China's Thorium revolution

Key Markets report for Friday, 9 May 2025

Last month, Chinese scientists made a major breakthrough with the experimental 2 megawatt thorium reactor in the Gobi Desert by refueling the reactor while in full operation – a world-first achievement. The reactor reached criticality in October 2023 and scaled up to full power by June 2024. The Chinese reactor was based on the 1960 US Molten Salt Reactor Experiment (MSRE) developed at Oak Ridge National Laboratory which the U.S. declassified, having abandoned the technology. Chinese scientists at the Shanghai Institute of Applied Physics (SINAP) used these designs and perfected them, stating that “the US left its research publicly available, waiting for the right successor. We were that successor.”

In March, China announced the discovery of a massive thorium deposit which now represents fuel that could power the country for 60,000 years. Compared to uranium, thorium is a significantly safer fuel, it is far more abundant, and it produces less nuclear waste, which could make it a game-changer in nuclear energy production.

Thorium reactor technology was originally developed in the U.S. in 1959 and from 1962 to 1972, the U.S. ran a cargo ship fueled by thorium with no incidents. But ultimately, thorium was abandoned in 1972 in favor of plutonium because the US defense establishment determined that thorium couldn't be weaponized and therefore couldn't have military uses.

For mysterious reasons, around 2010 the U.S. gave away its thorium intellectual property, and from 2011 on, China adopted it and invested heavily in its development. Thorium is abundantly available throughout the world, its exploitation is much cheaper than other nuclear fuels and nobody controls its supply. Apparently, thorium reactors can generate 200 times more energy from the same amount of fuel than traditional nuclear reactors, ad they burn 80% clean, leaving very little post-usage pollutants.

So why didn’t the Western nations continue to develop this potential game changer? In addition to the military usage angle, the sunk cost fallacy could be at fault, as it seems that Western nations are too invested in uranium reactors and uranium mining and trade, making them reluctant to embrace the transition. Another problem could be that Western powers are focused on near-term plays (the US is focused on selling LNG to Europe) while China is looking at long-term strategic development.

The transition is now gathering momentum, opening entirely new possibilities for development: in a not-too-distant future, thorium reactors could transform not only power generation but also shipping and transportation, for example, by enabling rapid trans-Eurasia travel supporting the rationale for extending China's nearly 30,000 miles of high-speed railroads across the Eurasian continent. This new energy technology could also prove to be essential for powering artificial intelligence.

This is yet another area where China has become a dominant player, not by deregulating markets and giving free reign to private capital, but through strategy and planning. Already in 2006, the Chinese government formulated the “Medium-to Long-Term Plan for the Development of Science and Technology” (MLP), setting out the strategy to transform China into “an innovative society” by 2020 and a world leader in science and technology by 2050. It also helped that China didn’t squander their wealth and economic potential on waging endless wars.

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