Canada’s CAMECO Boosts Silex Stake to 49%
- Feb 2, 2021 2:28 pm GMT
In a move to secure future supplies of high assay low enriched fuel (HALEU) for future customers with advanced small modular reactors that will need it, Canadian uranium miner CAMECO has boosted its stake in the Silex laser enrichment process.
The business driver for the investment is that there are a growing number of developers in Canada, and elsewhere, who are doing work on advanced small modular reactors (SMRs) that have core designs the will depend on burning HALEU fuel which is enriched to greater than 5% and less than 20% U235. Some of these designs are expected to achieve commercial status in the 2030s timeframe.
Cameco, which is one of the world’s leading uranium mining firms, has increased its equity stake in laser enrichment, an innovative technology from 25% to 49%. Silex owns the other 51% with GE Hitachi now having exited the project. At one time GE Hitachi was planning to build a laser enrichment plant in Wilmington, NC.
Cameco: (TSX: CCO; NYSE: CCJ) announced this week the successful closure of the binding Membership Interest Purchase Agreement (MIPA) between Cameco Corporation, Silex Systems Limited (Silex) and GE-Hitachi Nuclear Energy, completing the ownership restructuring of Global Laser Enrichment LLC (GLE).
With the restructuring, Cameco’s interest in GLE increases from 24% to 49%, with Silex acquiring the remaining 51%. Cameco is the commercial lead for the project and has an option to attain a majority interest of up to 75% ownership in GLE. (More on this below)
GLE is the exclusive licensee of the proprietary SILEX laser enrichment technology, third-generation uranium enrichment technology that is currently in the development phase.
Cameco president and CEO Tim Gitzel said, “While there are still a number of development milestones before this technology could be commercialized, we believe it has excellent potential to expand Cameco’s reach in the nuclear fuel cycle in the future, building on the existing world-class assets and capabilities we already possess in uranium production, refining, conversion and fuel fabrication.”
Two key objectives of the business include;
- Producing high-assay low-enriched uranium (HALEU), the primary fuel stock for the majority of small modular reactor (SMR) and advanced reactor designs that are proceeding through the development stage and continuing their march toward commercial readiness.
- Producing low-enriched uranium (LEU) fuel for the world’s existing and future fleet of large-scale light-water reactors with greater efficiency and flexibility than current enrichment technologies.
Canada and the United States are among the nations around the world pursuing ambitious carbon reduction strategies. Governments in both countries have signaled significant interest in cooperating on clean energy solutions, developing and deploying SMR technologies, and collaborating to bolster critical mineral and nuclear fuel cycle security.
GLE said it sees its business as helping to de-risk any HALEU fuel concerns impeding the progress of emerging SMR designs. “Nuclear power plays a massive role in the global clean energy equation,” Gitzel said.
“That role will only increase in a carbon constrained world, particularly with the momentum behind SMR and advanced reactor technologies, a focus on the electrification of transportation systems, and the many other innovations that countries and companies are counting on to help meet their emission reduction targets.”
Financial Terms of the Deal
The acquisition came after a restructure was completed of Silex technology licensee Global Laser Enrichment, which resulted in Silex acquiring the interest in GLE, and Cameco Corporation increasing its interest to 49%.
The MIPA will be paid in four annual instalments of US$5 million (roughly A$6.57 million), shared pro-rata by Silex and Cameco, which will be triggered for the first year after GLE generates US$50 million (around A$65.7 million) in revenues.
Silex and Cameco have also executed several additional documents offering the option for Cameco to purchase an additional 26% interest in GLE. This option can be exercised by Cameco from January 2023 up until the date 30 months after the technology is satisfactorily demonstrated at full commercial pilot scale.
“The completion of this acquisition represents a significant achievement for Silex, giving us greater control over the commercialization of the Silex laser enrichment technology,” said Silex CEO and Managing Director, Dr Michael Goldsworthy.
“This new ownership structure, together with the recently announced U.S. Government approval, represents the start of an important new era for GLE and the Silex technology, at a time when nuclear power is coming back into focus as a key source of zero-emissions base load electricity in an emissions constrained world.”
Additionally, Silex and Cameco have amended their previous commercialization and license agreement from 2013 to align it with the new GLE ownership, although key commercial terms of the technology license remain unchanged.
Silex and Cameco have also executed several additional documents offering the option for Cameco to purchase an additional 26 per cent interest in GLE, which could potentially take its interest in the company to 75%, dropping Silex’s interest to 25%.
Future Development of the Technology
A spokesman for the company emailed a response on 02/01/2021 to several questions from this blog about the deal.
According to Cameco, the laser enrichment technology is currently in the development phase, and there are still a number of development milestones before the commercialization of that technology could be contemplated.
GLE will continue to focus on the uranium enrichment plant demonstration program, with completion anticipated by the mid-2020s. However, that timeline will depend on the annual budgets and funding agreed to by the project partners going forward, which will depend on market fundamentals.
GLE’s present activities will continue at its current location in Wilmington, North Carolina. GLE has a site lease agreement in place with GE-Hitachi to permit continued test loop operations in Wilmington as part of its ongoing development phase.
Assuming the development program continues to proceed successfully, a commercialization decision would come sometime thereafter. If the project successfully progresses through to commercialization, GLE’s first commercial plant would be built in Paducah, Kentucky, adjacent to a previous gaseous diffusion enrichment plant the U.S. Department of Energy (DOE) operated until 2013.
GLE has a contract with DOE to re-enrich depleted uranium tails (DUF6) from this plant, repurposing legacy waste into uranium and conversion products for nuclear energy and aiding in the clean-up of enrichment facilities no longer in operation.
GLE will enrich about 300,000 tonnes of depleted uranium tails to natural-grade uranium at a Silex plant to be built at Paducah, Kentucky. The material is leftover as a by-product of previous-generation enrichment technologies. Also, it will repurpose legacy waste into uranium and conversion products to fuel nuclear reactors, and support the responsible clean-up of enrichment facilities no longer in operation.
As for whether Cameco will trigger its option to acquire a majority interest in the project, Cameco says it’s too early to say. Terms of the option are confidential, but the firm says it is pleased to have the option to attain up to 75% ownership of GLE. For now, the spokesman says the firm is focused on continuing along the development path with its project partners, Silex Systems.
GEH submitted a license application for the plant in 2009 which had the following characteristics. The GLE project was to be conducted in multiple phases:
- Test Loop operations;
- A license for a commercial-scale enrichment plant in Wilmington, NC; and
- An agreement with the Department of Energy (DOE) to purchase high assay uranium tails for re-enrichment at a proposed Paducah Laser Enrichment Facility (PLEF), in Paducah, Kentucky.
The science journal Nature reported in September 2012 that nuclear nonproliferation experts expressed a concern to the U.S.Nuclear Regulatory Commission (NRC) that building a fully operational laser enrichment plant could encourage other countries to to adopt the technology, making it easier for them to develop bombs.
Nature noted that the original application for the GE Hitachi plant in 2009 set off a debate over whether the NRC sufficiently weighs proliferation risks when licensing new types of enrichment technology
The American Physical Society (APS) in College Park, Maryland filed a formal petition with the NRC asking that such licenses be subject to a formal review of proliferation risks.
Calling the new technology a “game changer,” the APS argued that a laser enrichment plant would, in theory, be smaller than one that uses gas centrifuges, and thus if the technology were to spread, it would be more difficult to spot would-be proliferators.
Despite a high profile effort, including congressional hearings, in September 2012 NRC issued the license to GE-Hitachi for the laser enrichment plant
In its official notice, the NRC said: “The license authorizes GLE to enrich uranium up to 8 percent by weight in the fissile isotope 235U, using a laser-based technology. This low-enriched uranium will be used in fuel for commercial nuclear power plants.
However, some aspects of the Silex process remain classified by the U.S. government to deter its use by rogue nations to make nuclear bombs.
For a deeper dive into the technologies that make it tick and the issues surrounding laser enrichment, see IEEE Spectrum, 09/30/2010; Laser Uranium Enrichment Makes a Comeback
What is HALEU?
HALEU is a component for advanced nuclear reactor fuel that is not commercially available today in commercial quantities and may be required for a number of advanced reactor designs currently under development in both the commercial and government / military sectors. Existing commercial reactors typically operate on low-enriched uranium (LEU), with the uranium-235 isotope concentration just below 5 percent.
HALEU has a uranium-235 isotope concentration of up to 20% U235, giving it several potential technical and economic advantages. For example, the higher concentration of uranium means that fuel assemblies and reactors can be smaller and reactors will require less frequent refueling. Every time a reactor shuts down for refueling, the utility operating it loses revenue during that process.
The lack of a reliable U.S. source of HALEU is widely seen as an obstacle to U.S. leadership in the global market for advanced reactors. For example, Centrus notes on its website that a 2017 survey of leading U.S. advanced reactor companies, 67% of companies responded that an assured supply of HALEU was either “urgent” or “important” to their company. The survey also showed that “the development of a U.S. supplier” was the most frequently cited concern with respect to HALEU.
In the US Centrus Energy is currently working under a three-year, $115 million cost-shared contract with the Department of Energy to deploy 16 of its AC-100M centrifuges at its Piketon, Ohio, facility to demonstrate HALEU production. TerraPower and Arc100 have agreements with Centrus to use the fuel when it becomes available.
Work under the contract will include licensing, constructing, assembling and operating AC100M centrifuge machines and related infrastructure in a cascade formation to produce HALEU at the American Centrifuge Plant in Piketon, Ohio, for the demonstration program.
Competition from TRISO Fuel
A competing fuel type is TRISO fuel. BWXT is developing a TRISO fuel fabrication facility in Lynchburg, VA. In June 2020, BWXT announced a contract with the U.S. Department of Energy’s (DOE) Idaho National Laboratory to expand BWXT’s TRISO manufacturing capacity and produce a demonstration quantity of the fuel.
The project is jointly funded by the U.S. Department of Defense’s (DoD) Operational Energy Capabilities Improvement Fund Office and NASA, with overall program management provided by the DoD’s Strategic Capabilities Office.
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