Peter Thiel’s $50M Bet on American Nuclear Fuel, General Matter

0:00If you just rewind five years in the country, the amount of interest and support for nuclear energy is almost night and day. The DOE and Congress appropriated billions to new domestic enrichment capacity, two programs that we were named on, and then finally the EOs. Those executive orders were in May. Scott Nolan, CEO of General Matter. We're an American enrichment company trying to bring back the U.S.'s lead in producing nuclear fuel. So just like car engines need fuel, nuclear reactors need fuel. This is a big deal. You just got off of Sean Ryan. In terms of what categories are we investing in now, it's really the anti-category.

0:35With nuclear as the safest baseload energy source and cleanest, anything we're not doing there is forcing us to do something that's more dangerous and less clean. And then you look at what are people worried about with AI? They're worried about U.S. versus China. You look at China's grid in 2010, U.S. and China were neck and neck. That's where the two lines cross. And since then, China's doubled its grid while we stayed flat. So now they have 2x the energy production that we have. And it's going to be 3x by the 2030s if we don't do something about it. No matter what you're worried about or care about, energy production has been so shown to lift people out of poverty and to grow economies that it's just been a big mistake that we haven't expanded over the last few decades.

1:30Scott Nolan. Welcome to Sorcery. Thanks for having me. This is a big deal. You just got off of Sean Ryan. You're making a nice tour. It's great to be here. The Sean Ryan podcast was fun. We're here to re-industrialize, getting to talk a little bit about what we're doing. So it's great to talk through it. Yeah. So I think to start, I'd love to know, why did you decide to go after nuclear with General Matter? This all started when, you know, a decade looking at Nuclear Red Founders Fund, talked to every SMR company, small modular reactor company, all the advanced reactor companies. And the one common theme was that nobody had a good source of fuel long term.

2:11So there were some sources from the DOE that people thought were coming and that now have been released to startups. But long term, people looked at the landscape and they said, if we need HALU, which is more enriched fuel for the factory built reactors, we need to get that fuel from Russia. Only Russia makes it today. And so my natural question was, you know, why don't the U.S. enrichment companies make HALU? Why don't they enrich to 20 %? Is it that much more difficult than enriching to 3 % to 5 %? And then what these people told me was, well, what do you mean the U.S. enrichment companies? We're not really enriching fuel in the U.S.

2:48anymore. And that sent me down a whole rabbit hole starting at the end of 2022 to figure out if this was true, how it should be fixed, and ultimately decided in 2023, let's start a company around this. Someone new needs to exist. And it's not just for availability. That's an issue with advanced reactors and the HALU that they run on and for LEU since we're completely dependent on other countries. But part two of it was once you make the reactor really affordable and you factory build your reactor, now your fuel drives the cost. And enrichment is the biggest segment of fuel costs. And so if you actually care about making nuclear not just the safest and cleanest form of baseload energy, but the cheapest, you need to address fuel.

3:32And so our whole goal as a company is let's make nuclear the cheapest source of baseload energy. And let's do that by making fuel specifically in Richmond much more affordable and scalable. People know about nuclear broadly, but they might not know about the fuel aspect of this. Could you just explain a little bit further nuclear fuel or I guess like the nuclear process from, you know, maybe enrichment to actual generation? Yeah. So there's really there's really two two big parts. One is mine the uranium, get the uranium and then everything else is processing. So it's like chemical processing, refining.

4:09So there's four steps there. One one is it's typically turned into a gas. It's then enriched. It's then turned back into a solid. And then once in solid form, you can make whatever shape of fuel pellet you want. So those four steps are conversion, enrichment, deconversion, and fuel fabrication. The step we do is enrichment, which is, you know, the first step of conversion is a chemical process going from solid to gas. So that's chemical reactions. The enrichment process is really a separative refining process. No chemical reactions, no nuclear reactions. And then you go back into solid and then you do mechanical shaping.

4:46And so that's it. It's mostly manipulating matter into a final form. No real nuclear processes at that point. It doesn't really go critical until you're in a reactor in a specific configuration of fuel. That's when you get radioactivity and energy production. I guess how did we get here as a country? Nuclear has definitely stagnated over almost 50 years now. So how did we get to the point where there's actually no enrichment really here? At this century, it's been pretty flat. yeah, not much new nuclear production, even since the 90s. And so, you know, you think about that context of 35 years, 30, 35 years of no real growth in nuclear energy.

5:31It's natural to think maybe we don't need a lot of field production and maybe we can trade for what we need. If you rewind to the 50s, 60s, 70s, the U.S. was most of the world's enrichment. We were 65 % roughly. And we did that through a first-generation technology called gaseous diffusion. So we had these big facilities, very energy-intensive, Gen 1 process, gaseous diffusion. That's how we led the world in enrichment. Fast forward through the Cold War to the fall of the Berlin Wall to not much new nuclear build in the U.S. And we said, okay, Cold War's over. We have allies in Europe. We're friends with Russia.

6:14we should just freely trade for uranium and for enrichment services. Then we started the process of decommissioning our gaseous diffusion plants in the U.S. and said, we will solve this with free trade. Our allies and Russia do this much cheaper than we do at large scale, and free markets are going to be fine. In addition to that, the DOE was working on new technologies, thinking that that would be what scaled up in the U.S. and that we would have self-sufficiency, and we just haven't really scaled that. And so we're here now today with the U.S. doing less than 0.1 % of global enrichment, effectively R &D capacity, not much commercial capacity, and just completely relying on foreign state-backed entities.

6:57About 25 % of enrichment in the U.S. comes from Russia and about 75 % from two European companies. And the Russian enrichment, there's a Russian imports ban in place now. But that ban actually goes into full effect when the waivers end on January 1st, 2028. And so at that point, we see there as being a real gap for enrichment capacity in the U.S. and one that needs to be solved by U.S. companies. And you're building one. And so your company, General Matter, it was founded in last year. You can explain it all, but you've been at SpaceX, you're at Founders Fund, you've been helping out some really critical national interest companies within Founders Fund.

7:40And you were talking about the playbook that these companies use to build these generational companies, these like really Goliaths. So I'm really curious from your end, like, could you just share more on your background and how that's informing building out the company? So I started my career as an aerospace engineer, worked at Boeing during college, then moved over to SpaceX also during college, and then immediately after graduating. That was from 2003 to 2007. And back then, we were working on the original engine systems. We were working on the Falcon 1 vehicle and the NASA Commercial Orbital Transportation Services contract, which was structured.

8:16It was a milestone-based contract to bring back U.S. launch capacity and cargo capability to the space station. Back when we didn't have that capability once the space shuttle was grounded, and we were completely dependent on Russia for all of our crewed and cargo space launch. And so that experience just showed me how that company was built. It was really a combination of two things. One was people from the industry, aerospace industry, who knew all the tricks, knew the science, knew the engineering, but had a way of doing things that was more the incumbent way. And that was combined probably in a one-third to two-thirds ratio with Silicon Valley talent, people from hardware startups, software startups just saying, let's treat this problem as if it were a startup problem, almost like it's a software company.

9:10and so you know there were there were naming conventions around the rockets that were like more like software releases that was something from a very early stage and so fast forward to a couple other companies that founders fund was involved in and actually incubated palantir andurl same formula get people who really know the industry well that really you know multi-decade expertise on one side combine that with recent grads and other just smart generalist engineers from other industries and just rethink the problem fundamentally. And so that's the same thing we're doing. So people from the nuclear industry who have experience in this area from national labs and then people from hardware startups like SpaceX, Tesla, Andrel, and just combine the two and try and just rethink the problem fundamentally.

10:03Electrical to chemical, software, mechanical, aerospace, I'm probably leaving some out, but any type of engineering is extremely useful for what we're doing. And then we're combining that with just really operational generalists. Part of what we have to do is, you know, not only the engineering side of things, but construction, siting, licensing. There's almost a role for everybody who wants to work hard and just move fast. How do you build an enrichment facility and where are you going to do it? Great question. The site we are not announcing yet, That'll be later this year. Okay. But we've talked about the sort of place that we'd want to do it.

10:43You know, we're based in L.A., so ideally somewhere that's not too far from L.A. that's a simple nonstop flight. And there's a bunch of states that are very nuclear-friendly that we've been talking to. So, you know, Utah, Texas, Wyoming, Washington are all really good candidates. President Trump just released a couple executive orders that really help out the nuclear industry. Could you just break down some of these? Yeah, the executive orders, like, first, if you just rewind five years in the country, the amount of interest and support for nuclear energy is, it's almost night and day. And so over those five years, you've had five huge things that the government's done.

11:26you know 2020 energy act you have the halo availability program for all the smrs you've got the senate advance act also bipartisan all these are bipartisan the doe and congress appropriated billions to new domestic enrichment capacity two programs that we were named on and then finally the eos and so those those executive orders were in may and there were four of them that that touch nuclear. And there were three themes across all four. One was re-regulate, not deregulate, but let's just rethink the regulations in a smart way, given what we know now. Two, reduce reliance on foreign countries or foreign companies just for energy security purposes, and just rebuild some domestic capacity.

12:15And then three, growth. So just economic growth with with energy as the underpinning. So the four EOs that mapped to all those things, all those pieces were in all four, but one was about the NRC, one's about the DOE, one's DOD, and then one is industrial base. So the first, the NRC executive order, essentially said we need to start balancing benefit and cost, not just pure risk, because the best way to minimize risk is do nothing. and we don't do that in aviation. So let's treat the NRC more like the FAA where we have to balance the benefits of nuclear with the risks of nuclear. And with nuclear as the safest baseload energy source and cleanest, anything we're not doing there is forcing us to do something that's more dangerous and less clean.

13:02So we need to do more nuclear, so let's start factoring in the benefits. Part two was let's set a cap on application review timelines because an uncapped application review just leaves a reactor developer not knowing what their financing is going to have to be. So it becomes very hard to plan. So that set some limits on that. And it also said, let's not pursue some goal of absolutely minimizing all radiation exposure, which has been the historical precedent. But let's decide what is the safe limit, and let's regulate around that. So that's the NRC piece. On the DOE piece, it really said, these new reactors, these Gen 4 reactors, no one's ever deployed them before.

13:47They're brand new. They're going to be safer. But we can treat them as R &D because they're not commercialized. So the DOE has an authority to license things that are in R &D stage. And let's use that authority to use the national labs and other DOE land to actually test out reactors. And so I think we're going to see that open up as a pathway. And there were some specifications around how many reactors, how soon. So that was awesome to see. I think that's going to really accelerate the reactor development and deployment. And then you had the DOD executive order, which talked about deploying three reactors on DOD sites as early as next year.

14:26And then finally, the industrial-based rebuild was really around workforce, what to do about spent fuel, And then how do we increase conversion and enrichment capacity in the country? Given the broader goal of quadrupling nuclear by 2050, we need so much more production of everything upstream of the reactors. So mining, conversion, enrichment, and fuel fabrication. Wow. Yeah. And you were in the room for this. Yeah, I got to be there for it, which was an awesome day for the industry. So, yeah, honored to have been there. Because of that, are you working closely with the new administration? What's your experience been?

15:04We're working very closely with the DOE. So even before starting the company, we had conversations with the DOE about what we thought needed to happen. And there was a lot of support for this, given the goals of the country around nuclear. And so we've been working closely with them since day one, since before day one. And throughout the last year, we were selected for a couple large programs, really historic programs that the DOE has led around enrichment capacity, both on the low enriched side and on the HALU side. So the high assay, low enriched uranium, that's just under 20 % that most of these new reactors use.

15:45And just as background, they choose to enrich to a slightly higher level, still below 20%. But that is so that you can get more energy density into a smaller core. And so you can then build your core in a factory, ship it, avoid a lot of the build costs that historically have plagued nuclear. So the DOE created that program to help the advanced reactors and make sure that there was a supply chain for them. And then following the Russia imports ban, created a second program called the Low Enriched Uranium Acquisition Program to help encourage U.S. production to offset Russian imports and just in general set up U.S.

16:24capability in the area. So through those two programs, we've been working really closely with them. And then we're also a part of the HALU consortium that's just coordinating how to bring HALU production online. I'm curious how you think about this in the grand scheme of geopolitical tensions. You did mention that energy is directly linked to conflict and GDP. So what are your thoughts on that? Yeah, I think that's really two, I would think of it as two different topics. I think, you know, this is, and in terms of other groups that we've worked with or spoken with in the administration, the Energy Dominance Council has been awesome for trying to push for more U.S.

17:06energy production. And that's because they know energy production and consumption is directly linked to GDP. It's one of the most correlated things with GDP. So on the GDP side, yes, energy production, specifically baseload energy production is completely linked. and drives things like manufacturing and AI. So on the GDP side, that's how we think about that. On the conflict side, I think the point I've made there before is a lot of people worry about conflict with other peers or near peers. And people have different thoughts on how that's going to manifest, whether it's an AI war, if it's kinetic war, or if it's just economic tensions.

17:48And I think what we've seen for the last decade or more is just economic competition. And that goes back to energy production as the foundation for all economic activity. And so the way I think about that is whether you're worried about none of the above, if you're just worried about growth, great, energy production. If you're worried about economic battles with other countries, you need energy production. If it's kinetic, you need manufacturing, and that relies on energy. And then finally, if you are very concerned with AI competition, then you need energy to fuel that. And you look at some of these projections of AI power consumption over the next five years and by 2030 it's predicted to basically consume equivalent to all the power that's on the U.S.

18:34grid today. So clearly we need a lot more energy production and transmission in the country. And then you look at, okay, what are people worried about with AI? They're worried about U.S. versus China. And you look at China's grid and 2010, U.S. and China were neck and neck. That's where the two lines cross on the chart, 2010. And since then, China's doubled its grid while we stayed flat. So now they have 2x the energy production that we have, and it's going to be 3x by the 2030s if we don't do something about it. So this is the overall landscape. I think it just highlights the urgency and the importance.

19:07No matter what you're worried about or care about, energy production has been so shown to lift people out of poverty and to grow economies, that it's just been a big mistake that we haven't expanded over the last few decades. Sorcery is brought to you by Brex, the financial stack trusted by more than 30 ,000 companies, including one in three venture-backed startups in the U.S. Nearly 40 % of startups fail because they run out of cash. Brex is literally built to help founders avoid that. Unlike traditional banks that let your money sit idle, shipping away at it with fees, Brex's designs help you spend smarter and move faster.

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20:40From expert guidance to tailored projects, Turing helps top companies realize AI that's more capable, more adaptable, and more effective. With Turing, discover how AI can accelerate your business growth. To learn more, visit Turing.com slash sorcery, spelt S-O-U-R-C-E-R-Y. That's Turing.com slash sorcery. Do you think within the compounds of AI, we will be anywhere near meeting those energy demands? Yeah, I think to date, a lot of the AI power has come from stranded assets. So power that was maybe, you know, for example, stranded flare gas, which then turned into larger scale stranded wind in West Texas.

21:31And there have been companies that have gone after these stranded assets and built data centers on them. And now I think we're getting to the end of the stranded assets all being spoken for. And now what people are thinking about is, okay, two things. How do we bring capacity back that was mothballed? And so you see Microsoft going after Three Mile Island and what's now the Crane Clean Energy Center to take one of the two reactors at Three Mile Island and turn it back on. You're also seeing people talk about uprating. So how do we actually get more power out of the reactors we have? Those are probably the quicker wins.

22:07And then the question is how do we build a lot of capacity either in the form of large gigawatt scale reactors or SMRs or even many micro-reactors. So I think that's the landscape. I think we see the big ramp next decade. This decade is about proving out the technologies, getting them licensed, given early deployments, and then it's going to be time to scale in the 2030s. Some people believe that AI is today's arms race. It's our race to the moon. And if we can't do that with just our own power capacity in the U.S., we might need a partner. The U.S. has partnered with the UAE on this. It's a tool we can use and probably should use.

22:47I would say we need to do both. It's probably not either or. If it's truly an AI arms race, then power is the bottleneck. And we need to find power wherever we can. You think about, okay, what's the source of those partner countries' power? It's probably going to be natural gas. And I think on the natural gas side, people overlook the huge win that natural gas has actually been for the country. So people are worried about emissions from natural gas, but it's much better than coal. It's about half the carbon emissions of coal. And so this is actually what's enabled the U.S. to reduce carbon emissions the last few years.

23:24That said, I think we need to, you know, yes, we will do probably more natural gas as we expand AI capacity. We need power for that. Turbines will be the bottleneck most likely. And so that'll happen in the U.S. That'll happen in partner countries. But then nuclear is, I think, the long-term answer. So the way we see it, nuclear is the long-term solution to baseload. cleanest, safest. And so that's what we should be focused on making extremely affordable and just the lowest cost source. So I think once nuclear is lowest cost, which it really should be on physics, then your cleanest, safest and lowest cost, it's just, it's strictly better.

24:03And then I think we see massive expansion, but it won't be by the end of this decade. It's going to be in the decades ahead. I mean, AGI is like the hot topic of the day. I mean, it might change to superintelligence, and it already apparently has. But a company I recently came across at the Paris Raise AI Summit, I think it was last week, is a company called Turing. And they're helping build and deploy next-gen AGI systems within real-world industries, across industries. But I think the question that I have is, how does AGI come into play when it relates to nuclear? What is your stance on this?

24:40On the margins, you could see AI systems, helping make deployments faster, better. I know there's been some public announcements about Palantir working with the nuclear company on how do we track all these builds that we want to do and keep tabs on that. So I think software systems will be really important. A lot of the nuclear industry historically hasn't used everything that's available today. So that'll help. But I don't know that AGI specifically is really necessary. I think what we just have to do is just start building. And we have the technology in the nuclear industry already. The reactor designs are there.

25:17And it's just going to be a matter of deployment and construction and getting really, really good at development and construction. I think that's actually one of the biggest challenges. If you look at nuclear historically, like you look at Vogel, which, you know, is over budget, over schedule. People still highlight it was still cheaper than offshore wind that was built around the same time. So while there were delays and overruns, it was still competitive with other forms and the costs were coming down rapidly. So, you know, that said, you want to be able to routinely do construction builds that you know how long they're going to take and how much they're going to cost.

25:54And you just get better and better at that. I think that's what the industry needs most of all. And so hopefully that's what we see in the years ahead. AI just seems like it was the inflection point that has like just totally sprung nuclear back in the picture. Yeah, that's right. I think I think that's the way that AI helps the most. It's not that AI applications will unlock new reactor designs that help us finally get nuclear. I think we just have to build nuclear. But the impetus to build nuclear has been AI. And the data centers people are building. You know, you mentioned a five gigawatt data center.

26:28I heard the other week someone was just comparing what that means, and they compared it to Philadelphia. Philadelphia, as a city, uses three gigawatts. So five gigawatts helps you understand the scale of these builds. And so, yeah, you project that out. That's how you get to a point where in 2030 the AI demand is predicted to equal the entire U.S. grid. Helps you calibrate on how that's even possible. It's huge. As we get into the last parts of the segment, one of our partners is Brex. They're all about performance, spending smarter, moving faster. I'm really curious from your perspective, what was the biggest performance trade-off that you've been told to accept in energy and in nuclear that is not true and you've rejected it?

27:17Yeah, let's see if this answers that question. I think a misconception of nuclear that the regulation is the hard part. A lot of people have that view and they blame a lot on the regulator and they say the NRC is just, you know, the standard blame game is NRC is really slow. You know, it just takes too long. We've actually seen that, you know, almost the opposite. So all the people we've interacted with on the NRC on various topics want more nuclear. They're extremely responsive, smart, fast, motivated. And so I think we're going to see these regulations actually change the way those people in the NRC are able to operate, setting hard deadlines on things, giving them the freedom to factor in benefits of nuclear.