An energy world in revolution: how to secure the nuclear fuel supply?

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1 An energy world in revolution: how to secure the nuclear fuel supply? Luminita GRANCEA AREVA - International & Marketing Department Front-End Marketing luminita.grancea@areva.com Nuclear Fuel Cycle Information System NFCIS Technical Meeting IAEA Vienna - December, 2010

2 An energy world in revolution Sharply rising energy demand worldwide Limited fossil resources Consensus on climate change and on the need for greenhouse gas reduction Legitimate aspirations towards development by people in many emerging countries Today, the world needs twice as much energy and half as much CO 2 Nuclear: contributing to a reliable, economical, carbon-free energy NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.2

3 Story line A new era of the Nuclear Power is already taking shape, especially in Asia rapid reactor build-up and the consequent large growth in U demand is one of the key points in the nuclear fuel industry today. Major implications Need for a LT supply of the fuel requirements starting with Uranium Need for reliable fuel cycle facilities to accompany the new Nuclear Power Plants during their lifetime Well mastered safeguards Mean huge Capex in a tough financial environment Current Front-End market conditions are far away from reflecting the nuclear renaissance But prepare the LT is the right way to do as long way from projects to production! NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.3

The nuclear revival is a fact Global Nuclear Power Reactor New Builds Uranium requirements (in ktu), WNA 2009 report 160 Upper case Base case 140 120 + 113 % 100 80 + 61 % Source: WNA, 2010 60 40

4 The nuclear revival is a fact Global Nuclear Power Reactor New Builds Uranium requirements (in ktu), WNA 2009 report 160 Upper case Base case % % Source: WNA, The nuclear renaissance is already taking off and it is driving uranium and fuel cycle services requirements. NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.4

5 Content Market outlook A long standing effort to secure nuclear fuel supplies: Uranium mining UF6 Conversion Uranium Enrichment Fuel fabrication While constantly improving operational, safety and environmental performance NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.5

6 Being prepared in Uranium mining: a long standing effort NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.6

Growth in primary uranium production needed Primary Uranium production vs reactor requirements Source: WNA, Ux Consulting Uranium requirements are growing as new reactors are built and planned

7 Growth in primary uranium production needed Primary Uranium production vs reactor requirements Source: WNA, Ux Consulting Uranium requirements are growing as new reactors are built and planned Secondary supplies will significantly decrease after 2013 Production ramp up and required projects developments are significant NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.7

8 Need for increasing U production and resources over the long term But where are we today? tu Uranium production (tu) the last decade Total Other USA Uzbekistan Niger Russia Namibia Australia Canada Kazakhstan Source: WNA, 2009 After years of flat output, 2009 mine supply strong increase relies almost exclusively on Kazakhstan Exploration takes up to 15 years and M$ and global spend is highly correlated to Uranium spot price NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.8

9 Do we have enough uranium resources? Next generation Uranium at what cost? Identified uranium resources (in ktu), 2007 vs IAEA Red Book % % 796 <$40/ kgu <$80/ kgu <$130/ kgu <$260/ kgu The overall amount of identified resources (IR) increase by ~15% between 2007 and 2009 However, the resources below $40/kgU represent only 12.6% of the total resources in 2009 vs 54% in 2007 There is still some adjustments that need to be made to reflect the real costs Red Book: IR are enough (over 100 years) but the amount of ressources < $40/lb significantly reduced NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.9

10 Uranium production planned figures & the reality WNA forecasts and the real production Various issues Licensing issues Financing issues Technical issues Political issues Various consequences Projects delayed / postponed Longer ramp ups than expected Downsides at existing mines New uranium projects face many challenges in coming into production NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.10

11 Areva s Mining portfolio and how do we secure the future supply CANADA Mc Arthur Mc Clean Cigar Lake, Midwest, Kiggavik, Shea Creek FRANCE KAZAKHSTAN Katco MONGOLIA Sainshand JORDAN USA AREVA: 8626 tu produced in 2009, 17% of world production Active mines Mining projects Exploration Offices Reclaimed mines SENEGAL NIGER Somaïr Cominak Imouraren NAMIBIA Trekkopje GABON SOUTH AFRICA Ryst Kuil CENTRAL AFRICAN REPUBLIC Bakouma AUSTRALIA A worldwide diversified uranium producer NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.11

12 Canada Our strategy: manage a portfolio of projects to anticipate the renewal of resources Kazakhstan Development (Shea Creek, Kiggavik etc.) Exploration since 1964 Cigar Lake production to start in 2013 (+2,600 tu) Mining & global fuel agreement signed Katco production ramp-up / license for 4,000 tu obtained - Largest number one ISL production in the world > at 3,000 t U Mongolia Sainshand Exploration Morocco Agreement signed with Office Chérifien des Phosphates AREVA Resources Southern Africa Namibia - Trekkopje: mining permit obtained / desalination plant tests / +3,000 tu production expected Central African Republic -Bakouma: government agreement obtained +2,000 tu production expected South Africa Ryst Kuil Exploration With important resources allocated: budget and staff Niger Production (metric tons of U) Somaïr & Cominak mines Somaïr: starting heap leaching Imouraren mining license obtained - Start up (+ 5,000 tu) Democratic Republic of Congo Mining partnership Australia Exploration since 1969 ~ 8,600 10,000 12, NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.12

Current Key Mining Projects AREVA is starting now to prepare the future (meaning costs and risks ) Large mining project Capex are in the range of 0.

yr Investment (1) : > 1Bn April 2006: Project launched May 2008: Feasibility study completed 2010: Start of construction 2014: Start of production Katco Mine operator: KATCO

after 3 years of pilot operations 2009: Production of 3,100 tu 2012: Production capacity of 4,000 tu Trekkopje Cigar Lake Mine operator: AREVA Shareholder: AREVA (100%)

of construction 2012: Start of production Mine operator: Cameco Shareholders: Cameco (50%), AREVA (37%), third parties Resources: 135,000 tu Planned production (1) : 7,000

13 Current Key Mining Projects AREVA is starting now to prepare the future (meaning costs and risks ) Large mining project Capex are in the range of 0.5 to >1 billion euros Imouraren Mine operator: AREVA Shareholders: AREVA (57%), State of Niger (33%), KEPCO (10%) Resources: tu Planned production (1) : 5,000 tu / yr Investment (1) : > 1Bn April 2006: Project launched May 2008: Feasibility study completed 2010: Start of construction 2014: Start of production Katco Mine operator: KATCO Shareholders: AREVA (51%), Kazatomprom (49%) Resources: 54,400 tu Planned production (1) : 4,000 tu / yr Investment (1) : > 400M April 2004: Start of commercial production after 3 years of pilot operations 2009: Production of 3,100 tu 2012: Production capacity of 4,000 tu Trekkopje Cigar Lake Mine operator: AREVA Shareholder: AREVA (100%) Resources: 42,324 MTU Planned production (1) : 3,000 tu / yr Investment (1) : > 700M July 2007: UraMin acquisition April 2008: Feasibility study complete End of 2008: Start of construction 2012: Start of production Mine operator: Cameco Shareholders: Cameco (50%), AREVA (37%), third parties Resources: 135,000 tu Planned production (1) : 7,000 tu / yr Investment (1) :: > 1 Bn 2010: Dewatering completed 2013: Start of production Note: (1) Production and Capex figures are 100% basis NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.13

Best things come to an end Environmental management and remediation Beyond production, acting as a environmentally responsible actor is key to long term security of supply Remediation and

certification or Environmental Management System Precautionary & preventive measures at every step of operation so as to prevent risk and mitigate impact on environment Cluff Lake (Canada)

14 Best things come to an end Environmental management and remediation Beyond production, acting as a environmentally responsible actor is key to long term security of supply Remediation and supervising of sites at their end of life is critical Environmental management is an integrated approach throughout the mine lifecycle AREVA has good records in environmental issues ISO certification or Environmental Management System Precautionary & preventive measures at every step of operation so as to prevent risk and mitigate impact on environment Cluff Lake (Canada) site before remediation Cluff Lake site after remediation 9 sites closed in 15 years on 3 continents Total investments: > 300 M NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.14

15 Being prepared in UF6 Conversion: NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.15

Market Outlook: Increasing demand for conversion and related supply risk Future reactor needs require replacement of existing capacity and the adding of new capacity across the fuel cycle.

16 Market Outlook: Increasing demand for conversion and related supply risk Future reactor needs require replacement of existing capacity and the adding of new capacity across the fuel cycle...far from met. Even with possible new secondary supplies, there is a clear need for more primary conversion supply post Tons of Uranium in UF 6 Secondary resources Additional new capacities needed Potential new capacities Need of ~40-45 ktu in UF 6 Existing capacity replacements Existing capacities, to be upgraded or replaced Equivalent reactor needs (WNA reference scenario, 2009) NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.16 16

17 Conversion Market Driven only by a few main players Canada: CAMECO Port Hope & Blind River Capacity: 10,000 tu / year UK: NDA Springfields 5,000 tu / year Russia: AtomEnergoProm Angarsk (AECC) & Seversk (SCC) Capacity: 15,000 tu / year USA: ConverDyn Metropolis Works Plant Capacity: 13,000 tu / year France: AREVA COMURHEX Malvesi & Pierrelatte Capacity: 14,000 tu / year Adaptable to a wide range of uranium concentrates China: CNNC 3,000 tu / year National requirements Source: Trade Press and AREVA estimates Four companies account for 90% of nominal capacity and production. Almost all western conversion plants have to be replaced over the next years. NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.17

COMURHEX II AREVA is renewing and extending its capacities Investment: > 600M COMURHEX II Extendable Capacity: 15,000 tu per year, extensible to 21,000 tu only with market support Pierrelatte Malvési

18 COMURHEX II AREVA is renewing and extending its capacities Investment: > 600M COMURHEX II Extendable Capacity: 15,000 tu per year, extensible to 21,000 tu only with market support Pierrelatte Malvési Start of Construction: 2009 Start of Production: 2012 Nominal Capacity: 2015 All conversion facilities worldwide are old and production disruptions already happened. AREVA is the first to invest in a brand new conversion facility. COMURHEX II: technological innovations to respect stringent environmental and safety standards. NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.18

Comurhex II Project Key Project Milestones 2004-2007: Feasibility studies, including choice of processes and Design February 2007: Project officially approved by AREVA Executive Committee 2007 2008:

19 Comurhex II Project Key Project Milestones : Feasibility studies, including choice of processes and Design February 2007: Project officially approved by AREVA Executive Committee : Setting up the project platforms 2009: Public information process public inquiries. Start of civil engineering work : Construction of new units and testing : Gradual startup of units 2015: Full production capacity (15,000 metric tons) Malvési Plant Pierrelatte Plant NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.19

20 Being prepared in uranium Enrichment: NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.20

SWU market perspective in line with nuclear renaissance (000 s SWU) > Supply (SWU) compared with the three demand scenarios Source: WNA, 2009 Enrichment

21 SWU market perspective in line with nuclear renaissance (000 s SWU) > Supply (SWU) compared with the three demand scenarios Source: WNA, 2009 Enrichment needs: 48 MSWU in 2009 to 66 in 2020 and probably 80 in 2030 (WNA, 2009, reference scenario) NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.21

Four enrichers provides for 95% of the world enrichment capacities 12.7* URENCO centrifugation 26* 10.8* USEC gaseous diffusion *estimated capacity, 2010 (MSWU) AREVA diff.

22 Four enrichers provides for 95% of the world enrichment capacities 12.7* URENCO centrifugation 26* 10.8* USEC gaseous diffusion *estimated capacity, 2010 (MSWU) AREVA diff. gaseous gazeuse diffusion ROSATOM centrifugation 8.0* < 1* 1.5* CNEIC centrifugation JNFL centrifugation A large part of current capacities to be replaced before 2015: current gaseous diffusion plants, also ancient Russian centrifuges New projects: LES (Urenco), GBII (AREVA), USEC, EREF (AREVA), GLE (pilot phase) NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.22

fruitful partnership through the entrance of different utilities 5% 2.

23 GEORGES BESSE II AREVA is renewing and extending its capacities Investment: 3B GEORGES BESSE II Capacity: 7.5 million SWU/y expandable to 11 MSWU Pierrelatte UF6 introduction in the plant: December 2010 Nominal capacity reached by 2016 A fruitful partnership through the entrance of different utilities 5% 2.5% 2.5% 1% Tohoku & 1% Kyushu Long term security of supply implies access to the right technology (50 times less power/swu) at the right place (skills, acceptance ) NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.23

South Unit September 2006: Start of civil engineering works February 2008: CAB* hand over to ETC** March 2008 : Delivery of the first Cascade hall March 2009: Installation of the centrifuges

engineering works September 2010: CAB* hand over to ETC 2016: Full production (3.

24 South Unit September 2006: Start of civil engineering works February 2008: CAB* hand over to ETC** March 2008 : Delivery of the first Cascade hall March 2009: Installation of the centrifuges in the first Cascade Hall November 2009: First cascade rotation at nominal speed August 2010 : Control room hand over Georges Besse II Key Project Milestones March 2009: Start of civil engineering works September 2010: CAB* hand over to ETC 2016: Full production (3.2 MSWU) * CAB = Centrifuge Assembly Building December 2010: UF6 introduction in the plant (South Unit) & Grand Opening 2016: Full production South & North Unit (7.5 MSWU) North Unit **ETC=Enrichment Technology Company UF6 annexes NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.24 Control Room 24

Centrifuge Assembly Building Separation Building Modules UF6 Buildings $2 billion loan guarantee received from DOE.

25 Eagle Rock: An Enrichment Facility for the US market Eagle Rock Idaho Falls Investment: 2.5 Billion $ Capacity: 3.3 million SWU/y expandable to 6.6 MSWU Expected to start production in 2014 A proven and reliable centrifuge technology, already licensed by the NRC (same centrifuge technology as GBII in France). Centrifuge Assembly Building Separation Building Modules UF6 Buildings $2 billion loan guarantee received from DOE. Evaluation criteria: reliability of the proposed technology, innovation and financial strength. Construction will begin in 2011 subject to licensing and the necessary diplomatic agreements. Operation Support Building Technical Support Building Blending, Sampling and Preparation Building NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.25

26 Being prepared in fuel fabrication: investment & partnership NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.26

27 AREVA Fuel Activities Largest plant capacity worldwide, ready and renewed for growth Lingen Richland Lynchburg Dessel Rugles Montreuil-Juigne Paris Paimboeuf Lyon Romans-sur-Isère Pierrelatte Duisburg Karlstein Erlangen Ugine Jarrie Tokai (JV with MHI) Shimonoseki (JV with Zirco Products) Richland Lynchburg Romans Dessel Lingen Total Powder t t * 800 t * 3,800 t FAs 700 t 700 t 820 t * Clad Paimboeuf km Duisburg km Total km 700 t Design and Sales 650 t * Fuel Manufacturing Plants Component Manufacturing Plants * licensing limit Zirconium Plants NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.27

28 Fuel Manufacturing Optimization of our fuel footprint The largest fuel manufacturing capacity worldwide distributed across 15 sites requires consolidation Consolidation of US fuel fabrication in Richland, WA Over $130M to modernize the Romans Fuel Manufacturing plant (France) Targeted licensed capacities: 1800 t of Powder, 1400 t of Fuel Assemblies Over $130M to develop the Zirconium industrial tool, Joint venture with MHI (MNF), plus acquisition of 1/3 stake in Zirco Products (Japan) Increased capacity ( 7500 km), reliability and throughput on main production facilities NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.28

29 Sustainable development NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.29

30 Sustainable development: a core concern of our industrial strategy We must be faultless when it comes to safety, security and ethics. AREVA Way drives our sustainable development performance. Revolving around 10 major commitments, it is at once a state of mind, a goal and a way of acting specific to AREVA. NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.30

31 Commitment to local communities and involvement in infrastructures development: a key to sustainability Community relations Schools Infrastructure development Desalination plant Training Road project Hospitals Power line NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.31

32 Conclusion AREVA believes in Nuclear Renaissance and is committed to secure the future in the fuel cycle. We are already building brand new facilities investments in new uranium mines a complete replacement of UF6 conversion plant two large centrifuge enrichment facilities and Investments & partnerships in fuel fabrication and in zirconium cladding production We also integrate environmental, social and governance factors in our decision-making in order to guarantee the sustainability of our facilities and to guarantee the security of supply NFCIS Technical Meeting: L. Grancea IAEA, Vienna, December 2010 p.32

A New Era of Fuel Supply

A New Era of Fuel Supply Xavier Vottero VP Operational Marketing and commercial Strategy Mining & Front End Sales LAS/ANS 2010 22 June 2010 Diagram_Green_EN Complete Fuel Cycle Coverage from Front End