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Rare Earths and Energy - Thorium


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Thorium -  Rare Earth and Energy

 

I am not an expert on rare earth mining, but I am a knowledgeable person of the marketplace, reactor design, international politics and engineering. This article will contain forward looking statements and extrapolations from existing information to arrive at conclusions. For investment purposes, you are urged to do your own research. Any potential investment gains from advancements in thorium reactors would be on a longer time scale (China’s production goal is 2020), with investment payoffs unlikely in the next 5 years. Trade accordingly.

 

Background

Thorium is considered by the rare earth mining industry to be a waste product in mineral deposits. It is a radioactive element that is prevalent in nature. The disposal of thorium is often by incorporation into waste sand and then back filled in mining areas.

Thorium is also a potential super fuel for nuclear reactors. Due to the long term stability of the material and the use in liquid-fuel reactors, it is less hazardous than current technologies. It is also more widely available than current materials used in nuclear reactors. Urainium is as rare as platinum while thorium is found in vast quantities and can be produced as a byproduct of rare earth mining.

In the 1960s, the USA experimented with thorium reactors but decided to follow a path using a more known substance: Uranium. This stalled research and development of thorium reactors until more recent times. Currently, the USA only has minor research into the use of thorium reactors, mostly for military applications. China is furiously racing to produce thorium reactors and corner the market on reactor production. India has a similar program, albeit with less funding, to develop these reactors.

98% of the world’s rare earth minerals come from China. India has large deposits of thorium, more so than other potential fuel sources. The USA no longer has a large scale rare earth mining industry, with the biggest player, Molycorp in receivership. The USA is a long way from producing either thorium or a reactor to use it. Other countries in the world, like South Africa, don’t currently have production online but are allocating resources to thorium mining in speculation of reactor design success.


Nuclear Reactors

Nuclear fuel comes in different volatilities. An analogy would be that thorium is coal, uranium is wood and plutonium is petrol. Plutonium is commonly used in space application where weight is the critical factor and radiation emission is less critical. On earth, Uranium is the common fuel in nuclear reactors.

Uranium reactors use a solid fuel cooled by superheated water. This poses a problem when the water breaks through containment, as we saw in Chernobyl. The designs for these reactors require massive buildings to compensate for ruptures and failures. In Chernobyl, the steam expansion blew the roof off of the reactor, exposing the cooling rods to air. These rods are made of graphite, which then burned in the atmosphere. The smoke and debris from this fire carried with it radioactive material, creating the disaster.

Uranium reactors do not use all of their fuel. As the reaction happens, gas buildup in the rods slows the process. It can crack and warp the fuel rod pellets to such an extent that the majority of the fuel is not consumed. This unused fuel must then be stored and disposed of in a safe manner for a very long time. This creates high costs and very long term commitments by this industry and governments.

The world is scared of radiation and bombs. Most uranium is unsuitable for bombs and requires lengthy processing to become enriched. This is a way of separating heavier uranium from lighter uranium (it is not a chemical process, so it is very challenging). Plutonium is useful for bomb making; however it is a product of uranium reactions so to generate plutonium also requires a nuclear reactor.

 Thorium is sufficiently stable (long half-life) that it is unsuitable for bomb making. At the worst, it could be used in a dirty-bomb, however only 0.02% of the material ingested would remain in the body. Thorium actually poses less heath risked, even when used as a weapon, that the radiation dose common from the use of natural gas and coal (natural gas has radon and similar byproducts that are far more detrimental to humans). So wide scale adoption of thorium reactors would limit production of nuclear weapons grade material.

Thorium is sufficiently stable that it requires refined uranium to kick-start a nuclear reaction. This is like using newspaper to get a coal fired barbeque started.

 

Liquid Fluoride Thorium Reactors

Here is a quick 5 minute video on LFTR: https://www.youtube.com/watch?v=uK367T7h6ZY

And the full length version: http://topdocumentaryfilms.com/thorium-dream/

 

LFTR reactors use liquid fuels to generate their power. This means that the fuel can be used more efficiently (less waste products). The gasses emitted are not detrimental to the material (they boil off). The safety features of these reactors operate in a total power loss scenario (EM pulse, tsunami, wide spread catastrophic failure).

This technology is safer, cheaper and more accessible as the source of energy of the future.

Due to the compact nature of the rector design, thorium reactors have the potential to be compartmentalized into shipping container sized generators. This allows these generators to be utilized in remote locations (mining requires such high levels of energy inputs). It also has the potential to fuel the future of shipping as a use on freighters (massive cost savings over diesel).

 

 

Politics of thorium

China

China controls 98% of rare earth production. They currently have a development program working to design and build thorium reactors. China is attempting to corner the market on thorium reactors. They hope to mass produce these generators. They also control the fuel production for these generators.

India

India has a thorium reactor program. They also have wide scale thorium deposits available, unlike other fuels that must be imported.

USA

The USA has a very small thorium development program. The USA dropped funding for thorium reactors in the 1960s in favor of Uranium development. Current funding is primarily military for application on battle ships. American scientists are working with Chinese developers to create thorium reactors, however the information flow is primarily into China.

The USA currently does not have rare earth production. Molycorp is currently in bankruptcy and restructuring procedures. It is unlikely that this struggling company would incorporate thorium production into their business model.

Australia

Australia has rare earth mining and refinement. Many deposits being exploited are low thorium deposits (thorium seen as an environmentally detrimental waste deposit). Australia has uranium mining that also has a vested interest in stifling thorium technology.

South Africa

South Africa has historic thorium and rare earth mines. As thorium production was taken off line in the 1960s, these mines are currently in the “seeking capital” phase of production to come back online.

 

Forward Looking Potential

China sees the potential of compact reactors and is seeking to corner the market. This would make China the main supplier of energy generation technology in the future.

Peak oil has been reached. Some estimates indicate as early as 2005. As oil price drops, less productive deposits are being abandoned. Eventually, all oil produced will require huge amounts of effort and energy inputs, creating a prohibitively expensive oil and gas price. Alternate sources of energy will be required to sustain current population lifestyles. Long term, these energy sources will cease to be feasible at high cost of production values.

Current oil producers have forced prices lower in a time of high cost of production. This will help these fuel suppliers corner an already stressed market. Long term, this method of flooding the market is unsustainable.

 

Chinese Monopoly

China has cornered the market on rare earth production, and by default thorium. This puts China in the position as a controller of fuel for the next generation of power supply. This will place China in as a near monopoly in future energy supply.

As the controllers of the rare earth industry, China may be keeping rare earth prices artificially low to force out international players. This would create a monopoly for China as the sole supplier of thorium to the new industry. As the leader in this industry, and a monopoly holder of the impute materials, China will be able to control the future of power production. This would make China the new Saudi Arabia of energy supply.

This constitutes an energy security issue, long term, which will affect the nature of geopolitics as oil becomes less relevant on an international scale.

To ensure the security of this new market, funds need to be allocated now by governments to invest in reactor design and thorium mining. Storage facilities should be set up for thorium to ensure that there is not a monopoly player able to manipulate and hold ransom this potential market.

 

Profiting

There is a high potential that China will keep rare earth prices artificially low in hopes of forcing international production out of business. This will create a monopoly for Chinese rare earth miners. A monopoly will likely lead to vastly higher prices for materials. This creates a high level of short risk for rare earth investment.

The profit potential for thorium power generation is primarily in reactor design. China hopes to profit by selling these reactors and in essence corner the market on reactor production. As the majority of the design and development is occurring in secret, it is not a simplistic mater to invest in this technology. After these developers secure the exclusive rights to the designs, there is the potential that the companies will be publicly traded. This may be a high risk investment at even the “proven design” and “full scale production” stages of development.

Secondary industries that would benefit from reactor design are not yet an attractive opportunity. The shipping industry, if able to convert existing vessels to thorium power, would have a massive cost savings over excising fuels. The electric vehicle market would also be winners as lower energy costs would increase the cost savings of these vehicles. Solar and wind power would become more widely accessible as thorium reactors could compensate for low generation times (in place of coal or diesel generators – depending on scale).

Miners of rare earths could incorporate additional refinement to existing processing to remove thorium. This would aid the miners in lowering their environmental footprint. However, many existing deposits are extracted based on their low thorium content. Thus, each mine would need to be evaluated for feasibility and as such some mining operations are better positioned for capitalization.

Large scale thorium production does not exist. There is the potential for new technologies and methodologies to provide efficient methods of production. Technology has changed dramatically since the 1960s, and these tech advances may vastly effect the startup costs of industry.

Many exploitable deposits of thorium are not sufficiently mapped. In places like Australia, the exploration companies may be the big potential winners, being the holders of exploitable deposits. Expectations are that high level thorium deposits in mineral sands with accompanying rare earth minerals will be the most lucrative to exploit.

For potential ASX listed companies with Thorium resources:

http://www.australianuranium.com.au/thorium-asx.html

 

 

Further Reading

https://en.wikipedia.org/wiki/Thorium

https://en.wikipedia.org/wiki/Thorium-based_nuclear_power

http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/RP0708/08rp11

http://www.world-nuclear.org/information-library/current-and-future-generation/thorium.aspx

http://www.world-nuclear.org/information-library/current-and-future-generation/molten-salt-reactors.aspx

http://theconversation.com/should-australia-consider-thorium-nuclear-power-37850

https://australianmining.com.au/news/australian-and-czech-consortium-announce-thorium-joint-venture/

https://whatisnuclear.com/articles/thorium.html

http://fortune.com/2015/02/02/doe-china-molten-salt-nuclear-reactor/

https://www.technologyreview.com/s/542526/china-details-next-gen-nuclear-reactor-program/

http://iags.org/thoriumchina.pdf

http://energyfromthorium.com/

http://www.thoriumenergyworld.com/

http://www.australianminesatlas.gov.au/aimr/commodity/thorium.html

http://www.mining.com/why-not-thorium/

http://www.australian-shares.com/australian-thorium.html

 

 

 

 

DISCLAIMER:

YOU ARE AN ADULT and must make your own decisions. ONLY YOU know what level of experience you possess. ONLY YOU know what level of risk you are willing to take. ONLY YOU know what your financial goals are, and to what lengths you are prepared to go to meet those goals. You will be the one to wear your losses, so trade with caution and do your own research.

Henry Ledyard is an independent trader. He has NO affiliations with banks, brokerages, funds, trading houses or markets. He trades for himself and posts trading ideas merely to share information. He does NOT want your money, advice or opinions. He does NOT want your unsolicited emails. If you require further financial advice, seek it elsewhere. Henry’s opinions should be considered as addled as his blog site:

www.addlepated.com.au

 



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About the author


Henry Ledyard is a futures and options trader with over 20 years of trading experience and over 10 years of experience in trading futures. Henry Ledyard holds multiple degrees: BE Electrical Engineering, BS Physics, and BA Visual Arts. He has worked as a prop-trader (AU bonds, USA bonds) but found the bond market not conducive to his trading style. He currently trades for himself, and has no associations with any brokerage or firms. He has no boss and seeks no money for his information and trade ideas.

Henry’s trading focus is primarily on futures with longer term trades (hours to days) in tangibles (commodities and equities) with a real world bias. This is because high frequency trading algorithms are in control of much of the arbitrage trades and short term volatility.

Henry is predominantly a chart reader who looks for direction changes to enter and exit markets and is not a trend follower or scalper (much). His trade ideas are based on broader market forces creating opportunity while focusing on over-sold or over-bought moves. To make money in markets, he has to combine timing, direction and risk which can be a challenge (and may not suit your trading style). He is not an FX trader, nor stock trader (mostly) and tries to avoid bond markets except as a spread for other trades. He also avoids ETFs and many derivative products because of exaggerated leveraged moves.

Henry is based in Sydney, Australia and normally trades EU pre-market through the USA session with the occasional eye to Asia trade for indicators of direction.

The trade ideas expressed by Henry are places he sees potential for profit and may be as addlepated as his blog site: www.addlepated.com.au

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