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Commodity Investing

The Future of Nuclear: Is Thorium a True Threat to Uranium?

The Future of Nuclear: Is Thorium a True Threat to Uranium?

by Justin Dove, Investment U Research
Friday, September 23, 2011

Nuclear power took a huge public relations hit in the wake of the Fukushima disaster. A supposed “clean” energy, it caused massive devastation and left miles of land uninhabitable for thousands of years. At least 25 reactors in Europe were shut down or cancelled since the triple meltdown in March.

But what if nuclear power could produce more power with less material, while being incredibly less risky?

There’s a growing sentiment that it may be possible with a little-known radioactive metal called thorium. An article in the latest issue of Los Alamos Laboratories’ National Security Science opened with this introduction:

“Imagine an element that when used in a nuclear reactor is so safe that it may never lead to the possibility of the type of catastrophic meltdown that threatened the reactors in Japan. Picture one ton of such an element producing as much energy as 200 tons of uranium or 3,500,000 tons of coal.”

It sounds like science fiction. But when the prestigious Los Alamos Laboratories is involved, the concept receives a ton of credibility.

Thorium and The Cold War Conspiracy Theory

The use of thorium in nuclear reactors is nothing new. Its research dates back to the Manhattan Project.

So why is it just beginning to create a buzz now? Well, to some, it’s a big Cold War conspiracy.

Former Oak Ridge National Laboratory (ORNL) Director Alvin Weinberg filed many of the patents on the uranium-based light water reactors (LWRs) that are currently used around the world. He knew LWRs and their limitations as well as anyone.

In 1954, Weinberg developed the first molten salt reactors as part of a project to create a nuclear-powered aircraft. While the nuclear-powered aircraft project never took off, Weinberg fell in love with thorium-based molten salt reactors.

By 1973, he became convinced that these molten salt thorium reactors were safer and more stable than LWRs. But according to the conspiracy theorists, the political powers that be were more interested in making nuclear weapons. The byproduct of uranium reactors is plutonium, which can be used to make nuclear weapons.

Thorium, on the other hand, is lousy for nuclear weapons. So in 1973, the Nixon Administration fired Weinberg. Research in thorium and molten salt reactors was forgotten.

But now that China announced they’re trying to develop thorium nuclear technology, the radioactive metal may regain political support.

According to a Wired report in February, “With nuclear weapons less in demand and cheap oil’s twilight approaching, several countries – including India, France and Norway – are pursuing thorium-based nuclear-fuel cycles…

A Chinese thorium-based nuclear power supply is seen by many nuclear advocates and analysts as a threat to U.S. economic competitiveness.”

Changing The Way Our Economy Views Thorium

Currently thorium has no real uses in today’s economy. It’s actually viewed as waste, a radioactive byproduct of rare earth mining.

The U.S. government even has 3,200 metric tons of thorium trapped in nuclear waste from the 1960s. Since disposal would cost $60 million, the waste is buried in a shallow grave in Nevada.

It’s estimated that there are only about 80 years left of sustainable uranium production.

Thorium would be inexpensive to mine, since it’s plentiful and little is needed.

Because of this, the mining and production of thorium would probably never be as profitable as it is for uranium. Thorium will most likely be produced and cheaply sold as a byproduct by rare earth miners, such as Molycorp (NYSE: MCP)*.

Lynas Corp. (OTC: LYSCF.PK) is actually planning to get rid of the thorium it will encounter at Mount Weld. The expensive plans involve diluting the radioactive metal with lime, encasing it in concrete and using it for artificial reef systems.

But if China, India, France, Norway, or even the United States’ plans for thorium nuclear reactors take hold, costs could be reduced greatly for Lynas. Instead of the expensive disposal of thorium, it could be sold for use in reactors. Thorium probably wouldn’t be very profitable, but the lack of expense would certainly help the company’s bottom line.

The Companies Leading the Way in Thorium Technology

Rather than investing in the miners or directly in thorium, the biggest beneficiaries will be entrepreneurial companies that lead the way in producing the reactors**.

So far, the only publicly traded pure play on thorium nuclear power is Lightbridge Corp. (Nasdaq: LTBR). Dr. Alvin Radkowsky, who was a chief scientist at the U.S. Atomic Energy Commission (later named the Department of Energy), founded the company in 1992. Originally called Thorium Power, Ltd., the name was changed to Lightbridge in 2009.

However, with a market cap of $34 million and no profitability, Lightbridge is a wildly speculative company.

Another company to watch is Flibe Energy. It’s a private start-up created in May by Kirk Sorensen, a former NASA engineer who dedicated his life to promoting Weinberg’s work with thorium molten reactors. There’s no telling if the company will ever become public or profitable, but this guy seems to be the current authority on thorium nuclear power.

Also, pay attention to the effect this could have on energy companies that currently use coal plants or uranium-based reactors. Uranium miners and producers will also likely take a hit if this technology comes to fruition***.

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