Two uranium companies with mines in Wyoming may get a boost from the Trump administration, forcing U.S. nuclear power plants to obtain more of their fuel from American producers.
Amidst sustained low prices for uranium, UR-Energy and Energy Fuels approached the Commerce Department with a proposal: investigate whether low-priced imports of uranium risk national security.
The department accepted that petition, noting the importance of uranium to domestic infrastructure and “weapons systems.” Officials have about nine months to offer a recommendation to the president on the companies’ contention of a national security risk and their proposed remedies: quotas on imports from countries like Russia and setting aside 25 percent of the domestic market for U.S. producers.
Wyoming’s uranium industry is the largest in the country, though just a handful of companies mine in the state. And it’s been under pressure.
Companies, via the Wyoming Mining Association, approached lawmakers last summer seeking tax breaks.
Their argument, which ultimately failed, was that prices had fallen so low that mines would start looking at layoffs and potentially shuttering their facilities. A tax break would allow companies to invest money into new projects rather than just scrape by. They hoped that the availability of cheap uranium would slow in some regions of the world and demand would outpace supply. But they needed a bridge.
Paul Goranson of Energy Fuels was one of the men looking for tax relief. The executive vice president of operations for Energy Fuels said the pressure from cheap uranium continues to depress the U.S. industry.
The two uranium companies maintain that the military and nuclear power industries are too dependent on foreign providers of uranium.
What’s the endgame for U.S. producers? A shift of business in their direction and a higher price for their product.
Uranium prices have plummeted in recent years as production from countries like Kazakhstan has flourished. About 40 percent of U.S. demand is supplied at low prices from Kazakhstan, Russia and Uzbekistan, according to the two uranium companies.
Goranson said the Wyoming mines are staying open by fulfilling existing contracts, with no new interest on the horizon. With prices so low, it’s a buyers’ market, he said.
“The domestic utilities have stopped doing new contracts because they can rely on ... really cheap enriched uranium and really cheap uranium (from other countries),” Goranson said.
In the case of Russia and Kazakhstan, production is subsidized by those governments. It’s not an even playing field. They can sell uranium for less than what it costs to produce it, he said.
Uranium expert Andrea Jennetta said in a recent interview that the method used to mine uranium in Wyoming — called in-situ recovery — is economically competitive on the world stage.
“The advantage is ISR mining,” she said. “When they are producing at 100 percent, they are absolutely lower costs. They can’t compete with Kazakhstan at least on the face of it, but they are competitive.”
Nuclear isn’t what many people think of when it comes to electricity in the U.S., but enriched uranium fuels up to 20 percent of the country’s power load. The enriched fuel packs a punch, holding the same amount of potential power in a single pellet as nearly 2,000 tons of coal.
Only a fraction of that uranium comes from within the country, however. Canada is the biggest provider, exporting about 25 percent of the uranium used in U.S. power plants. Kazakhstan follows with about 24 percent, then Australia and Russia.
Of course, not everyone is pleased with the idea of establishing quotas or mandating national buying, namely those who produce nuclear power with enriched uranium.
Jennetta, the uranium expert and founder of International Nuclear Associates, said that utilities have strong relationships with foreign sellers.
“Russia has been an incredible supplier to U.S. utilities for decades. Not just a few years, but decades,” she said. “It has a great reputation as a supplier. There are never any problems with deliveries … they have billions of dollars in supply contracts with utilities.”
The Nuclear Energy Institute put out a study on the heels of the Commerce Department’s announcement arguing that Energy Fuels and UR-Energy’s proposal will hurt an already struggling market.
The quotas alone could hit the nuclear power industry with a $500 million to $800 million annual increase in costs.
“The entire U.S. commercial nuclear energy industry is facing significant economic stress,” said Maria Korsnick, president and chief executive officer of NEI in a statement. “We encourage steps that will help to protect the nation’s uranium mining industry — the loss of domestic mining would have a significant detrimental impact on U.S. strategic interests. However, any action taken should not impose onerous financial burdens on companies operating the U.S. nuclear power fleet.”
Goranson said he believed fuel is such a small portion of the cost of nuclear generation that the quotas wouldn’t move the price to customers.
The uranium producers chose to suggest quotas over tariffs. Tariffs are essentially taxes that go to the U.S. Treasury, when what the industry needs is buyers, he said.
“If you want to rebuild an industry you have to drive the bus towards the industry,” he said.
The Commerce Department has about nine months to investigate the matter, though Goranson said he expected it to finish much sooner. Once the department makes a recommendation to the president, Donald Trump will have 90 days to decide.