (FBR) contribution to China’s energy grid occurred in July 2011. As a research reactor, it is only functioning at 40 percent of its limited, 20MW capacity. While originally China had plans for domestic designs to be deployed at a commercial scale of 600 MW by 2020 and a 1500 MW version in 2030, the import of Russian designs has changed these plans. Rosatom has agreed to supply two blocks of two FBR reactors (World Nuclear News, April 30, 2010; Moscow Times, August 30, 2010). This will be the first export of commercial FBR as Russia is the only country to have developed the technology enough to make commercial commitments. Construction on one block in Fujian should start in this month and come online before 2020. If China does expand its FBR program beyond the small percentage of power the reactors are expected currently to contribute, it could alleviate some pressure on China’s conventional civil nuclear reactor fleet.

In another effort to expand the fuel resources available, China has sporadically pursued commercial uranium recovery from coal ash, mine waste and phosphate rock. It had four such production facilities operating from the 1960s to the early 1980s, but decommissioned them when the uranium market bottomed-out in the 1980s following Chernobyl.

In the last decade, these recovery operations have resurfaced as alternative methods to mining uranium as China has switched from a net exporter to an importer of uranium. A marketing manager at China’s largest nuclear firm, said in 2010 that the country wants to get uranium from “every possible channel” (The Economist, April 8, 2010). Currently, China is partnering with a Canadian firm to extract uranium from coal ash in Yunnan province, which contains over 0.03 percent uranium oxide. Preliminary testing shows 70 percent uranium recovery at estimated costs ranging from $20 to $35 per pound, profitable at even the lower spot prices of the global economic depression (World Finance, June 18, 2010).  The Canadian firm claims, after three years, it could produce as much as [1,000 tons] of uranium in China annually” with the ash waste from three large coal plants in the Yunnan area (Wall Street Journal, February 22, 2010).

China is currently pursuing reprocessing capabilities in partnership with Canadian CANDU designer Atomic Energy of Canada  that, if successful on a commercial scale, would allow it to import less uranium and produce less nuclear waste. CCTV claims that, “the breakthrough could yield enough [fuel] to last 3,000 years” (The Telegraph [UK], January 4). Plans for a closed fuel cycle have been in effect since the mid-1980s, but only recently did China begin in earnest to pursue a civilian fuel recycling program. China currently has two CANDU reactors (and is considering building additional units contingent on reprocessing potential), which can take reprocessed fuel from its nine light water reactors (World Nuclear News, March 24, 2010). CANDU reactors can also run on thorium fuel, and China has been working on developing a thorium fuel cycle with its Canadian partners. Thorium is more abundant in China, cheaper to mine, produces less waste and, if successful, will enhance Chinese energy security.

In addition to spent-fuel reprocessing technology, China has invested considerable resources to develop an entirely new type of nuclear technology. In recent years, Chinese nuclear authorities have explored the feasibility of controlled reactions using fist-sized balls of fuel coated in a layer of protective graphite, as opposed to the traditional fuel rods used in conventional nuclear reactors around the world today. This technology—previously explored by Germany, South Africa and the United States—has never been successfully developed due to technical hurdles and a lack of funding. Consequently, China is potentially leading the way in this field with scientists actively working to construct two reactors on the coast of the Yellow Sea. Among the bevy of potential benefits this technology offers, the ability to govern the pace of nuclear reactions and ease of shutdown should an emergency occur are among the most appealing (New York Times, March 24). Assuming that this type of nuclear power plant proves cost-effective, it is safe to assume that several of China’s planned nuclear reactors will follow this unconventional design in the coming years.

Although Chinese scientists have recently announced their mastery of nuclear fuel reprocessing technology, the prospect of this approach becoming a substantial aspect of China’s uranium pursuit remains dim. Reprocessing uranium costs significantly greater than purchasing uranium and storing the spent fuel. Moreover, the process, which China would perform domestically but would encourage other countries to adopt the technique, would likely provoke international criticism since it also produces extracted plutonium. Another impediment is the need to build a dangerous breeder reactor— one whose costs would likely outweigh any benefits. Instead, Harvard nuclear expert Matthew Bunn argues that China should prudently wait until cheaper and safer technologies are developed (The Telegraph [UK], January 4).

Conclusion

China’s energy policy continues to emphasize autonomy and nuclear power but China lacks the domestic uranium to achieve its objectives. Chinese officials eagerly want to advance domestic uranium production and reduce the country’s reliance on imports. Although pride in self-sustainment is a factor, economics is an important incentive. With improved domestic supply, China would gain some immunity to the whims of the volatile commodity market (Globe and Mail, January 17).

With no scientific breakthrough on the horizon likely to resolve the dilemma, China has launched a global quest to acquire uranium. The Chinese face several barriers in this endeavor—ranging from increased international competition to underdeveloped infrastructure in potential uranium suppliers to political instability and security threats in these countries. Additionally, the price and availability of uranium will increasingly be affected by the staggering scale of the Chinese need for the substance. China’s international efforts will addressed in part two.

Notes:

1. Chen Zhaobo, et al., “Uranium Provinces in China,” Acta Geologica Sinica, Vol. 74, No. 3, September 2000.
2. “Developments in Uranium Resources, Production, Demand and the Environment,” International Atomic Energy Agency, January 2005.
3. Yan Qiang, Wang Anjian, Wang Gaoshang, Yu Wenjia, and Chen Qishen, “Nuclear Power Development in China and Uranium Demand Forecast: Based on an Analysis of Global Current Situation,” Progress in Nuclear Energy, Vol. 53, No. 6, August 2011, pp. 746-47.