Thorium Trade

Current excitement in the Gulf of Mexico demonstrates one of the reasons why we need new angles in energy. That didn’t stop me buying BP shares at the weekend – after a price decline from 647p to 517p I put in a limit order with an upper limit of 500p, just to see if it would get that low. I got filled, which I thought was great until the top kill/junk shot tanked later on. So right now we are off 13% to 430p. My response to that was to buy some more – call me psycho. Anyway, in a year either I will have been wiped out or made out like a bandit, and those are the only two options I am interested in. Life choices are the same as trade choices. In case you were wondering.

But anyway, to the point. Nuclear power is better than carbon-based energy generation. It’s greener – and you can’t defeat that argument by pointing to the waste problem – because we already have that problem. So we may as well have it in spades, right? In any case, the Finns are going to sort it out by sticking it deep underground in a sort of fairly stable rock chamber. And isn’t it about time the Finns contributed something? Where have they been lately? There’s been lots going on and we never hear from them. Finland buries its nuclear past. But does that look like good press? Is there a different answer?

Yes – there’s even a better option: thorium. For three major reasons.

Less waste

Thorium-based reactors produce waste products which have a half life much shorter than the 100s of thousands of years involved with uranium reactors.

It’s available

The uranium is going to run out. And quicker than you think if you note that we have maybe 60 years worth. That is at current rates of use but you might want to assume greater energy use in the future and a higher nuclear component.

It’s not weaponisable

You can’t make nuclear weapons from thorium. So if one state, say the US, wanted to persuade another state, say Iran, to act consistently with the latter’s stated intentions only in the realm of power generation, it could offer them thorium based reactor technology and then be intensely relaxed about the consequences. Because there wouldn’t be any.

So who believes this story and does anyone care?

HATCH, REID INTRODUCE NEW THORIUM NUCLEAR FUEL BILL TO PROMOTE ENERGY INDEPENDENCE

This is a Bill in the US Senate which notes that the energy dependence of the US is a national security issue for that country. There’s another Bill in committee which observes that the US nuclear submarine fleet would be grounded (I know that’s wrong – but what happens to non-flying vessels when they can’t go anywhere…?) without uranium fuel. And mandates the Secretary of the Navy to look at thorium as a replacement.

Congressman Sestak’s Amendments in National Defense Authorization Act Pass House

So this is a US national security issue and a convincing picture in general. But the former element means one thing: lots and lots of money. Where’s the thorium? Virginia, for example. Not so much dealing with difficult people for essential products.

So what should you do if you believe the story? These are the two stocks to buy. Firstly you want exposure to the design story. And secondly you want some thorium. There’s the usual triple lock on investment decisions: compelling story, pure exposure, acceptable risk. The first box I already ticked. Secondly you can buy two stocks as listed below. The first one is a consultancy specialising in thorium reactor design. The second one is basically a very speculative outfit with at least three men and a dog in Canada. They have a licence to dig in a hill next to one where some people before found some thorium. [Actually it’s better than that – today they announced the hiring of a new experienced exec and they gave him “incentive stock options for 150,000 shares exercisable over 5 years at $0.14 each, subject to vesting provisions”. So this guy believes they are going north of there.]

Lightbridge Corporation

RockBridge Resources Inc

It will be apparent that option two is slightly more risky. Option one isn’t safe because nothing is, but it is NASDAQ listed so you have some better transparency and reporting. Though you should never forget that Enron was main board listed. Rockbridge are listed on the Vancouver startup board but you can get the exposure through a pink sheet OTC trade in NY. This is a pass-through derivative. So the recommended division should be something like 90/10. Which was what I was going for when I did this trade on behalf of myself and Mark L – except I got confused by the factor of two and ended up with 80/20. When you try to hold 20 numbers in your head at the same time, you always forget one, or mix up GBPUSD with USDGBP or something. But again, trades are like life and serendipity can be the new name for chaos.

Author: Tim Short

I went to Imperial College in 1988 for a BSc(hons) in Physics. I then went back to my hometown, Bristol, for a PhD in Particle Physics. This was written in 1992 on the ZEUS experiment which was located at the HERA accelerator in Hamburg (http://discovery.ucl.ac.uk/1354624/). I spent the next four years as a post-doc in Hamburg. I learned German and developed a fondness for the language and people. I spent a couple of years doing technical sales for a US computer company in Ireland. In 1997, I returned to London to become an investment banker, joining the legendary Principal Finance Group at Nomura. After a spell at Paribas, I moved to Credit Suisse First Boston. I specialized in securitization, leading over €9bn of transactions. My interest in philosophy began in 2006, when I read David Chalmers's "The Conscious Mind." My reaction, apart from fascination, was "he has to be wrong, but I can't see why"! I then became an undergraduate in Philosophy at UCL in 2007. In 2010, I was admitted to graduate school, also at UCL. I wrote my Master's on the topic of "Nietzsche on Memory" (http://discovery.ucl.ac.uk/1421265/). Also during this time, I published a popular article on Sherlock Holmes (http://discovery.ucl.ac.uk/1430371/2/194-1429-1-PB.pdf). I then began work on the Simulation Theory account of Theory of Mind. This led to my second PhD on philosophical aspects of that topic; this was awarded by UCL in March 2016 (http://discovery.ucl.ac.uk/1475972/ -- currently embargoed for copyright reasons). The psychological version of this work formed my book "Simulation Theory". My second book, "The Psychology Of Successful Trading: Behavioural Strategies For Profitability" is in production at Taylor and Francis and will be published in December 2017. It will discuss how cognitive biases affect investment decisions and how knowing this can make us better traders by understanding ourselves and other market participants more fully. I am currently drafting my third book, wherein I will return to more purely academic philosophical psychology, on "Theory of Mind in Abnormal Psychology." Education: I have five degrees, two in physics and three in philosophy. Areas of Research / Professional Expertise: Particle physics, Monte Carlo simulation, Nietzsche (especially psychological topics), phenomenology, Theory of Mind, Simulation Theory Personal Interests: I am a bit of an opera fanatic and I often attend wine tastings. I follow current affairs, especially in their economic aspect. I started as a beginner at the London Piano Institute in August 2015 and passed Grade One in November 2016!

12 thoughts on “Thorium Trade”

  1. I don’t know that we want to bury our current nuclear waste, since it could be treated or otherwise used again (even if the tech isn’t mature today). I’d think we’d want to keep the option of getting at it again easily if we wanted to.

    I’d be tempted by some thorium, as well as the Swedish heat pump outfit, but is the arse generally about to fall off the stock market? These are long term things, though, right, so it doesn’t matter so much (unless the arse really really falls off the stock market…)

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    1. Fair enough. But I don’t think you can get at the Oikiluto stuff very easily. The concept is expressly designed to keep it out of the way. The assumption is that people in the future won’t be able to read or attach appropriate significance to signs saying “danger – nuclear hazard”. You might think that if society has declined to that level it isn’t worth worrying about anyway…so maybe you are right, and we should be looking at this stuff as an opportunity rather than a threat.

      The arse question, in my view, continues to hinge on whether governments can get their deficit glide paths to look less like ramming the hard deck but still retaining Aaa ratings, and other similar really big macro factors like the high yield bond maturity wall 2010-13. That market is closed so the refinance by rollover method won’t work. The local difficulty we are having right now seems to be just general BP woe as far as I can see.

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  2. Not really fair to say : “And isn’t it about time the Finns contributed something?”. Surely Linux is enough of a contribution – “WordPress” would not exist without it.

    Not only do thorium reactors produce less waste but the same technology that powers the reactor can be used to transmute the harmful long-lived nuclear waste that we currently bury. It’s two for the price of one. You power the nuclear reaction by producing spallation neutrons which are are got from protons from a high power particle accelerator (like the LHC only much lower in energy but much higher in beam current) hitting a suitable target (liquid lead…).

    One of the main obstacles to Th-power is the know-how to produce a 10MW proton accelerator. Our present accelerators are good for 1-2MW. This is something that is being investigated in the UK (and Japan) and offers the UK what could be a rare technology lead (although traditionally we are then notoriously bad at exploiting/profiiting from such initiatives). This is happening through the EMMA project at Daresbury Lab.
    The UK government should be pushing this – other countries are recognising the potential of Thorium e.g.
    India and UAE – places with resource (people, cash…).

    The same accelerator technologies being developed for Th-power can also be used to develop proton accelerators which are far more efficacious at treating cancer than the conventional X-ray treatment. Embarrassingly the UK remains one of the few (only ?) nation in the G8 not to be investing in such cancer treatments. As has been remarked:

    “When proton therapy facilities become available it will become malpractice not to
    use them for children [with cancer].”
    Herman Suit, M.D., D.Phil., Chair, Radiation Medicine, Massachusetts General Hospital 10

    .. anyway don’t get me started on that.

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    1. Fair enough on the Finns. But he’s only one guy, you know? There were four of them in Abba.

      Shouldn’t someone like GE be doing the proton cancer therapy research?

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      1. Yes there are comercial companies that do off the shelf proton accelerators for cancer treatment e.g.
        IBA and Still River but they are very expensive – about $100-200M and not too versatile hence that is why the UK, being cheap, doesn’t have one. What the particle physics community is trying to do is to develop an alternate accelerator (non-scaling fixed-field-alternating-gradient) [nsFFAG] that is much cheaper and more versatile see e.g.
        this article. You use the same nsFFAG to create the high intensity proton beam to produce your neutrons for Th reactors or nuclear waste transmutation…

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      2. One of the claims made in the Google tech talks is that the current providers of nuclear power designs don’t want to get into LFTR because it will cannibalise the profits they expect from conventional design. Maybe there is also a factor like that weighing against proton therapy machines also. But both of these sound like good VC opportunities.

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    2. And…here’s a 15 minute briefing that’s like doing a physics degree on acid…

      – so, it’s also cheap, and there’s enough in Idaho to power the US for millennia, and it’s passively safe against cooling loss incidents like Three Mile Island…

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  3. On the subject of when such a reactor is viable. It’s likely to proceed in stages. First a hybrid thorium:uranium (or thorium:plutonium) reactor, where the neutrons come for free from the uranium. So this isn’t ideal from the above uranium issues (longer-lived waste, nuclear proliferation) but is a start and there have been or already exist reactors of this type. Second, and longer term is the accelerator driven sub-crtitcal reactors (ADSR) where the neutrons come from a 10MW proton accelerator plus a target. So here more R&D is needed to:

    – get to 10MW power. J-PARC in Japan is aiming for 1MW in the short-term and 5MW longer term. So realistically 10 MW is probably 10 years away or 5 if you threw a LOT of money at it.
    – understand the target properties – there is R&D in Belgium on this with the timeline of a commercial accelerator driven waste transmutation reactor by 2023.

    So it’s investment limited. Yes some of the technology/physics issues are tricky but they went from nuclear fission to bomb in 6 years and bomb to reactor in 6 years. So the timeline if you threw money at it is probably similar ie 6 years but the more natural timeline is 10-20 years but not a 20 years like fusion which is always 20 years away ! And the hybrid reactors will be sooner.

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  4. Thanks Mark. This is in response to questions from Adrian.

    Also bear in mind that you don’t need to wait for it to come online to see the stock price move, because that is basically the NPV of current expected future cashflows. So if anything happens to make this future cashflow more valuable, which could be a useful technical breakthrough or a favourable political development, then you will see that reflected in the stock price fairly quickly. The issue here is that people with money and people with physics aren’t necessarily the same people – which is why this is cheap right now, apart from general BP-related energy stock malaise. But that latter point, if correctly understood, points to increasing need for viable alternatives like Thorium.

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  5. I’m all for Abba, and I’ll take your word for it on Thorium, but the other thing you have to thank Finland for is the text message, invented by Nokia

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  6. Very good point Tim. Also Scandi is flavour of the month now because the only place we can think of right now to park cash without getting headwinds from Greece, Hungary, Spain, deepwater horizon etc…is Norway.

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