Movers and SHAKERS
Should the U.S. Uranium Industry Be Rescued?
(Note: companies that could be impacted by the content of this article are listed at the base of the story (desktop version). This article uses third-party references to provide a bullish, bearish and balanced point of view; sources listed in the "Balanced" section)
On April 14, 2019, the U.S. Department of Commerce (DOC) submitted a report to the White House on their investigation into the impacts of uranium imports on U.S. national security. The President has up to 90 days from April 14 to act on the DOC’s recommendations. While the report remains confidential, supporters and foes of trade sanctions that could protect the U.S. uranium industry from imports of uranium await the outcome. Should trade actions be taken to protect the U.S. uranium industry from imports?
Without trade sanctions, the U.S. uranium industry is endangered. Domestic uranium producers supply less than 5% of the 50 million pounds used annually in U.S. nuclear plants. Preliminary U.S. uranium concentrate production in 2018 declined 40% to 1,466,496 pounds compared to 2,442,789 pounds produced in 2017. This is the lowest annual production since 1950.
Unfair trade is the source of the problem. Approximately 50% of demand for U.S. nuclear plants is supplied by countries whose interests don’t align with those of the United States and who subsidize their uranium production. Despite low prices and a global supply glut, foreign producers continue to ship low-priced uranium to the United States. While the global demand for uranium has not increased materially, countries like Kazakhstan have significantly expanded production and shipments to the United States in recent years.
The U.S. is becoming more dependent on adversaries for uranium. Global uranium production is dominated by Russia and its allies in Kazakhstan, with China planning to enter the global market by acquiring large mines in Namibia. More than 60% of newly mined uranium emanates from state-owned enterprises controlled by adversarial nations.
Once it is gone, it will be hard to recover. Given the threat to domestic suppliers of uranium concentrate, trade relief could ensure a viable nuclear supply chain and workforce to support national security needs.
Trade quotas will do financial harm to U.S. nuclear power operators. The U.S. nuclear electric industry supplies 20% of total electricity generation in the United States. They claim proposed trade sanctions, including quotas, would significantly increase their costs and endanger the financial health of the industry and impose an unfair burden on their customers.
An increase in mining in the U.S. could encroach on public and tribal lands. According to an article in The Salt Lake Tribune, the Grand Canyon Trust worries that the expansion of mining unleashed by a quota could put political and economic pressure on the Interior Department to lift a long-standing uranium-mining moratorium on about 1 million acres surrounding Grand Canyon National Park. Other public or tribal lands could also be affected.
There is plenty of uranium in storage. Most defense supplies are now drawn from stockpiled material built up over decades. The National Nuclear Security Administration manages the military’s nuclear needs and has determined its uranium inventory currently meets all government requirements. Ernest Moniz, who led the Department of Energy under former President Barack Obama, said in a Bloomberg interview that “I think uranium supply – especially a commodity like that, you can store lots and lots of it – I don’t consider it to be a driving national security issue.”
Don’t confuse national security with protectionism. From the Heritage Foundation’s perspective, the case investigated by the Department of Commerce isn’t about national security. It’s just old-fashioned protectionism.
The devil is in the details. U.S. producers of uranium have petitioned the Department of Commerce for limits on imports and “Buy American” provisions for government purchases of uranium. While the devil will be in the details, the current Administration will likely give the Department of Commerce report fair consideration. Unlike previous administrations, the White House may be inclined to be more supportive and sympathetic to the issues raised by the petitioners, especially that of the role of state-owned enterprises that subsidize their own industries and whose governments are not aligned with U.S. policies.
Department of Commerce Submits Uranium Section 232 Report to President Trump, Ur-Energy and Energy Fuels Press Release, April 16, 2019
Opponents of Trade Relief for Uranium Mining Have Unconvincing Case, Forbes, Thomas Duesterberg, March 25, 2019.
Southern Utah Uranium Producers Hope Trump’s Trade Decision Will benefit Them, The Salt Lake Tribune, Brian Maffly, April 17, 2019.
Don’t Be Fooled by Those Who Argue for Uranium Subsidies, The Heritage Foundation, Katie Tubb, January 2, 2019
National Security Imperative Lacking, Protectionism Abounding in Section 232 Uranium Case, The Heritage Foundation, Katie Tubb, November 2, 2018
Uranium Imports Aren’t a Threat, Obama’s Energy Chief Says, Bloomberg, Ari Natter, April 16, 2019
China’s Strategy No Surprise to Uranium Producers, Energy Fuels CEO Article, Mark Chalmers,
Executive Summary of Petition for Relief Under Section 232 of the Trade Expansion Act of 1962 from Imports of Uranium Products That Threaten National Security, Energy Fuels Resources Inc. and Ur-Energy, January 16, 2018
Petition for Relief Under Section 232 of The Trade Expansion Act of 1962 from Imports of Uranium Products That Threaten National Security, Energy Fuels Resources Inc. and Ur-Energy, January 16, 2018
Domestic Uranium Production Report, 4th Quarter 2018, U.S. Energy Information Administration, February 20192017 Domestic Uranium Production Report, U.S. Energy Information Administration, May 2018