Uranium is one of the more common elements in the Earth's crust - it is more common than tin, about 40 times more common than silver and 500 times more common than gold.

Still, the uranium industry remains a mystery to many in the general public and often even to industry analysts.

This section gives you an overview of the framework in which Cameco operates. It looks at the uranium mining industry, its major players, and demonstrates how uranium fits into the nuclear fuel cycle. It also helps you understand at a basic level what uranium is, what radiation is, how nuclear energy compares to other forms of power, and how uranium is being mined safely throughout the world.

Research sources and external links

Canadian Nuclear Association

Canadian Nuclear Safety Commission

Powerful stuff for kids and their teachers

International Atomic Energy Agency

The Nuclear Energy Agency

The Nuclear Energy Institute

The World Nuclear Association

Uranium Information Centre

Ux Consulting Company

TradeTech

How is uranium related to energy?
What are the sources of energy?
How is nuclear energy produced?
Chain reaction

How is uranium related to energy?

Uranium is an element found in nature. Used as a nuclear fuel, it is a source of energy. Uranium fuel is emissions-free, making it safe for the environment and in comparison to other fuels, only a tiny quantity is required to generate an equivalent amount of electricity. All the uranium produced by Cameco is used to generate electricity.

Society depends on electricity. It wakes us up, cooks our food, keeps us warm, cools us off, runs the factories, and connects us to the Internet. We may take these conveniences for granted but many of the things we do require electricity.

Electricity is a form of energy. The universe is made up of both matter and energy. Matter is all those things that have weight, or mass - rocks, trees, lakes, people, animals. Energy is harder to describe, but it is observed all the time. Energy is the force that makes things move and change. In other words, if the universe were a watch... energy would make it tick.

uranium pellet
A typical pellet of uranium weighs about 7 grams (0.24 ounces). It can generate as much energy as 3.5 barrels of oil, 17,000 cubic feet of natural gas, or 1,780 pounds of coal.
atom
An atom consists of protons and neutrons that form a nucleus around which electrons orbit.

What are the sources of energy?

There are six basic kinds of energy. As you throw a basketball, your arms give it mechanical energy in the form of movement. A burning log gives off chemical energy, which you can see as light and feel as heat. A hot burner on the stove receives electrical energy from an outlet and supplies thermal energy to a frying pan with eggs. The sun sends radiant energy to Earth every day in the form of light but gets its own nuclear energy from reactions inside the nuclei of its own atoms. Nuclear energy can be produced in two ways. In the sun, energy is created by the joining of the nuclei of hydrogen atoms in a process called fusion. On Earth the nuclei of larger atoms such as uranium split apart to create energy in a process called fission. All types of energy are essentially different forms of one another.

How is nuclear energy produced?

How can something so small generate so much energy? The secret is in the basic building block of all matter - the atom. All matter in the universe is made up of atoms, particles so tiny that they cannot be observed even under a microscope.

Atoms

The atom resembles a miniature solar system. In the centre of the atom is the nucleus around which electrons orbit, like planets moving around the sun. The nucleus, composed of protons and neutrons, contains most of the mass of the atom. Tiny electrons move around in relatively large orbits with nothing in between.

Atoms that contain an equal number of protons and electrons are referred to as elements. There are 90 kinds of naturally occurring elements and at least 14 other artificial elements have been created by scientists in controlled experiments. Elements are listed in a periodic table arranged according to their number of protons (atomic number). For example, an atom of hydrogen, the lightest element, has just one proton in the nucleus. An atom of uranium, the heaviest element found in nature, has 92 protons.

Periodic Table of the Elements
Elements are listed in a periodic table arranged according to their number of protons.

Isotopes

The number of protons in the nucleus of an element is always the same but the number of neutrons may vary. For example, carbon atoms that have six protons usually have six neutrons. However, some have eight. Atoms that have a different number of neutrons than protons are called isotopes. Each isotope is identified by its atomic mass, the sum of its protons and neutrons.

Naturally occurring uranium is made up primarily of two different uranium isotopes. Approximately 99.3% is uranium 238 (U-238) with 92 protons and 146 neutrons, and 0.7% is uranium 235 (U-235). Under certain conditions the nucleus of U-235 can be made to split, or fission. Because of this property, U-235 plays an important role in the creation of nuclear energy.

nucleus of an atom
Splitting the nucleus of an atom - a process called nuclear fission - releases the binding energy. The energy released is nuclear energy.
Einstein
Einstein's equation, E = mc2, explains how matter can become so much energy.

Fission

Fission describes the splitting of an atom's nucleus into two or more smaller nuclei. Most atoms will not fission because a binding energy that holds the protons and neutrons together prevents it. However, some atoms with big, unstable nuclei, like U-235, can be broken apart. Under certain conditions, when U-235 is struck with a neutron it divides and produces two lighter atoms. The mass of these two lighter atoms added together is less than the original U-235 atom. In the process of fission the mass that seems to have disappeared has been converted into energy.

According to Einstein's formula E = mc2, even a small amount of mass (m) inside the atom can be magnified by a huge number (c2, the speed of light squared) to create enormous amounts of energy (E). The fission-ing of one U-235 nucleus releases 50 million times more energy than the combustion of a single carbon atom. Nuclear fission produces far more heat than burning a comparable volume of hydrocarbon fuel such as oil, natural gas or coal.

Chain reaction

In addition to the creation of two new smaller nuclei, fission frees some neutrons to make other atoms divide. They strike other U-235 atoms and release more neutrons. As long as there are uranium atoms present, the fission process continues. This is called a chain reaction. It is this chain reaction that makes a sustained nuclear reaction possible. It creates an ongoing release of energy from one atom to the next and therefore provides a continuous source of energy.

If uncontrolled, the fission reaction multiplies rapidly and can produce an explosion. However, in a nuclear reactor, fission is controlled. Only one neutron is allowed to produce another fission. Control rods prevent the number of neutrons in a nuclear reactor from growing too large by absorbing excess neutrons. To do this, control rods are inserted into the core of the reactor. Pushed in, they soak up neutrons and slow down the reaction; pulled out they allow it to speed up again. In this way the chain reaction is controlled.

chain reaction
nuclear fission
Chain reaction: A neutron hits a nucleus, which splits. The split releases energy and more neutrons, which then strike other nuclei. As more nuclei are split, more energy and neutrons are released.
Controlled chain reaction: For each fission only one neutron will create a second fission.

What is uranium?
Where is uranium found?
Where are uranium deposits located?
When did uranium mining begin in Canada?
What is the history of uranium?

uranium ore
Uranium is one of the most abundant elements found in the Earth's crust.

What is uranium?

In its pure form, uranium is a silvery white metal of very high density, more dense even than lead. Uranium can take many chemical forms, but in nature it is generally found as an oxide (in combination with oxygen). Triuranium octoxide (U3O8) is the most stable form of uranium oxide and is the form most commonly found in nature.

Where is uranium found?

Uranium is one of the most abundant elements found in the Earth's crust. It can be found almost everywhere in soil and rock, in rivers and oceans. Traces of uranium are even found in food and human tissue. However, concentrated uranium ores are found in just a few places, usually in hard rock or sandstone.

The concentration of uranium varies according to the substances it is mixed with and the places where it is found. For example, when uranium is mixed with granite that covers 60% of the Earth's crust, there are approximately four parts of uranium per million, i.e. 999,996 parts of granite and four parts of uranium.

High-grade orebody - 2% U or higher 20,000 ppm* U
Low-grade orebody - 0.1% U 1,000 ppm U
Granite 4 ppm U
Sedimentary rock 2 ppm U
Average in Earth's continental crust 2.8 ppm U
Seawater 0.003 ppm U
*ppm = parts per million
Source: World Nuclear Association

Concentrations of uranium that are economic to mine are considered ore. Uranium is present in low concentrations in many rocks and bodies of water, but extraction is only economically viable from richer deposits. The decision to mine is a function of many factors including extraction method, market prices and social and environmental considerations.

Where are uranium deposits located?

Uranium deposits are found all over the world. The largest deposits of uranium are found in Australia, Kazakhstan and Canada. High-grade deposits are only found in Canada. The following illustration shows known conventional resources of uranium.

world uranium production
Reasonably Assured Resources plus Inferred Resources, to US$ 130/kg U, 1/1/05, from OECD NEA & IAEA, Uranium 2005: Resources, Production and Demand, ("Red Book").

When did uranium mining begin in Canada?

Canada's uranium journey began in 1931 at Great Bear Lake in the Northwest Territories where veteran prospector Gilbert Labine discovered the country's first uranium deposit. Labine's discovery gave birth to Eldorado Nuclear Limited, a forerunner of Cameco Corporation. Today, Cameco dominates the uranium market as the majority owner of the world's largest and highest-grade uranium deposits.

For more information, go to Uranium in Saskatchewan

What is the history of uranium?

Uranium was discovered in 1789 by German chemist Martin Klaproth while analysing mineral samples from the Joachimsal silver mines in the present day Czech Republic. Apart from its value to chemists, the only significant use for uranium throughout the 1800s was to colour glass and ceramics. Uranium compounds were used to give vases and decorative glassware a yellow-green colour. Ceramic glazes ranging from orange to bright red were used on items as varied as household crockery and architectural decorations.

Uranium's radioactive properties were not noticed until 1896. French scientist Henri Becquerel did not realize the full significance of his discovery, but one of his students, Marie Curie, correctly interpreted his results and chose the name radioactivity for the new phenomenon. Working with her husband Pierre, Marie Curie went on to discover another new element, radium, in 1898. The Curies had to use tonnes of uranium ore to obtain even a fraction of a gram of this new element. Radium was felt to be a miracle cure for cancer and commanded prices as high as $75,000 per ounce until the bottom fell out of the market in the late 1930s.

Demand for radium led to a rapid expansion in the mining of uranium ore in the early 1900s. New discoveries were made in the US, Australia, Portugal, the Belgian Congo (now Zaire) and Canada.

After the Curies' first work with radioactive materials, many scientists around the world began to study uranium, trying to discover its atomic secrets. In 1939, the first proven nuclear fission was performed by Otto Hahn in Germany. By this time the world was on the edge of war and military secrecy quickly surrounded the work of atomic scientists. A team led by Enrico Fermi built the first nuclear reactor (known as an "atomic pile") in great secrecy at the University of Chicago. This pile achieved the first controlled nuclear reaction in 1942. The US, fearful that Germany would be the first to develop an atomic weapon, assembled a team of leading nuclear scientists from several countries. Their work, known as the Manhattan Project, resulted in the first nuclear explosion at the Trinity test site in New Mexico in July 1945. The world became aware of the enormous destructive power of nuclear weapons a month later when the Japanese cities of Hiroshima and Nagasaki were destroyed.

After the war ended, attention quickly turned to developing the peaceful uses of nuclear energy. The first practical use of nuclear power was in 1951, when an experimental nuclear reactor at a US research centre in Idaho Falls lit four ordinary light bulbs. In 1957, the first full-scale US nuclear power plant went into service at Shippingport, Pennsylvania. It had a generating capacity of 60 megawatts, a small amount by today's standards.

Meanwhile several other countries were also building reactors. In 1954, the world's first commercial reactor produced power in Obninsk, Russia. Britain's Calder Hall started in 1956 and was the world's first industrial-scale nuclear power station. The French nuclear program had a slower start after the war, but generated its first electricity with a reactor at Marcoule in 1956. Canada and Sweden also succeeded in independently generating nuclear electricity, in 1962 and 1964 respectively.

The nuclear industries of these countries grew rapidly during the 1960s and 1970s. The first export orders for nuclear power reactors, awarded by Italy in 1958, were followed by the spread of nuclear electricity generation to many other countries, including the former West Germany, Switzerland, Spain, Belgium, Finland and Japan. The Soviet Union exported reactors to Eastern European countries, including East Germany, Czechoslovakia, Bulgaria and Hungary. Many of these countries developed their own nuclear expertise, leading to the development of today's international nuclear industry.

The world's major source of uranium until the early 1950s was in the Belgian Congo. Later, to meet the requirements of the fast-growing nuclear industry, uranium mining was expanded in the US, Canada, France, Australia, and Africa. Today, Canada produces the largest share of uranium from mines (about one-third of world supply), followed by Australia (one-fifth).

How does uranium become nuclear fuel?
How do you find uranium deposits?
How is uranium mined?
What happens to the ore during milling?
What is refining and conversion?
What is enrichment?
What is fuel fabrication?
How does a nuclear reactor work?
Can nuclear fuel be reused?
How are nuclear fuel wastes handled?

Nuclear Fuel Cycle

How does uranium become nuclear fuel?

Uranium, as it is mined from the ground, is not directly useable for power generation. Much processing must be carried out before uranium can be used efficiently to generate electricity. Uranium's transformation from ore in the ground into nuclear fuel and ultimately the handling of waste products is described as the nuclear fuel cycle.

After a successful exploration program, uranium ore undergoes:

  1. mining and milling to produce uranium concentrate known as yellowcake
  2. refining and conversion of the concentrated uranium into either uranium dioxide (UO2) for heavy water reactors or gaseous uranium hexafluoride (UF6) for light water reactors
  3. enrichment, which increases the proportion of the rarer 'fissile' form of uranium, U-235, which is the essential component of nuclear fuel
  4. fuel manufacture, where the uranium is manufactured into fuel pellets
  5. electricity generation where nuclear fuel is loaded into a reactor and nuclear reactions generate electricity.  After fuel is consumed, it is removed from the reactor and stored on-site for a number of years while its radioactivity and heat subside.
  6. optional chemical reprocessing, after a period of storage, residual uranium or byproduct plutonium, both of which are still useful sources of energy, are recovered from the spent fuel elements and reprocessed. Alternatively, the spent fuel is stored for up to fifty years to allow the radioactivity to diminish; (while its radioactivity and heat subside.)
  7. and finally disposal where, depending on the design of the disposal facility, the nuclear fuel may be recovered if needed again, or else remain permanently stored. At some point in the future the spent fuel will be encapsulated in sturdy, leach-resistant containers and permanently placed deep underground where it originated, thus completing the cycle.

Steps one to four are known as the front end of the fuel cycle; steps six and seven, the back end, refers to what happens after the fuel comes out of the reactor. 

How do you find uranium deposits?

Today's exploration activities are much more complex than in the past since the deposits that were close to the surface were found first because they were easier to discover. With the highest-grade deposits buried in deep rock formations, advanced technologies like satellite imagery, geophysical surveys, multi-element geochemical analysis and computer processing are required to locate and confirm the deposits.

Once geologists locate a prospective deposit, detailed geological and economic evaluation of the grade and characteristics of the orebody must be completed. Then mining engineers develop a mining plan to extract the ore. If the project looks promising, environmental impact assessments and the public consultation process begin so that applications can be made for regulatory approvals of project development. When permits and licences are in place, mine development and construction of surface facilities can begin. The timeline from discovery of an orebody to electricity production can span decades. Cameco's McArthur River mine was fast-tracked and still took 12 years to bring to commercial production.

At Cameco, uranium exploration has focused in recent years on targets in northern Saskatchewan's Athabasca Basin and in Arnhem Land in the Northern Territory of Australia.

How is uranium mined?

Uranium ore is removed from the ground in one of three ways depending on the characteristics of the deposit. Uranium deposits close to the surface can be recovered using the open pit mining method, and underground mining methods are used for deep deposits. In some circumstances the ore may be mined by in situ recovery, a process that dissolves the uranium while still underground and then pumps a uranium-bearing solution to the surface.

Open pit mining

When uranium ore is found near the surface, generally less than 100 metres deep, it is typically extracted by the open pit mining method. Open pit mining begins by removing overburden (soil) and waste rock on top of the orebody to expose the hard rock. Then a pit is excavated to access the ore. The walls of the pit are mined in a series of benches to prevent them from collapsing. To mine each bench, holes are drilled into the rock and loaded with explosives, which are detonated to break up the rock. The resulting broken rock is then hauled to the surface in large trucks that carry up to 200 tonnes of material at a time.

open pit mine
truck being loaded
Cameco's Key Lake mine in 1994. The photo on the left is an aerial view of Deilmann Pit. On the right, ore is being loaded onto a truck to be transported to the surface. After mining was completed in 1996, the pit was converted to a tailings storage facility.
cross-section of McArthur River underground
Cross-section of McArthur River underground development
scoop tram
Mine operator Arthur Bekkattala uses a remote controlled scoop tram to collect and transport uranium ore 640 metres underground at McArthur River, the world's largest, highest grade uranium mine.
in situ recovery mining
Mining at Smith Ranch-Highland uses an environment-friendly extraction method called in situ recovery (ISR).

Underground mining

When an orebody is located more than 100 metres below the surface, underground mining methods are necessary since it is uneconomic to mine by open pit. For example, Cameco's McArthur River orebody is located more than 500 metres below the surface so it is mined using an underground mining method.

The first step in underground mining is to access the ore. Entry into underground mines is gained by digging vertical shafts to the depth of the orebody. Then a number of tunnels are cut around the deposit. A series of horizontal tunnels, called drifts, offer access directly to the ore and provide ventilation pathways. All underground mines are ventilated, but in uranium mines, extra care is taken with ventilation to minimize the amount of radiation exposure and dust inhalation.

In most underground mines the ore is blasted and hoisted to the surface for milling. At McArthur River, due to the potential for radiation exposure from the high-grade ore, processing systems must ensure worker safety. As a result, the ore is processed underground to the consistency of fine sand, diluted with water and pumped to the surface as slurry or mud. The slurry is trucked to the Key Lake site for milling.

In situ recovery

In a few places geological conditions allow uranium to be dissolved directly by pumping mining solutions underground, bringing it back to the surface, and extracting the dissolved uranium. With this in situ recovery (ISR) process there is limited surface environmental disturbance. The surrounding rock remains in place while the dissolved uranium is pumped to the surface then circulated through a processing plant for extraction. ISR is suitable for certain deposits such as Cameco's US operations and is the mining method at the Inkai project in Kazakhstan.

What happens to the ore during milling?

After mining, ore is transported to a nearby mill for processing. In Saskatchewan, Cameco's mills at Key Lake and Rabbit Lake process ore from the McArthur River and Eagle Point orebodies.

Key Lake mill
Rabbit Lake mill
The Key Lake mill processes ore transported by truck 80 km from the McArthur River mine. The Rabbit Lake mill processes ore from the Eagle Point mine located at the operation.
yellowcake
Yellowcake, which ranges in colour from yellow to black, is the final product from a uranium mill.
yellowcake in steel drums
These barrels contain yellowcake and are ready to be shipped to a refinery and conversion facility where it will undergo the next stage of the nuclear fuel cycle.

Uranium ore is a mixture of valuable minerals and waste. The first step in milling is to crush the ore, unless it is in a solution already, and treat it with acid to separate the uranium metal from unwanted rock material. Then it is purified with chemicals to selectively leach out (dissolve) the uranium. The uranium-rich solution is then chemically separated from the remaining solids and precipitated (condensed) out of the solution. Finally, the uranium is dried. The resulting powder is uranium oxide concentrate, U3O8, commonly referred to as yellowcake because it is often bright yellow.

The yellowcake is packaged into special steel drums similar in size to oil barrels. When full they weigh about 400 kilograms. Approximately 43 drums per load are hauled by truck to uranium refineries, the next stage in the nuclear fuel cycle.

What is refining and conversion?

After milling, yellowcake requires further processing. First it is refined to remove impurities which produces high-purity uranium trioxide (UO3). Then, depending on the type of reactor for which it will be used, the UO3 is converted into powdered uranium dioxide (UO2) or uranium hexafluoride (UF6). If converted to UO2, the fuel is now ready to be fabricated into fuel pellets for Candu reactors. If converted to UF6, it must undergo two more steps, enrichment and subsequent conversion to enriched UO2, before it can be finally pressed into usable fuel pellets for light water reactors.

If the processing is completed by Cameco, refinement to UO3 is carried out at our refinery in Blind River, Ontario. Uranium trioxide is trucked 600 km to the Port Hope conversion facility, also in Ontario, for further processing into UO2 or UF6.

Blind River refinery
Port Hope
Cameco's Blind River refinery (shown on left) and Port Hope conversion plants (right) process uranium from Cameco's mines as well as uranium from other mines around the world.

What is enrichment?

Naturally occurring uranium is made up of two different uranium isotopes, approximately 99.3% U-238 and 0.7% U-235. Most commercial reactors require uranium fuel to have a U-235 content of 3 - 5%. Uranium enrichment is the process that increases the U-235 concentration from 0.7% to 3 - 5%. Enrichment involves separation of the lighter U-235 atoms from the heavier and more predominant U-238 atoms in order to concentrate the U-235 portion. There are two commercial enrichment methods: gaseous diffusion and centrifuge.

gaseous diffusion technology
United States Enrichment Corporation, in the US, uses gaseous diffusion technology to enrich uranium.
Source: NAC Worldwide Consulting
centrifuge technology
Urenco uses low cost centrifuge technology to enrich uranium.

Gaseous diffusion

In the gaseous diffusion process, U-235 and U-238 atoms are separated by feeding UF6 in gaseous form through a series of porous walls or membranes that allow more U-235 to pass through. To understand how this method of enrichment works, think of UF6 as equal sized sand particles of two different weights suspended in air. All the sand grains are blown through thousands of sieves, one after another.

Because the light U-235 particles travel faster than the heavier U-238 particles, more of them penetrate each sieve. As more sieves are passed, the concentration of U-235 increases. The process continues until the concentration of U-235 is increased to 3 - 5%. The slower U-238 particles left behind are collected as byproduct and referred to as "depleted tails" or "tails", in other words uranium with a reduced concentration of U-235. The high amount of energy required to force the UF6 through the porous membranes makes the gaseous diffusion process expensive.

Centrifuge

In this type of enrichment process, the gaseous UF6 is placed in a centrifuge (a cylindrical container that spins the UF6 at high speeds). The rapid spinning flings the heavier U-238 atoms to the outside of the centrifuge, leaving UF6 in the centre enriched with a higher proportion of U-235 atoms. The enrichment level achieved by a single centrifuge is insufficient to obtain the desired concentration of U-235. It is therefore necessary to connect a number of centrifuges together in an arrangement known as a cascade. The U-235 concentration is gradually increased to 3 - 5% as it passes through the successive stages of centrifuge cascades. Enrichment using centrifuge technology requires little energy, giving this method a significant cost advantage. Centrifuge requires only about 2% of the energy needed for gaseous diffusion.

Separative work units

Enrichment services are sold in separative work units (SWU). A SWU is a unit that expresses the energy required to separate U-235 and U-238. How uranium is enriched depends on: 1) the amount of uranium feed (UF6) at the beginning of the process; 2) the amount of SWU used; and 3) the concentration of U-235 atoms left over (tails assay) at the end of the process.

A reactor operator knows the amount and concentration of uranium fuel required by each reactor. By varying the level of tails assay, a reactor operator can find the most economical combination of UF6 feed and SWU required for enrichment. To illustrate, consider the following example:

Let's assume you are in the freshly squeezed orange juice business. By deciding first how much juice you are prepared to leave behind in the pulp, you can then decide the optimum balance between the number of oranges you require and the effort required to squeeze them.

If oranges are cheap and the cost of squeezing is high you are less concerned with how many oranges you use, but you want to make your orange juice with the least amount of squeezing. If oranges are relatively expensive and the squeezing process is cheap, you will minimize costs by squeezing fewer oranges more times to get the same amount of juice.

Now think of the oranges as uranium and the effort to squeeze them as SWU. If the price of uranium is relatively low, then you will use more uranium and less SWU to enrich the UF6. If the price of uranium is high and SWU is relatively cheaper, you will use more SWU and less uranium. Enrichment is measured both as the percentage of U-235 in the product and in the depletion. So the percentage of U-235 left behind in the tails assay is critical to the calculation of enrichment. The reactor operator always starts with the tails assay to find the best combination of UF6 feed and SWU. The following table shows two examples of how a given quantity of enrichment could be contracted. The shaded part of the table shows the relative amounts of electricity required to produce that quantity of enrichment which points to one of the key advantages of centrifuge enrichment.

1 kg of UF6 enriched to 3% U-235 could be produced by either of the following combinations:

      Gaseous Diffusion Centrifuge
Natural UF6 Feed Separative Work Units Tails Assay Approximate Kilowatt Hours Required
6.0 kg 3.8 SWU 0.25% 9,500 190
5.1 kg 5.0 SWU 0.15% 12,500 250

It takes about 100,000 SWU of enriched uranium to fuel a typical 1,000 megawatt commercial reactor for one year, which can supply the electricity needs for a city of 600,000 people.

What is Fuel Manufacturing?

Fuel manufacturing is the last stage of the front end of the nuclear fuel cycle before the uranium fuel is ready for use in a reactor. The process begins by pressing powdered UO2 into small cylindrical shapes and baking them at a high temperature (1600 - 1700°C) to make hard ceramic pellets.

In a light water reactor, the fuel pellets are packed in thin tubes called fuel rods. The rods are grouped together into a bundle called a fuel assembly. A typical 1,100 megawatt pressurized water reactor contains 193 fuel assemblies composed of nearly 51,000 fuel rods and approximately 18 million fuel pellets.

fuel fabrication
This illustration shows a cross-section of a typical fuel assembly used in light water reactors. Fuel pellets are inserted into fuel rods, which are grouped together in a fuel assembly.

In a Candu reactor, fuel pellets are loaded into 28 or 37 half-metre long rods grouped into a cylindrical fuel bundle. Twelve bundles lie end to end in a fuel channel in the reactor core.  A Bruce 790 megawatt Candu reactor contains 480 fuel channels composed of 5,760 fuel bundles and over 5 million fuel pellets. 

Fuel bundle and fuel channel relationship.
In Candu reactors, fuel pellets are inserted into fuel rods and grouped together in bundles which are loaded into fuel channels in the reactor core.

How does a nuclear reactor work?

See Nuclear Reactors.

Can nuclear fuel be reused?

Reprocessing

After being in a nuclear reactor for several months, a portion of the nuclear fuel must be replaced with new fuel. The used (spent) fuel contains some residual U-235, plutonium (created when U-238 absorbs a neutron) and wastes from the fission process. Reprocessing is the chemical separation of spent fuel into these three components. The U-235 can again become reactor fuel. The plutonium can be blended with natural UO2 to create mixed oxide fuel (MOX), a fuel used in some reactors in Belgium, Germany, France and Switzerland. The waste is placed in secure storage.

While the costs of reprocessing outweigh its benefits at the present time, Russia and some European countries reprocess used fuel for environmental reasons or as a result of political policy. As well, countries like Japan are turning to reprocessing because they lack domestic fuel sources and wish to be energy independent.

How are nuclear fuel wastes handled?

Radioactive waste is generally divided into three categories depending on its level of radioactivity: low, intermediate and high-level waste.

Low-level waste includes slightly contaminated clothing and items that comes from places such as nuclear medicine wards in hospitals, research laboratories and nuclear plants. Low-level waste contains only small amounts of radioactivity that decays away in hours or days. After the radioactivity has decayed, low-level waste can be treated like ordinary garbage.

Intermediate-level wastes mostly come from the nuclear industry. They include used reactor components and contaminated materials from reactor decommissioning. Typically these wastes are embedded in concrete for disposal and buried.

High-level waste generally describes spent fuel from nuclear reactors. Spent nuclear fuel from nuclear power plants is initially stored in large water-filled pools. The water provides shielding from the radiation and cooling to remove the heat, which continues to be generated by the radioactive material in the spent fuel. After several years, when the radioactivity and its associated heat have diminished, the fuel is transferred to medium-term storage near the nuclear power plants.

The nuclear industry is evaluating long-term storage of high-level waste. While spent fuel is safely stored at nuclear plant sites today, the storage facilities were never intended for permanent storage. Countries operating nuclear power reactors are conducting extensive studies on how high-level wastes should be disposed. Research indicates the ideal permanent storage disposal is in deep underground caverns in stable geological formations.

At present, no country has constructed a repository, although considerable research is being done on a variety of different geologies. Belgium, for example is studying clay formation. The US is investigating the suitability of the volcanic tuffs of Yucca Mountain in Nevada. The site received government approval in 2002 and is now in the multi-year process of licensing application. Finland is the closest to implementing disposal of high-level wastes. In 2001, the Finnish parliament approved the plan to build a repository in the crystalline Precambrian rocks of southwest Finland near the nuclear power plant at Okiluoto.

At this time there is no urgency to build a permanent disposal facility for spent nuclear fuel in Canada because dry storage facilities can provide safe storage for many decades. After years of operations, the high-level waste from all the reactors in Canada would roughly fill a soccer field to the height of 1.3 metres. Nevertheless, it was deemed necessary to demonstrate the feasibility of permanent disposal.

Therefore, a research program led by Atomic Energy of Canada Limited (AECL) was launched in 1975 to develop a concept for disposing of high-level wastes deep in the Canadian Shield. Research was conducted until about 1998 at which time a panel of technical experts and non-technical representatives reviewed the disposal concept. The panel stated that the safety of the concept had been demonstrated from a technical point of view, but not from a social perspective. As the concept did not have broad public support, it was not considered acceptable as Canada's approach for disposing of nuclear waste.

After receiving input from various stakeholders and the public, the federal government introduced nuclear fuel waste legislation in April 2001, requiring nuclear utilities to establish a separate waste management organization to manage the disposal of nuclear fuel waste. The Nuclear Waste Management Organization www.nwmo.ca (NWMO) was established in 2002 to assess disposal alternatives including the option of long-term centralized storage, as well as establish a comprehensive public participation program. On November 3, 2005 the Nuclear Waste Management Organization concluded the first phase of its mandate by submitting its recommendations to the Minister of Natural Resources Canada. After a comprehensive three year study, the NWMO recommended Adaptive Phased Management for the long term care of Canada's used nuclear fuel. For more information on the study and implementation go to: www.nwmo.ca.

How does a nuclear reactor work?
What types of reactors are there?

How does a nuclear reactor work?

Large electrical generating plants which provide most of our electricity all work on the same principle - they are giant steam engines. Power plants use heat supplied by a fuel to boil water and make steam, which drives a generator to make electricity. A generating plant's fuel, whether it is coal, gas, oil or uranium, heats water and turns it into steam. The pressure of the steam spins the blades of a giant rotating metal fan called a turbine. That turbine turns the shaft of a huge generator. Inside the generator, coils of wire and magnetic fields interact - and electricity is produced.

nuclear reactor

The reactor in a nuclear power plant does the same thing that a boiler does in a fossil fuel plant - it produces heat. The basic parts of a reactor are the core, a moderator, control rods, a coolant, and shielding. The core of a reactor contains the uranium fuel. For a light water reactor with an output of 1,000 megawatts, the core would contain about 75 tonnes of uranium enclosed in approximately 200 fuel assemblies.

The neutrons produced by fission are travelling at great speeds, and in most reactors, are deliberately slowed down by a material known as a moderator. Slow neutrons are much more likely, when they collide with the nuclei of U-235, to cause a fission and keep the reaction going. A moderator is composed of light atoms and the materials most commonly used are carbon in the form of graphite, and water.

For more precise control of the chain reaction, control rods are inserted into the core of the reactor. Pushed in, they absorb neutrons and slow down the reaction - pulled out they allow it to speed up again. In this way the chain reaction is controlled.

Fissions occurring in the reactor generate an enormous amount of heat. A liquid or gas coolant carries this heat away from the reactor to a boiler where steam is made.

Shielding, typically made of steel and concrete about two metres thick, is an outer casing that prevents radiation from escaping into the environment.

What types of reactors are there?

All nuclear reactors operate on the same basic principle, but various designs are in use throughout the world.

Reactor Types in Use Worldwide, January 2004

boiling water reactor Boiling Water Reactors (BWR) heat water in the core and allow it to boil into steam. The steam goes directly to the turbine outside the reactor.
Pressurized Water Reactor In a Pressurized Water Reactor (PWR) water is kept under pressure to keep it from boiling, even at 300 C. The pressurized water is pumped through a closed system of pipes called the primary circuit. Heat from the primary circuit warms up water in the secondary circuit. The water in the secondary circuit comes to a boil and its steam turns the turbine. The water in the primary circuit returns to the reactor core after giving up some of its heat.
pressurized heavy water reactor

A Candu reactor is an example of a Pressurized Heavy Water Reactor (PHWR). Fuel assemblies are placed horizontally in a tank called a calandria. Heavy water coolant is pumped through tubes containing the fuel assemblies to pick up the heat generated from the nuclear reaction. The coolant then moves to the steam generators to produce steam from ordinary water and back to the reactor.

Heavy water is a rare but natural form of water and is the most effective moderator used in nuclear reactors to maintain continuous fissioning. Ordinary water is a combination of one oxygen and two hydrogen atoms (H2O). Heavy water is virtually identical, except each of the hydrogen atoms have an extra neutron. This hydrogen isotope is called deuterium (D). Since heavy water (D2O) has almost all the extra neutrons it wants, it slows neutrons in the reactor without significantly absorbing them. The advantage of heavy water is that it permits the use of unenriched uranium as fuel. This means two less steps are required in the conversion process resulting in a more economical fuel source.

fast breeder reactor The Fast Breeder Reactor (FBR) has a core of plutonium surrounded by rods of U-238. The U-238 nuclei absorb neutrons from the core and are transformed into plutonium (P-239). For every four atoms of plutonium that are used up in the core of the breeder, five new plutonium atoms are made from the U-238. Therefore, FBRs "breed" plutonium. Fast breeder reactors work at such a high temperature that they need a special coolant such as liquid sodium. In addition, they are not equipped with a moderator to slow down neutrons, and for this reason are called "fast" breeders.

High temperature gas cooled reactors (HTGR) offer an alternative to conventional light-water cooled and moderated reactors. They use graphite as the moderator and helium as the coolant. One design concept, called a pebble bed reactor, uses a fuel made of tennis-ball sized spheres known as "pebbles". Each pebble contains thousands of tiny "kernels" consisting of enriched uranium and graphite compressed together and coated externally with temperature resistant ceramic. The pebbles are stacked in the reactor and cooled by helium.

high temperature gas cooled reactor

Nuclear Power Reactors: Typical Characteristics

Type of Reactor Fuel Form Coolant Moderator
BWR Enriched Uranium Dioxide Water Water
PWR Enriched Uranium Dioxide Water Water
PHWR (Candu) Natural Uranium Dioxide Heavy Water Heavy Water
GCR Natural Uranium Carbon Dioxide Graphite
AGR Enriched Uranium Dioxide Carbon Dioxide Graphite
LWGR Enriched Uranium Dioxide Water Graphite
FBR Plutonium Oxide and Uranium Dioxide Liquid Sodium None

What is radiation?
What types of radiation are associated with nuclear energy?
What are the sources of radiation?
How is radiation exposure measured?
What are the effects of radiation?
Why do we need radioactive materials?
What controls are there on radiation created by industries?
What safety measures are in place for those who work around radioactive materials?

What is radiation?

All matter is composed of atoms and many atoms are unstable. In fact, over half of the elements in the periodic table including uranium, are in a constant process of rearranging themselves. This is not something that humanity can control.

When the nucleus of an atom attempts to become more stable, it releases energy, known as radiation. Once this happens the original atom changes into a new atom. In some instances, a new element is formed and in other cases, a new form of the original element, called an isotope, appears. The spontaneous change in the nucleus of an unstable atom that results in the emission of radiation is called radioactivity and this process of change is often referred to as the decay of atoms.

Radioactive decay is described in half-lives. The time required for 50% of a given radioactive material to disintegrate (or decay) and become a new element or isotope (i.e. lose one-half of its original level of radioactivity) is known as a half-life. In other words, after one half-life only half of the original material is still around, and after two half-lives only 25% of the original material is still in existence. The half-lives of various substances differ widely, from small fractions of a second to billions of years.

Radiation is energy in the form of sub-atomic particles (protons, neutrons and electrons) or electromagnetic waves. When radiation has enough energy to remove the electrons of atoms with which it interacts, it causes the atoms to become charged, or ionized, and it is called ionizing radiation. Ionizing radiation occurs in several forms - as alpha particles, beta particles or neutrons, or in the form of electromagnetic radiation (gamma rays and X-rays). However, people routinely encounter electromagnetic radiation that is not ionizing. It makes up our visible light, radio and television signals, emanates from our computer screens and heats our food in microwave ovens. Yet, because of their low energy, all of these examples are classified as non-ionizing radiation.

What types of radiation are associated with nuclear energy?

The types of radiation associated with nuclear energy are alpha particles, beta particles, gamma rays and neutron radiation. Each type can interact with matter, including the human body, but all can be effectively stopped by different types of material.

Alpha particles consist of two protons and two neutrons, identical to the nucleus of a helium atom. A sheet of paper or a person's surface layer of skin will stop them. Alpha particles are only considered hazardous to a person's health if they are ingested or inhaled and thus come into contact with sensitive cells such as in the lungs, liver and bones.

A source of alpha particles is radon gas, a colourless and odourless gas formed from the radioactive decay of radium which in turn is one of the products of the uranium decay chain. It is not radon itself that is a health concern, but the radioactive products into which it decays. Radon, being a gas, is simply the vehicle by which members of the uranium decay chain can enter the lungs. Outside the body, radon is not a concern since the alpha particles it emits cannot penetrate the skin.

Beta particles are electrons emitted from the nuclei of many fission products. They can travel a few feet in air but can usually be stopped by clothing or a few centimeters of wood. They are considered hazardous mainly if ingested or inhaled, but can cause radiation damage to the skin if the exposure is large enough.

Neutrons which are contained in the nucleus of an atom can be expelled during fission. They interact weakly with matter and are very penetrating - not easy to stop. Neutron radiation typically occurs inside nuclear reactors but water and concrete provide effective shielding.

Gamma rays are a form of electromagnetic radiation (like light, radio, and television) that come from the nucleus of a radioactive atom. They penetrate matter easily and are best stopped by water or thick layers of lead or concrete. Gamma radiation is hazardous to people inside and outside of the body.

Beta particles, neutrons and gamma rays are produced during the fission process. First, when a uranium nucleus captures a neutron and fissions, electrons, gamma rays, and neutrons are emitted instantaneously. Second, the new fragments formed from the fission of a uranium nucleus emit radiation. Most of this radiation consists of electrons and gamma rays. Third, during fission ordinary materials can absorb neutrons and subsequently emit radiation. Many materials can be made radioactive by exposing them to neutrons. For example, the iron used in the structural supports inside reactors becomes radioactive. Most radioactive materials made this way will emit electrons and gamma rays, but some will emit neutrons.

types of radiation
Alpha and beta particles, neutrons and gamma rays are types of radiation associated with nuclear energy.

What are the sources of radiation?

Radiation is all around us and we are exposed to some form of it every day of our lives. Most natural substances contain radioactive material - soil and rocks, rivers and oceans, food and drinks, our own bodies. A typical backyard, with dimensions of 10 metres by 10 metres and a soil depth of one metre, contains approximately 300 grams of uranium. A typical backyard is therefore slightly radioactive. While uranium emits radiation it is not the only source.

More than 85% of all radiation to which people are exposed occurs naturally, but radiation is also created by our own activities. Take for example the X-rays generated for medical uses. These represent about 12% of the radiation to which we are regularly exposed. Radiation from the nuclear industry is less than 1% of all radiation. A person living at the boundary of a nuclear power plant would receive less radiation each year from living there than received from a single round-trip flight from Vancouver to Halifax.

How is radiation exposure measured?

The principal result of radiation passing through something such as human tissue is the transfer of energy. Radiation loses energy as it interacts with matter and the matter gains this energy. So the unit used to measure radiation is based on the amount of energy absorbed. Radiation exposure, also referred to as dose, is measured in grays (Gy).

Some types of ionizing radiation are more damaging than others. For example, alpha particles tend to deposit lots of energy over very short distances and therefore cause significant damage if they travel through sensitive biological tissue. Neutrons on the other hand, interact very infrequently with atoms but when they do, the effects can be significant. For these significant reasons, different types of radiation are given different weighting factors. These factors are used to relate their physically deposited energy to the biological significance of the damage they cause.

The unit used to measure this biological significance is the sievert (Sv). The sievert is equal to the amount of energy deposited in grays, multiplied by the relevant weighting factor. The higher the factor, the greater the reckoned damage. For alpha particles the factor is 20; for neutrons it is in the 5 - 20 range varying with their energy; for gamma rays and beta particles, the factor is 1.

When estimating damage, several factors are to be taken into consideration such as exposure to the whole body or only a part, and if so, which part. Different tissues (e.g. lungs, liver, bones) have different sensitivities to radiation damage. For example, the most biologically significant radiation emitted by uranium are alpha particles. These cannot even penetrate a person's skin, so exposure to uranium dust on the skin is generally not hazardous. But if the same dust is inhaled and ends up next to sensitive lung tissue it can be damaging to the cells exposed.

radiation therapy
Radiation is an invaluable method of diagnosing injuries and diseases, which it can also cure as well. For example, radiation therapy for cancer helps save many lives. This patient is receiving radiation. (Photo courtesy of the Nuclear Energy Institute)

What are the effects of radiation?

Exposure to radiation and the effects of exposure continue to be subject to controversy. The effects of radiation depend on the dose, which is the amount of radiation a person's body absorbs. Low doses such as those received from the environment, normal work activity exposures, exposures to manufactured products containing radioactive materials — like smoke detectors, and medical procedures like X-rays, have no noticeable effects. Predicting the long-term effects of low radiation exposures is therefore difficult. Most people exposed to low doses do not suffer any harm — just as not everyone who rides in a car will be in an accident, not everyone who is exposed to radiation will develop cancer. However, because there is not enough scientific evidence to conclude what the long-term risks of exposure to low levels of radiation may be, a conservative assumption is that all exposures to radiation may pose some risk.

Studies of animals and humans exposed to high levels of radiation indicate that high doses of radiation can increase the rate of cancer and genetic damage in the body and can have an immediate effect. This may include reddening of the skin, nausea, or even death (at very high doses).

The ability of very high doses of radiation to kill cells is used in cancer treatment. These doses are directed at the cancerous tumour to try and destroy the cancer cells, while every effort is made to leave the normal body tissues around it undamaged.

pharmacist
Nuclear medicine techniques are used to conduct millions of procedures and laboratory tests each year. At least 80% of all new drugs are tested with radioactive materials to help prove that they are safe and effective. Radiation is used to sterilize medical supplies such as syringes, sutures, and clothing worn by health-care workers.

Why do we need radioactive materials?

Radiation and radioactive materials affect our lives in some way every day. Over 400 reactors worldwide use radioactive uranium as the fuel to generate electricity.

Radiation is also used to check for flaws when manufacturing jet engines, to toughen rubber in radial tires, to eliminate static in photocopiers and to scan luggage at airports. Radioactive materials are used in industry to verify the quality of steel, in the production of coated paper, in highway construction to test the density of road surfaces, to test the strength of welds on pipes and in museums to authenticate paintings and art objects.

In agriculture, radioactive materials are used to develop hardier crops, to control insect pests, and to study such things as plant absorption of fertilizer to optimize the rate of application and avoid unnecessary pollution of soil and the water table. Radioactive materials are also used in consumer products such as smoke detectors to improve their performance.

What controls are there on radiation created by industries?

Most countries have their own regulations concerning radiation protection. Many of these regulations are based on the recommendations of the International Commission on Radiological Protection (ICRP), an independent non-profit organization established to provide recommendations and guidance on all aspects of protection against ionizing radiation. The ICRP's main recommendations are that all exposures shall be kept as low as reasonably achievable, with social and economic factors considered, and that dose limits to individuals shall not exceed specific values over specified periods of time.

In Canada, radiation protection is regulated by the Canadian Nuclear Safety Commission (CNSC) which is a federal agency answerable to the Canadian parliament. The CNSC exercises control through a regulatory system that establishes the health, safety, security, and environmental standards for the handling and use of nuclear substances. The CNSC licenses only those activities that can meet and maintain those strict standards.

The use or disposal of radioactive material in Canada must be licensed, and the facilities where radioactive substances are handled are regulated and inspected. This applies to hospitals and clinics using radioisotopes in diagnosis or cancer treatment, uranium mines and refineries, oil companies using radioactive materials for exploration and nuclear power plants.

underground monitor
Underground monitors such as this one at Cameco's McArthur River mine continually check the level of radon and display results like a traffic light. The green light indicates the area is safe.

What safety measures are in place for those who work around radioactive materials?

Radiation has been studied extensively, is easily measured and can be safely controlled. People who work in areas where radiation is a concern wear radiation measuring devices to monitor exposure levels. In work areas such as certain areas in underground uranium mines, various monitoring and warning systems are in place.

Wherever there are concerns about radioactivity, every effort is made to minimize exposure. A person's radiation exposure can be reduced by:

Distance - putting a greater distance between the person and the source of radiation

Shielding - placing something that will absorb the radiation between the person and the source

Time - reducing the amount of time the person is exposed

Cameco utilizes all three of these factors to ensure safety at our uranium mining, milling and processing operations. As well, work areas are continuously monitored for radiation. Workers wear radiation measuring devices as required.

Uranium Markets

Where are the markets for uranium?
Where does the supply of uranium come from?
What factors affect uranium demand?
How are uranium sales contracts structured?
What is the spot market?
How does the long-term market operate?
What is the US-Russia HEU agreement?

Where are the markets for uranium?

The only significant commercial use for uranium is to fuel nuclear power plants for the generation of electricity. There are about 440 reactors operating worldwide, and a total of 96 new reactors that are under construction or planned for completion within the next 10 years (as of February 2008).

World Nuclear Reactors (Cameco estimate, February 2008)1
Cameco estimate
  Outlook to 2017  
 
Nuclear Electricity
20062 (%)
Operating 2008
New
Shutdown
Operating 2017
GWe Change
Argentina
7
2
2
0
4
1.5 
Brazil
3
2
1
0
3
1.4 
Canada
16
18
2
2
18
1.1 
Mexico
5
2
0
0
2
0.0 
USA
19
104
5
0
109
6.5 
Americas Total
 
128
10
2
136
10.5 
China
2
11
23
0
34
23.8 
India
3
17
15
0
32
10.2 
Iran
0
0
2
0
2
2.0 
Japan
30
55
5
1
59
6.1 
Korea (South)
39
20
8
0
28
10.1 
Pakistan
3
2
2
0
4
0.7 
Taiwan
20
6
2
0
8
2.7 
Turkey
0
0
1
0
1
1.0 
Asia
 
111
58
1
168
56.6 
Belgium
54
7
0
0
7
0.0 
Bulgaria
44
2
2
0
4
2.0 
Czech Republic
31
6
0
0
6
0.0 
Finland
28
4
1
0
5
1.7 
France
78
59
1
1
59
1.7 
Germany
32
17
0
0
17
0.0 
Hungary
38
4
0
0
4
0.0 
Lithuania
69
1
1
1
1
0.4
Netherlands
4
1
0
0
1
0.0 
Romania
9
2
2
0
4
1.4 
Slovakia
57
5
2
1
6
0.4 
Slovenia
40
1
1
0
2
1.1 
Spain
20
8
0
0
8
0.0
Sweden
48
10
0
0
10
0.0 
Switzerland
37
5
0
0
5
0.0 
UK
18
19
0
4
15
(1.6)
Europe Total  
151
10
7
154
7.1 
Russia
16
31
13
2
42
11.3 
Armenia
42
1
0
1
0
(0.4)
Belarus
0
0
1
0
1
1.0 
Ukraine
48
15
2
0
17
2.0 
Russia and Eastern Europe Total  
47
16
3
60
13.9 
South Africa
6
2
2
0
4
1.1 
World Total
16
439
96
13
522
89.2 
1 Estimated by Cameco, February 2008. Partially based on public announcements made prior to February 2008.
2 World Nuclear Association (WNA).

Before uranium is ready for use as nuclear fuel in reactors, it must undergo a number of intermediary processing steps which are identified as the front end of the nuclear fuel cycle:

  1. Mining and milling to produce U3O8;
  2. Refining and conversion to produce UF6 and UO2;
  3. Enrichment to produce low-enriched uranium; and,
  4. Fuel fabrication to produce fuel assemblies or bundles.

Nuclear utilities, the ultimate users of nuclear fuel, purchase uranium in all of these intermediate forms. Typically, a fuel buyer from power utilities will contract separately with suppliers at each step of the process. Sometimes, the fuel buyer may purchase enriched uranium product, the end product of the first three stages, and contract separately for fabrication, the fourth step.

Sellers consist of suppliers in each of the four stages as well as brokers and traders. Cameco's involvement comprises selling uranium in the first two steps, and in some cases has unique supply and trading arrangements with customers to manage the latter two steps.

In addition to being sold in different forms, uranium markets are differentiated by geography. The global trading of uranium has evolved into two distinct marketplaces shaped by historical and political forces. The first, the western world marketplace comprises the Americas, Western Europe and the Far East. A separate marketplace comprises countries within the former Soviet Union, or the Commonwealth of Independent States (CIS), Eastern Europe and China. Most of the fuel requirements for nuclear power plants in the CIS are supplied from the CIS's own stockpiles. Often producers within the CIS also supply uranium and fuel products to the western world, increasing competition.

Cameco sells uranium products and services exclusively for the generation of electricity to utilities throughout the western world. There are fewer than 100 companies that buy and sell uranium in the western world. Because the number of uranium producers is small and few among them are publicly traded companies, Cameco believes it prudent to not disclose certain business data in the uranium and conversion segments of its business, including unit production costs.

Where does the supply of uranium come from?

Production from world uranium mines supplies only 62% of the requirements of power utilities. The balance comes from secondary sources. Secondary supply is essentially inventories of various types and include inventories held by utilities and other fuel cycle companies, inventories held by governments, used reactor fuel that has been reprocessed, recycled materials from military nuclear programs and uranium in depleted uranium stockpiles.

Primary production
The uranium production industry is international in scope with a small number of companies operating in relatively few countries. In 2007 eight producers provided approximately 85% of the estimated world production of 109 million pounds U3O8.

Major Uranium Producers (million lbs U3O8)
  
Producer
2007 Production*
   
Cameco
20
Rio Tinto
19
Areva
16
Kazatomprom
12
Russia
10
BHP Billiton
9
Navoi
6
Uranium One
2
General Atomics
2
Other
13
Source: Cameco's supply and demand estimate
  
2005 World Uranium Production

Secondary sources
Secondary sources are a common feature in commodity markets, but they assume a particular importance with uranium. Since 1985, western world uranium production has been less than western world utility uranium consumption. The resulting shortfall has been covered by a number of secondary sources. Excess inventories held by utilities, producers, other fuel cycle participants and governments (including Russian government inventories) have been and continue to be a significant source of supply but availability is declining. Recycled products include reprocessed uranium, mixed oxide fuel and re-enriched tails materials. Some utilities use reprocessed uranium and plutonium derived from used reactor fuel as a source of supply. In recent years, another source of supply has been the use of excess Russian enrichment capacity to re-enrich depleted uranium tails held by European enrichers. Finally, highly enriched uranium (HEU) derived from the dismantling of Russian nuclear weapons has become a significant source of supply equivalent to a large mine. A limited amount of uranium from the US weapons program has been introduced into the market but is not expected to become a significant supply source.

With the exception of recycled material, secondary supplies are finite and will be depleted over the next few years. The Russian HEU, will continue to supply annual quantities to the western market (See What is the US-Russia HEU Agreement?) until 2013.

What factors affect uranium demand?

Demand for uranium is directly linked to the level of electricity generated by nuclear power plants. Reactor capacity is growing slowly, and at the same time the reactors are being run more productively, with higher capacity factors, and reactor power levels.

An external factor expected to have a particularly important impact on the prospects for nuclear power, is the trend towards the liberalization of electricity markets in many countries. Historically, electric power utilities in the western world have operated in regulated electricity markets. Typically, a government regulator allowed each utility to serve a captive market area and earn a prescribed rate of return on its assets. The focus was on delivering a reliable supply of electricity. Since the mid 1990s, however, there has been a transition toward market liberalization. This trend began in the US and has been adopted to varying degrees in Europe and the Far East.

Generally, deregulation in the electrical generation industry has resulted in utilities competing for market share on the basis of price. This new bottom line focus has necessitated changes in utilities' planning and operations including improved operating methods, lower unit production costs and optimizing the use of assets. Faced with the challenge of deregulation, electric utilities worldwide have been restructuring through mergers and acquisitions. Often restructuring has resulted in larger utilities, some of which are strongly committed to nuclear power.

Nuclear utilities have dramatically improved the operating performance of their reactors. One measure of performance is the capacity factor. Across the entire US fleet of reactors, the average capacity factor has increased from 66% in 1990 to 91.8% in 2007. Improved reactor performance translates into greater uranium consumption and to more demand for nuclear services in general.

How are uranium sales contracts structured?

Unlike other metals such as copper or nickel, uranium is not traded on an organized commodity exchange such as the London Metal Exchange. Instead it is traded in most cases through contracts negotiated directly between a buyer and a seller.

The structure of uranium supply contracts varies widely. Pricing can be as simple as a single fixed price, or based on various reference prices with economic indices built in. Contracts traditionally specify a base price, such as the uranium spot price, and rules for escalation. In base-escalated contracts, the buyer and seller agree on a base price that escalates over time on the basis of an agreed-upon formula, which may take economic indices, such as GDP or inflation factors, into consideration.

Delivery quantities, schedules, and prices vary from contract to contract and often from delivery to delivery within the term of a contract.

What is the spot market?

A spot market contract usually consists of just one delivery and is typically priced at or near the published spot market price at the time of contract award. When a contract is priced at spot, it is usually the value quoted by one of the several market information services such as Ux, TradeTech or Nukem, at the end of the month prior to the delivery date. Spot market delivery quantities vary from 50,000 to a few hundred thousand pounds U3O8.

Over the last few years, about 15% of the western world's uranium requirements have been procured in the spot market, that is, for delivery within 12 months of contract award. In 2007, about 20 million pounds U3O8 were traded on the spot market.

How does the long-term market operate?

Historically, some 85% of all uranium has been sold under long-term, multi-year contracts with deliveries starting one to three years after contract award. In 2007, about 250 million pounds of U3O8 were contracted in the long-term market.

Long-term contract terms range from two to 10 years or more, with deliveries to begin two to five years after contracts are finalized. Other commercial terms are specified in the contract.

To diversify market risks, producers and utility customers often maintain a mix of contract terms and pricing mechanisms in their contract portfolios. Buyers are often willing to pay a premium in long-term contracts, compared to spot prices, because they can achieve secure supply at prices that are more predictable.

Cameco sells uranium on the long-term market. However, spot prices do affect Cameco's revenue, as about 60% of its contracts have pricing mechanisms that reference the spot market price at the time of delivery or the long term price indicator. The remaining 40% of Cameco's contract portfolio is sold at fixed prices escalated by an inflation index.

What is the US-Russia HEU agreement?

HEU stands for highly enriched uranium. In 1993, the US and Russia entered into an agreement whereby the Russians would dismantle a significant portion of their nuclear weapons by 2013. This agreement is known as the US-Russia Highly Enriched Uranium agreement or the megatons-to-megawatts agreement. It stipulates the annual quantities of HEU that may be delivered to the US by Russia. The dismantled weapons contain a valuable resource for Russia. HEU can be blended down into low enriched uranium (LEU) and sold in the western world market as reactor fuel for hard currency.

There are three main components that make up LEU: natural uranium (the mine concentrates or U3O8); conversion services that convert U3O8 to UF6; and enrichment, the process of enriching UF6 to LEU. Together, U3O8 plus UF6 conversion is referred to as the natural uranium feed component of the fuel. This feed displaces primary U3O8 production and uranium conversion services.

This agreement provided a major source of new supply - the equivalent of one major mine. Since new supplies of this magnitude can be disruptive in the uranium market, Cameco placed a high priority on ensuring this material was marketed in the western world market in a disciplined fashion and sought participation in the marketing of the natural feed component.

In 1994, the United States Enrichment Corporation (USEC) as agent for the US government, and Russia, signed an agreement whereby USEC would purchase the enrichment component of the LEU upon delivery to the US. In 1999, Cameco and two other western companies, AREVA and NUKEM, Inc. concluded an agreement with Russia whereby they have the option to purchase the majority of the natural feed component of LEU. This agreement is officially called the UF6 Feed Component Implementing Contract. In November 2001, the western companies agreed to exercise a portion of their options to bring predictability to the program - predictable supply to the western market and predictable revenue to the Russians.

As of March, 2008 325 metric tons of weapons grade HEU from the former Soviet Union has been recycled which is equivalent to eliminating 13,000 nuclear warheads. For a chronology and progress report please go to www.usec.com.

What is the difference between nuclear power plants and fossil fuel plants?
What can nuclear electricity be used for?
How safe is nuclear electricity?
How is the nuclear electricity industry regulated?
How big a factor is cost in developing and operating nuclear power projects?
What improvements have been made in reactor design?
What kind of growth is projected for the industry?

What is the difference between nuclear power plants and fossil fuel plants?

All power plants - including nuclear - work pretty much alike. Basically, the fuel (whether that be coal, gas or uranium) heats water and turns it into steam. The steam turns the propeller-like blades of a giant turbine. That turbine drives the shaft of a huge generator. Inside the generator, coils of wire and magnetic fields interact - and electricity is produced.

The biggest difference is that nuclear power plants don't burn fossil fuels - or anything else. Instead, they split uranium atoms. That means they don't create acid rain, soot, urban smog or carbon dioxide (the principal greenhouse gas).  Nuclear power plants avoid more than 2 billion tonnes of carbon dioxide emissions annually.

What can nuclear electricity be used for?

Nuclear utilities rely on their nuclear plants as the backbone of their electricity generation systems. These plants operate 24 hours a day, 365 days a year with only periodic shutdowns for maintenance and refuelling. The nuclear electricity they generate can be used to power anything in a modern economy that requires electricity.

How safe is nuclear electricity?

Nuclear generation of electricity has an excellent safety record. In the nuclear industry, safety is the first thing - and the last thing - on everybody's mind. In the design of nuclear power plants, an important objective can be described as 'defence in depth'. In other words, there are multiple levels of protection to ensure safety. If any system or procedure fails, there is another that provides backup. Typically, a fully automatic (passive) system is provided to backup any manual system or manually-controlled activity. Whenever possible, components of a nuclear facility are designed to be 'failsafe', so that if they should fail, they will do so in such a way that safety is not compromised. Systems are installed to monitor virtually every aspect of a nuclear power plant's operation. In addition, a facility is designed so that, in the unlikely event of all systems failing, the release of contamination will be limited. This critical characteristic is standard for any reactor licensed in the western world. (See What improvements have been made in reactor design?)

A strong safety culture is the foundation of operations at every nuclear plant. Managers and workers take safety very seriously. The training and certification of reactor operators are regulated by national regulators. Minimum training periods for operators are specified and, like airline pilots, operators are required to demonstrate their competence on a simulator.

Although many precautions are taken to reduce the risk of a significant accident at a nuclear power plant, it is impossible to eliminate the risk completely. Consequently, every plant has developed emergency procedures, approved by the local regulatory authority, to be employed in the event of an accident. These procedures are reviewed frequently and tested regularly.

How is the nuclear electricity industry regulated?

The nuclear industry is one of the most highly regulated industries in the world with licensing requirements for construction, operation and decommissioning of all operations involved in the nuclear fuel cycle. In Canada, the Canadian Nuclear Safety Commission (CNSC) is the national regulatory body. In the United States, the Nuclear Regulatory Commission (NRC) oversees all nuclear operations including the review of power plant licence applications.

The International Atomic Energy Agency (IAEA) is an independent intergovernmental, science and technology-based organization, in the United Nations family. According to its mission statement, the IAEA serves as the global focal point for nuclear co-operation. In the context of social and economic goals, the IAEA assists its member states in planning for and using nuclear science and technology for various peaceful purposes including the generation of electricity. It facilitates the transfer of such technology and knowledge in a sustainable manner to developing member states, develops nuclear safety standards and, based on these standards, promotes the achievement and maintenance of high levels of safety in applications of nuclear energy, as well as the protection of human health and the environment against ionizing radiation. The IAEA also verifies through its inspection system that member states comply with their commitments under the Non-Proliferation Treaty and other non-proliferation agreements, to use nuclear material and facilities only for peaceful purposes.

How big a factor is cost in developing and operating nuclear power projects?

Due to the transition to competitive electricity markets, nuclear utilities are reassessing the economic value of their reactors. Where governments formerly subsidized some of the high costs of building and operating reactors, that burden is now shifting to investor-owned utilities. Utilities have responded by reviewing their reactor operations in detail. Less productive reactors are being sold or prematurely shut down. Owners of more productive reactors are pursuing capacity upgrades and licence extensions.

In 2007, US nuclear power plants achieved a record low average electricity production cost of 1.68 cents per kilowatt hour. For a comparison of nuclear's cost to those of other fuels, please see the Fuel Comparisons section. For more information on nuclear energy, please go to the Nuclear Energy Institute www.nei.org.

By comparison with coal, oil and gas consumed in generating electricity, the fuel cost in nuclear power is relatively minor compared to total nuclear costs. This remains true even when conversion, enrichment and fuel fabrication costs are added to that of uranium, together with an appropriate allowance for the cost of spent fuel management and final waste disposal. Even though uranium prices have increased sharply over the past several years, the impact on overall nuclear electricity generation costs are relatively small.

What improvements have been made in reactor design?

Worldwide, increased funding for research and development of new reactor designs reflects renewed interest in nuclear energy. The next generation of reactors is based on today's plants - only easier and safer to operate. They'll rely more on natural forces - like gravity and stored water - instead of pipes and valves. They'll be standardized in design, faster and less expensive to build in part because regulatory approval for construction and operation will be sought before construction begins.

Recently, the Nuclear Regulatory Commission certified the design of the Westinghouse AP-1000, a 1,000 megawatt light water reactor. There are also a number of new reactors under development. These include new light water reactor designs such as the European pressurized water reactor (PWR), which is now under construction in Finland and France. Russia is developing two advanced PWRs. In Canada, the new Advanced Candu Reactor-1000 (ACR-1000),