Karen Heinold, in representing Ur-Energy Inc., submitted a Petition to the U.S. Department of Commerce (“DOC”) for Relief Under Section 232 of the Trade Expansion Act of 1962 (as amended) from Imports of Uranium Products that Threaten National Security (the “Petition”), that includes the following statements:
• Imports of uranium from state-owned and state-subsidized enterprises in Russia, Kazakhstan, and Uzbekistan now fulfill nearly 40% of U.S. demand, while domestic production fulfills less than 5%.
• Increasing levels of nuclear fuel are expected to be imported from Russia and China in the coming years, which will compete directly with U.S. uranium production.
• In 2017, U.S. uranium production fell to near historic lows due in large part to uranium and nuclear fuel imported from state-subsidized foreign entities; 2018 domestic production is likely to be even lower.
• A healthy uranium mining industry is vital to U.S. national security, because it supplies fuel for nuclear power plants that are a key component of the nation’s critical energy infrastructure and essential defense needs.
• Ur-Energy and Energy Fuels, both headquartered in Denver, Colorado, are the two main U.S. uranium producers, together supplying more than half of all U.S. uranium in 2017.
• Energy Fuels and Ur-Energy have filed a Section 232 Petition requesting:
1) the Department of Commerce to investigate the effects of uranium imports on U.S. national security and
2) the President to use his authority to adjust imports to ensure the long-term viability of the U.S. uranium mining industry.
• Energy Fuels and Ur-Energy have proposed sensible remedies that will support a viable domestic uranium mining industry with a negligible impact on U.S. nuclear utilities.
Uranium is primarily used as the fuel for non-emitting, zero-carbon nuclear energy, but also plays a key role in national defense. According to the Nuclear Energy Institute, nuclear energy provides about 20% of all electricity, and nearly 60% of the carbon-free electricity, generated in the U.S. Uranium is also the backbone of the U.S. nuclear deterrent and fuels ships and submarines in the U.S. Navy. Despite uranium’s critical role in supporting clean electricity and national defense, imports of cheap, foreign state-subsidized uranium have swelled in recent years to the point that domestic suppliers currently provide less than 5% of our nation’s demand. As recently as 1980, U.S. producers supplied nearly 100% of our domestic uranium needs, and in 1989 the DOC initiated a Section 232 investigation at the request of the U.S. Department of Energy (“DOE”) because of concerns that uranium imports exceeded 37.5% at that time. The problem is far worse now.
In 2016, the combined uranium imports from three geopolitically and commercially linked countries – Russia, Kazakhstan, and Uzbekistan – fulfilled nearly 40% of U.S. requirements. While the U.S. does not import significant quantities of uranium from China at this time, China has significantly grown their state-owned nuclear enterprises and announced that they intend to penetrate the U.S. nuclear market with nuclear fuel that will compete directly with U.S. uranium miners. Further, the approaching expiration of the Russian Suspension Agreement will remove existing limits on Russian uranium imports. This will create additional pressure on U.S. uranium producers, as Russia has announced plans to increase its U.S. market share after that agreement expires in 2020.
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 U.S. companies who could otherwise compete fairly on a global basis. The Petition filed today is a response to this threat to U.S. energy and national security. The Petitioners urge Commerce Secretary Ross and President Trump to act decisively to help restore the long-term viability of the U.S. uranium mining industry. Without a viable nuclear fuel cycle, the commercial and nuclear capabilities of the U.S. will be diminished, and the nation is likely to become 100% dependent on foreign parties that compete with the U.S. for geopolitical influence and commercial advantage to fuel a majority of our clean, baseload electricity. Further, international treaties require that the uranium necessary for defense programs be sourced from the U.S. Unless steps are taken now to foster a healthy domestic uranium mining industry, the defense stockpiles currently held by the DOE will be depleted, and it is unlikely that domestic producers will have sufficient capabilities to meet our defense needs in
the future.
The Petition was filed by Energy Fuels and Ur-Energy pursuant to the Trade Expansion Act of 1962, as amended (the “Act”), and 15 C.F.R. § 705.5. The Act was promulgated by Congress to protect essential national security industries whose survival is threatened by imports. As such, the Act authorizes the Secretary of Commerce (the “Secretary”) to conduct investigations to evaluate the effects of imports of any item on the national security of the U.S. In the Petition, Energy Fuels and Ur-Energy describe in detail how the loss of a viable U.S. uranium mining industry would have a significant detrimental impact on the national, energy, and economic security of the U.S. and the ability of the country to sustain an independent nuclear fuel cycle.
Once the DOC initiates an investigation, the Secretary has 270 days to prepare a report to the President. Following receipt of the Secretary’s report, the President then has 90 days to act on the Secretary’s recommendations, and if necessary take action to “adjust the imports of an article and its derivatives” and/or pursue other lawful non-trade related actions necessary to address the threat. The Petition seeks remedies which will set a quota to limit imports of uranium into the U.S., effectively reserving 25% of the U.S. nuclear market for U.S. uranium production. Additionally, the Petition suggests implementation of a requirement for U.S. federal utilities and agencies to buy U.S. uranium in accordance with the President’s Buy American Policy. These remedies are expected to result in U.S. utilities purchasing approximately 12 million pounds of uranium per year from U.S. production, based on recent data. This would be expected to create a healthy U.S. uranium mining industry, bolster national defense, and improve supply diversification for U.S. utilities and their customers. Greater diversification will lessen the exposure of the U.S. government, U.S. utilities and their customers to the policies of nations like Russia, Kazakhstan, and China.
U.S. utilities and their customers will also receive greater protection from supply shocks, price increases, and other geopolitically motivated actions of foreign state controlled uranium producers. Likewise, a strong domestic uranium mining industry will be able to reliably supply the required domestic uranium that is critical to our national defense programs. The U.S. government will provide support to a vital national security industry, while maintaining a high degree of competition that encourages innovation and lower prices. These remedies will reduce dependence on imports that fuel clean energy, and support reductions in air pollution and carbon emissions.
U.S. uranium producers will continue to compete with global uranium producers, but on a more level playing field. U.S. production will come from existing U.S. producers, from other U.S. producers that are on standby as a result of low uranium prices, and from new U.S. producers. Pricing for U.S. uranium would be expected to increase through domestic competition to levels more consistent with unsubsidized global costs of uranium production, but not to a level that will have a significant impact on the bottom lines of U.S. utilities or the rates their customers pay. An econometric model included in the Petition demonstrates that the average price impact to consumers will be negligible.
Additional information regarding the trade action, including the full text of the Section 232 Petition, can be found on the companies’ respective websites (here). There can be no certainty of the outcome of the investigation or the recommendation of the Secretary, and therefore the outcome of this process is uncertain.
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