A report on Thorium: The newest of the technology metals

I do not wish to condemn, nor glorify, the world's oldest profession, but I note here that said profession has created an enduring capitalist business model, which is succinctly stated as "Why give away something you can sell?

I was reminded of this adage when a colleague sent me the following link: www.bharatbook.com/Market-Research-Reports/Report-on-2009-World-Market-Forecasts-for-Imported-Thorium-Ores-and-Concentrates.html, for a report titled "Report on 2009 World Market Forecasts for Imported Thorium Ores and Concentrates."

Let me offer you the same information, and additional data, which I do not think the authors of the above report have, or have taken into account, for free.

The USGS has just released its commodity minerals summary for thorium for 2009. This can be found on the Internet at http://minerals.usgs.gov/minerals/pubs/commodity/thorium/mcs-2009-thori.pdf. A more detailed USGS discussion of thorium market fundamentals and end-uses can be found in the USGS's "2007 Minerals Yearbook Thorium [Advance Release]" on the Internet at http://minerals.usgs.gov/minerals/pubs/commodity/thorium/myb1-2007-thori.pdf. (Although this last article is dated 2007, it was released in late 2008 and is an analysis based on information gathered by the very conservative and through USGS throughout most of 2008.)

My take on thorium in 2009 is that it is most likely going to be the last natural element to become a technology metal. Therefore I want to take this opportunity to expose and dispose of some myths about the potential supply of thorium and to bring you up to date on the potential for an explosive (excuse the pun) growth in demand for thorium.

The potential for thorium to be a breakout investment is based on its potential, and today more and more likely, its use as a nuclear fuel component for civilian reactors used exclusively to produce electricity. There are three reasons why this will most likely come to pass:

  1. Reactors using thorium in their fuel can be constructed so that they produce little or no products useful for explosive type (fission- or fusion-based) nuclear weapons.
  2. Thorium reactors previously built and currently near operation, or in the design stage, produce far less radioactive waste material than the presently used uranium and/or plutonium based reactors.
  3. Thorium is more abundant in the earth's crust by a factor of between three and four than uranium, and coincidentally is also found in recoverable (as a byproduct) grades and quantities in the United States, Canada, Australia, the Republic of South Africa, and the People's Republic of China (that is, the mainland). It has not yet been mined as a primary ore (more on this in a moment) but is rather always produced as a byproduct of either uranium or rare-earth metals primary production.

Note the following statement from "Canadian Energy Research Institute - World Energy: The Past and Possible Futures - 2007":

"Nuclear became an important source of energy following the first oil price shock in 1973. The main reasons for the rise of nuclear power are the low cost of fuel compared to other primary energy sources, and abundant uranium resources located in politically stable regions. Total known recoverable uranium resources equal 4.7 million tonnes, half of which are found in Australia, Kazakhstan, and Canada. Canada is currently the largest manufacturer of uranium, producing about one-third of the world's total."

So, therefore, in summary, thorium reactors are non-proliferative, they produce less waste, and even though there is a lot more thorium than uranium in the earth's crust, the USGS and Canadian Energy Research Institute reports, which are current, clearly indicate that the minable resources and reserves of thorium are less than those of uranium. Even so, it is now apparent, and cannot be overemphasized at this point that the largest minable resources and reserves of thorium are today, in order of size, in the United States, Australia, China and Canada.

Just as with uranium resources and reserves, it now turns out that the largest accessible supplies of thorium are in politically stable and reliable regions. In particular, it turns out that just as Canada has the world's largest working deposits of minable uranium, it is possible to cast the United States in the same role for thorium if the political will can be found.

Why doesn't everyone stop building uranium- and/or plutonium-based reactors and start building and only build, from now on, thorium fuel-type reactors? Let's list some facts and then analyze them to find out.

Economics of uranium supply and demand:

  1. Nations, such as France, Japan, The United Kingdom and the United States that produce a significant proportion of their electricity using nuclear reactors have a very large investment in those reactors and a large supporting infrastructure of existing uranium supplies. The World's nuclear industry operates a total of 443 commercial nuclear generating units with a total capacity of about 364.9 gigawatts. To put this in perspective, if all of this nuclear generating capacity were in the United States, it would provide just about one-third of our current yearly demand. As of Dec. 31, 2007, there were 104 commercial nuclear generating units that were fully licensed by the U.S. Nuclear Regulatory Commission (NRC) to operate in the United States. Of these 104 reactors, 69 were categorized as pressurized water reactors (PWRs), totaling 65,100 net megawatts (electric), and 35 units were boiling water reactors (BWR), totaling 32,300 net megawatts (electric). Therefore the United States obtains about 10% of its electricity demand from commercial nuclear generating units. The corresponding figure for France is 80% and for Japan it's 34%.
  2. Nations, other than G-7 members, that are financially capable of building reactors look upon the production of weapons-grade uranium and plutonium as assets to insure the security of their political systems. Even if they sincerely do not plan to build nuclear weapons with the output of their reactors, that they could do so gives many of them clout in the political world far beyond what their GDP or population size can do.
  3. The mining of uranium is a long-established industry for which incremental growth is possible and for which there is still active exploration. Most important, no one is concerned that political instability could interrupt Canada's output of uranium!

Economics of thorium "demand":

  1. There are no commercial thorium reactors in operation anywhere in the world, however...
  2. Thorium reactors were built at the beginning of the nuclear age, for testing the concept of purely civilian reactors that did not have a military weapons use, because of the non-weaponizability of their products, and so there is an archive of engineering design and operational data for those reactors. The best known thorium reactors were built in the United States and the Soviet Union, but may also have been constructed elsewhere, such as in the United Kingdom.
  3. No significant quantities of thorium have been purposefully mined or refined for at least 30-40 years, and there is at present, except perhaps in the People's Republic of China, and most likely in India, no government- or privately sponsored exploration program for thorium.
  4. On the positive side, the major western and Japanese commercial reactor builders, as well as the government-controlled ones in China, all have openly announced that they have recently been looking at thorium fuel designs, and one, Atomic Energy of Canada Ltd., AECL, has said that it already has a program being designed and tested to retrofit its well-known and widely used CANDU reactors for the utilization of thorium fuel.
  5. Additionally, India has announced that it is constructing or reconstructing a reactor to run principally on in-house designed thorium fuel, and that this reactor will be in operation within a couple of years and is intended to be a prototype for a future family and mass-produced series of such reactors to take advantage of what is claimed to be India's large domestic resources of thorium.
  6. Other nations have evinced interest in thorium-fueled reactors and seem to have made investments in their development, including Norway, Russia, Canada, China and the United States.
  7. It is, unfortunately, conceivable that the People's Republic of China, which has lately made no secret of its interest in thorium-fueled reactors, and has instructed its rare-earth mines -- today the sole producers of these metals -- to hold thorium removed during separation and purifying of the rare earths for the State Nuclear Authority, may have it in mind to conserve uranium for military purposes by switching planned civilian nuclear electric generating capacity to thorium-fueled reactors. This may well also be the plan of the government of India, the world's most vociferous proponent of thorium-fueled reactors.

The supply of thorium:

  1. Thorium has always been available as a byproduct of the mining of uranium and of the rare earths, but it has traditionally been considered either a liability or a low value material.
  2. Thorium reports and commentaries without fail or exception state that thorium is more common than uranium, but usually fail to emphasize that this is a statement of the relative abundances of both in the earth's crust. It is in no way a statement of the relative distribution of thorium vs. that of uranium in known minable deposits, as discussed above and below...
  3. There is actually no way to verify the thorium reserves that are contained in the world's existing rare-earth mines, because to the best of our knowledge, such measurements have simply not been made, and, if they have, have certainly not been made public by the world's largest and most actively mined rare-earth deposits in the Bayanobo region of Inner Mongolia in the PRC. There are today no significant rare-earth mining operations anywhere outside of the Bayanobo region. The largest previous single source mine for rare earths in Mountain Pass, Calif., stated to a magazine writer last month that it had no thorium production associated with its hoped-for reopening of operations. The two large Australian rare-earth startups, Lynas and Arafura, also do not comment on any planned thorium production, and, in any case, are both in turmoil due to the current economic crisis. Lynas has suspended operations and Arafura is not only not operating but is also in the process of selling a large stake to a Chinese operator. It is not commonly known whether India, which always claims to have significantly more thorium than uranium, in fact produces any thorium from its deposits of monazite "sands," which do contain low levels of "disseminated" thorium but are principally an ore of the rare earths of which India has very limited production. Finally, Russia produces some rare earths and thus could produce some limited amount of thorium, but it is not known if it does.
  4. Uranium miners even in Canada have not announced any plans to produce thorium nor do any of them show thorium quantity produced in their accounts. The same is true for Australian producers, and Kazakh thorium statistics do not exist.
  5. The best opportunity today to produce thorium in quantity from a high-grade deposit would be in the United States in the Lemhi Pass region of Idaho and Montana. The claims in that region are owned today by Thorium Energy Inc., a privately held company, which purchased and extended the claims staked beginning 50 years ago by a group of utilities and engineering companies, starting with Idaho Power. Those companies were looking for uranium (and thorium) for the purpose of becoming self-sufficient and vertically integrated as nuclear power producers. But they were premature. The age of thorium was not yet ready to be born. Idaho Power and its successors noted also that the claims were rich in rare earths, but just as with thorium, the birth of the age of those technology metals was still in the future.
  6. Today, Thorium Energy Inc., is in a unique position. It may be able to open the first primary thorium mine in American history with a substantial rare-earths byproduct stream, if the demand is there, or it can develop a primary rare-earth mining operation in the Lemhi Pass with a substantial thorium output as a byproduct. Economics and politics will determine which of the two paths is followed, or if neither path is taken.

The conclusion at this point in time of this first Thorium Report for 2009 is that a thorium-fueled civilian-use-only nuclear electric generating industry is looming on the economic and political horizon. At this moment, no one knows how much thorium it is possible to produce as an adjunct to rare-earth or uranium mining, but we do know that one of the largest deposits of high-grade thorium and rare earths in the world is located in the Lemhi Pass region of Idaho and Montana. This deposit is accessible and minable.

America could become completely self-sufficient in non-proliferative nuclear electric power production and reduce its carbon footprint without sacrificing its standard of living or quality of life. Let's see if our politicians have the will and leadership skills to make this happen. Our future depends on it.

Jack Lifton is a featured contributor to the new Resource Investor. With 35 years experience in the OEM electronics and automotive supply industries, he is today a metals sourcing consultant for OEM heavy industry and offers due diligence analysis for institutional investors. Lifton is a prominent speaker on the market fundamentals of minor metals and their end-uses and travels the world on behalf of Fortune 500 and Global 1000 corporations. Reach him directly at JackLifton@aol.com.

About the Author
Jack Lifton

Jack Lifton is a leading authority on the sourcing and end use trends of rare and strategic metals. He is a founding principal of Technology Metals Research LLC and president of Jack Lifton LLC, consulting for institutional investors doing due diligence on metal- and material-related opportunities.

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