Thorium: Next-Gen Nuclear Fuel

February 09, 2010

We take a look at the fuel of choice for the newest generation of nuclear power.

  • Why is thorium better than uranium?
  • Are there pure-plays for thorium?
  • Keep your eyes on these technologies



In his most recent budget, President Obama called for increased support for nuclear energy, and why not? Nuclear power offers a golden combination: the ability to come online in large enough chunks to keep up with demand, with minimal environmental impact. It's no wonder, then, that new players are coming into the market every day, bringing with them new ideas for reactor designs, manufacturing processes—even nuclear fuel.

That's because uranium, plagued by continual supply shortages and storage concerns, is quickly becoming too much of a headache for power and technology companies to navigate. Instead, next-gen nuclear has its eye on a new fuel source: thorium.


Thorium: The Other Radioactive Metal

Thorium is a silvery-white, radioactive metal whose stability and brilliance at high temperatures make it ideal for use in heat-resistant ceramics, welding electrodes and even light bulb filaments. The metal is found in trace amounts almost everywhere; with an abundance in the Earth's crust of about 12 parts per million, thorium is several times more prevalent in the soil than its more popular cousin, uranium.

According to the United States Geological Survey, thorium deposits exist in Australia, Brazil, Canada, Greenland (Denmark), India, South Africa and the United States. In the U.S., two private companies hold major thorium claims: privately held Thorium Energy, which holds the claim to the Lemhi Pass in Idaho and Montana; and Wings Iron Ore, which holds Pea Ridge in Missouri, a mine whose ores and tailings are rich in thorium and other rare earth metals.

As recently as 2007, total thorium usage for the U.S. was a mere 3.5 metric tons, according to the USGS; consumption in 2008 and 2009 was so low, the numbers are actually negative. If thorium-based nuclear power takes off, though, it'll be a different story: a single gigawatt (GW) reactor is estimated to use a ton of thorium per year.

Thorium is mostly found in monazite, a byproduct of titanium and zirconium processing which is itself mined for its rare earth elements (REE). But since thorium isn't in great demand right now, the metal is often tossed out with the mine tailings. Indeed, it appears a major source of the thorium the U.S. has imported over the years was the older stocks left over from the processing of rare earth elements by Rhodia Electronics and Catalysis, Inc. in France.

This belies the fact that the fate of thorium supply is deeply tied to the greater rare earth element supply chain—one that has become increasingly dominated by the Chinese. China now produces 97 percent of the world's REE, and according to some analysts, the country may soon require all of it for domestic use. Some Western sources are available, such as Canadian E&P junior Avalon Rare Metals (TSX: AVL) and explorer Quest Uranium (TSX: QUC), but as we've covered before, the supply of REE could likely become a major point of contention in years to come.


Playing Thorium

Using thorium in a nuclear reactor offers several advantages. For starters, a thorium-based reactor cannot start by itself, as the metal must first be bombarded with neutrons to transform into uranium-233, which is a fissionable material. This means existing nuclear waste can be used in the start-up function and burned up in the process. Plus, the thorium-uranium 233 cycle does not create higher-order actinides, like plutonium, that can be reappropriated into nuclear weapons; hence, thorium-based reactors would not contribute to nuclear proliferation. And best of all, the waste from thorium reactors is proportionately much less than that from uranium reactors and decays to background radiation levels within a few hundred years, as opposed to thousands of years for uranium reactor byproducts.

But thorium doesn't always behave like uranium, so using it in a nuclear reactor requires different strategies. One public company taking the incremental approach is Lightbridge Corp. (Nasdaq CM: LTBR), formerly Thorium Power Inc. Lightbridge has developed a thorium-uranium fuel rod that is a near-direct replacement for the fuel in existing uranium-based reactors. Its advantages include reductions in volume, weight, and, most significantly, radio toxicity of used fuel—not to mention it contains the risk of weapons proliferation.

But should thorium replace uranium as the nuclear fuel of choice, eventually reactors must be designed specifically with thorium in mind. Privately owned DBI/Century Fuels Inc. has designed a gas-cooled reactor to be produced in modules of 25 to 50 MW electrical. While the field seems small now, look out for other companies to announce plans for different designs soon.


Game Changers?

Although thorium technology offers substantial advantages, the legacy uranium technology has become deeply entrenched over the course of six decades with corporations and bureaucracies devoted to its advancement. There are, however, a potent set of potential game changers, as leaders in the U.S. Congress and the Department of Defense now recognize it is not in its national interests to have strategic materials like nuclear fuels and REE under the control of foreign governments.

For example, one Congressional bill, H.R. 1534, would direct the Department of Defense to investigate the possible use of thorium in naval reactors. Another, Senate Bill S.3680, would amend the 1954 Atomic Energy Act to provide for thorium nuclear fuel development. In fact, when Senator Orrin Hatch introduced the bill, he said, "Our nation has focused mostly on mixed oxide nuclear fuel cycles, and our regulatory structure reflects that. With the growing interest in thorium nuclear power ... it's time we made sure our government has a regulatory infrastructure in place to accommodate this new generation of nuclear power."

Should one of these bills become law, the prospects for thorium will suddenly become much brighter. Until then, however, nuclear-minded investors would be wise to keep an eye on thorium as uranium's potential replacement.

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