An agenda to integrate
28 August 2008
A new company has been formed to smooth out the lumps and bumps in nuclear fuel supply market. Accord Nuclear Resources will be backed by the First Reserve private equity group and intends to operate fuel cycle facilities in the near term.
Buyers of reactor fuel currently negotiate individually with suppliers of uranium and the various chemical and industrial processes that follow in the manufacture of the finished fuel. This fragmentation has long been seen by investors outside the nuclear industry as confusing and unnecessary.
Since the recent renaissance in the uranium market, which began once it was clear that secondary supplies from various governments would comes to an end, there has been growing interest in the various business opportunities offered by the fuel cycle - in integrating them and providing the commitment and investment that was lacking in the market's former state.
The latest effort to address the condition of the nuclear fuel market is Accord Nuclear Resources, headed by CEO Charles Scorer and executive vice president David Sloan, who have backgrounds with uranium traders Nufcor and Nukem respectively. Despite that history, however, the new firm will not focus on uranium trading. David Sloan told World Nuclear News the company saw itself as a future nuclear operator, and that it plans to get involved in nuclear fuel facilities in the near term. It will integrate activities where it should be more efficient to do so.
Sloan said the company would target the companies and facilities meeting today's needs, while also looking at the longer term picture of providing security of supply during the coming period of expansion. Accord wants the hard assets to produce front-end nuclear products and the timescale for that is "as fast as possible." Sloan would not be drawn on the objectives of Accord's opening deals but noted the lack of forthcoming uranium conversion capacity in the West to match the current expansion in enrichment. Accord is interested in facilities and supporting services to the nuclear fuel cycle up to but not including the enrichment stage (uranium mining, milling and conversion).
Financial muscle to establish a position for Accord will come from First Reserve, which boasts a 25-year history of investing exclusively in energy. The firm has been involved in the formation of over 30 companies, including Torus Insurance last month which came with $720 million of equity funding. Accord will have offices in London, UK and Greenwich, Connecticut.
Other notable initiatives to integrate fuel cycle activities include those of KazAtomProm which will build on an existing Kazakh uranium operation to provide everything up to and including finished reactor fuel. In the North America, GE-Hitachi hopes to add a large laser enrichment capability to its fuel manufacture business, while uranium miner Cameco has recently bought into the project - and also owns a significant stake in Bruce Power. In addition, the power generator Constellation recently bought Nufcor in order to help secure its own uranium supplies, and new uranium miner Paladin has established a uranium trading subsidiary.