More Nuclear Fuelers

There is more to nuclear fuel than the conventional U-238 that drives most of the nuclear power reactors in the world.  The post “Fresh Tricks for Nuclear Fuel” published on March 2, 2020, featured several producers of novel alternatives to low enriched uranium.  In this post we look at two developers of nuclear fuel technologies.

The assembly is a vital part of delivering nuclear fuel to fission process.  The assembly or bundle is a group of fuel rods that contain the fissionable materials to the nuclear reactor.  Depending upon the reactor type each fuel assembly is composed of about 180 to 260 fuel rods.  There can be as many as 190 fuel assemblies in each reactor.  The numbers make it clear that the business of assemblies could be a lucrative as the fuel itself.

Not much as changed in the fuel assembly until recently.  In this post we look at two technology innovations that are bringing new efficiency to the nuclear fuel market.

Global Nuclear Fuel (GNF) is a joint venture of General Electric (GE:  NYSE) and Hitachi Ltd. (HTHIY:  OTC).  GNF has also been on the receiving end of various grants and awards from the U.S. Department of Energy.  Even more importantly GNF won a contract to deliver its GNF3 fuel assembly to Entergy Nuclear (ETR:  NYSE).  The twelve-year contract was valued at $250 million represented an expansion of GNF’s relationships with Entergy, for which GNF had been supplying fuel assemblies for several years.

Of course, taking a position in GE, HTHIY or ETR gives investors exposure to all sorts of business opportunities and risks entirely unrelated to nuclear fuel.  It is a reach to consider any of these companies as a play on nuclear power.  That said, the presence of large, well-capitalized companies in the space suggests there is significant opportunity in nuclear fuel.

For a pure play in nuclear fuel assembly technology it is necessary to travel down to the small capitalization sector.  Lightbridge Corporation (LTBR: Nasdaq) is developing a metallic nuclear fuel core made from a uranium zirconium alloy.  A zirconium-niobium allow is used in as a barrier around the core.   The rod in the fuel assembly has a helical multi-lobe shape that has 35% more fuel surface area.  The shape also reduces the distance it takes heat generated in the fuel rod to reach cooling water.  Thus in the center of the fuel rod the temperature is over 1,000 degrees cooler than standard fuel rod assemblies.    Lightbridge touts its fuel rod as at least 10% more efficient than conventional rod assemblies.  Fuel cycles could be extended by 18 to 24 months.

To commercialize its technology Lightbridge has formed Enfission LLC, joint venture with Framatome, a supplier of nuclear steam systems and nuclear equipment, services and fuel.  The partners have a live fish on the line in the form of Nuscale Power, itself an up and coming developer of small nuclear power reactors.  Nuscale has pledged to work with Enfission to explore the use of the Lightbridge technology in its small power reactor.  Framatome already had a relationship with Nuscale that had anticipated Framatome equipment for Nuscale’s project, making the memorandum an especially important breakthrough for Lightbridge. 

Investors accustomed to the large nuclear power players such as GE or Entergy may be unsettled by the big zero at the Lightbridge’s top line.  The company has yet to realize sales of its technology.  While its technology is patented, it is still not yet fully approved by the Nuclear Power Agency in the U.S.  The company burned through a little over $8.0 million in cash to support operations in the twelve months ending September 2020.  With about $17 million on its balance sheet at the time, Lightbridge could count on keeping the lights on for as long as two years.        

 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.