Section 232 Petition Puts Domestic Uranium Supply in the Headlines
In January 2019, two US uranium suppliers put the domestic uranium supply chain in the spotlight with a 232 petition requesting a quota that would require 25% of uranium for US reactors to be purchased from US suppliers.
The two US producers, Ur-Energy Inc and Energy Fuels Inc. stated in the petition that US uranium production accounted for just 5% of domestic requirements in 2018, with a paltry 2% fulfillment projected for 2019. As recently as 1980, US reactors purchased 100% of uranium from US producers.
The petitioners stated:
"Today's extreme dependence is not a matter of foreign competition legitimately under-pricing domestic production. It is the result of certain foreign state-subsidy policies that undermine US companies who could otherwise compete fairly on a global basis."
The 232 petition triggered high hopes for a bull market early in 2019 as US uranium suppliers looked to the quota requiring all US energy facilities to purchase 25% from US producers to "level the playing field" in a global uranium market skewed by state-subsidized producers in Russia, Kazakhstan, and Uzbekistan. This geopolitically connected triad is responsible for fulfilling 40% of US uranium demand.
China is also raising the nuclear energy bar with more state-owned reactors in the works and has brazenly announced its intention to "penetrate the US nuclear market with nuclear fuel that will compete directly with US uranium miners," according to a recent report at World Nuclear News.
Complicating matters further for US uranium producers, The Russian Suspension Agreement (which currently holds Russian uranium imports in check), expires in 2020, removing limits on uranium imports from the Russian triad which already gorges on 40% of US fulfillment.
Industry watchers had anticipated that President Trump would extend his track record of protecting US industries based on previous actions taken as a result of 232 petitions filed in the US steel and aluminum industries, which resulted in tariffs on imports of those metals. The Pentagon also initiated an investigation into national security risks caused by over-reliance on rare earth metal imports from China.
But President Trump, caught between the interests of two industries, backed away from the suggested uranium quota.
US Uranium Suppliers vs The US Nuclear Energy Industry
President Trump declined to accept the recommendations of the Department of Commerce on the uranium petition, ruling out the 25% domestic quota. Pressure from the US Nuclear Energy Institute came from CEO Maria Korsnick who stated that the domestic uranium quota would " impose onerous financial burdens on companies operating the US nuclear power fleet."
Trump did, however, form the Nuclear Fuel Working Group to analyze the state of the entire nuclear fuel supply chain and the effect of over-reliance on imported uranium on national security.
Trump's Nuclear Fuel Working Group Keeps US Uranium Investors Optimistic
According to the current report at Investorintel.com, US uranium producers can still anticipate "some kind of boost" in the form of import quotas on state-subsidized uranium suppliers such as the Russian triad and China, tax breaks and incentives for US uranium mining operations, and fast-tracking for new uranium mining licenses and permits.
Increasing US uranium reserves to secure the 20% of overall US energy production supplied by nuclear facilities, as well as the critical fuel sources for the US Navy nuclear aircraft carrier and submarine fleets, is another highly probable action that is keeping uranium investors optimistic for 2020.
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