The U.S. Department of Energy recently released a roadmap for rebuilding the country's nuclear energy sector, including commitments to bolster domestic production of uranium, increase its enrichment as a fuel source and expand the export market for nuclear technologies.
U.S. Secretary of Energy Dan Brouillette unveiled the strategy on April 23. The report: Strategy to Restore American Nuclear Energy Leadership, was written by the government's Nuclear Fuel Working Group (NFWG) - a task force put together by U.S. President Donald Trump last July.
The strategy paper builds on previous efforts by the Trump administration to help uranium miners in the U.S. and the broader nuclear energy sector as a whole - both of which have been struggling in the last few years.
"The decline of the U.S. industrial base in the front end of the nuclear fuel cycle over the past few decades has threatened our national interest and national security," Brouillette said when he released the strategy report. "The Trump Administration is committed to regaining our competitive global position as the world leader in nuclear energy."
In February, as part of the president's proposed federal budget for fiscal 2021, his administration requested US$150 million annually over the next decade to stockpile U.S.-mined uranium in a new national reserve.
The leadership strategy lays out a three-fold approach to strengthening the entire U.S. nuclear enterprise. It begins with the government taking a series of actions to revive and strengthen the uranium mining industry, while also ending reliance on foreign enrichment capabilities. For miners, the most important aspect of this phase is the commitment by the government to directly purchase uranium from American producers in order to create a strategic reserve of the metal.
Next, the government wants to leverage investments in American nuclear research and development so that technological advancements, such as Small Modular Reactors (SMRs), can be accelerated. And these would require fuel sources, presumably initially sourced from the proposed uranium reserve.
Finally, the report outlines the administration's desire to expand the export market of U.S. nuclear technology. It specifically says that American companies face competition not from other international companies, but from state actors such as Russian and Chinese state-owned enterprises.
The leadership strategy paper is the result of several years of intense lobbying by U.S. uranium miners and other players in the nuclear sector. In January of 2018, two uranium mining companies jointly submitted a petition to the U.S. Department of Commerce for relief under Section 232 of the Trade Expansion Act of 1962, an act that was promulgated by the U.S. Congress to protect essential national security industries whose survival is threatened by imports.
The two Colorado-based miners, Ur-Energy (TSX: URE; NYSE-Am: URG) and Energy Fuels (TSX: EFR; NYSE-AM: UUUU), initially wanted the U.S. government to set a quota that would reserve 25% of the country's nuclear market for domestic uranium producers. They were also concerned that cheap foreign uranium was flooding the market, mostly from Russia, Kazakhstan and Uzbekistan.
In a conference call on April 24, Mark Chalmers, Energy Fuels' president and CEO, said the strategy report was the U.S. government's strongest statement of support for the domestic nuclear fuel and uranium industry in decades.
Though the country is the largest global consumer of uranium, Chalmers noted that the United States did not produce enough uranium in 2019 to power a single commercial reactor. "America is truly addicted to foreign uranium," Chalmers told analysts and investors on the call. "Approximately one-third of the world's uranium is consumed by the United States."
The NFWG report proposes addressing this shortfall by creating a new uranium reserve, and also potentially merging it with the existing American Assured Fuel Supply. This could see the government procuring between 17 and 19 million lb. mined and milled uranium beginning in 2020.
Energy Fuels operates three key uranium production facilities in Wyoming, Texas and Utah, and has about 515,000 lb. finished uranium in its inventory, Chalmers said, noting that the company is ready to increase this inventory. "We plan to have close to 700,000 lb. at the end of this year - 650,000 to 700,000 pounds."
Other uranium companies have also weighed in on the report. Jeff Klenda, chairman and CEO of Ur-Energy, which operates the Lost Creek in-situ recovery uranium facility in south-central Wyoming, told The Northern Miner that, for the most part, he feels the NFWG report says all the right things, in the right order, at the right time to get the uranium mining sector back online in the United States.
"If you're going to resurrect the fuel cycle here in the United States, it really must, by definition, begin from the ground up, which means you have got to address the miner first," Klenda said. "Everything else is built on us."
While the paper does extol the importance of American uranium miners and the nuclear sector in general, it is also vague when it comes to specifics, something that concerns Klenda.
"When does this exactly begin, buying that 17 or 19 million pounds, and at what price?" Klenda says. "Our primary objective, right now, is we've got to get clarity. We hope that this will provide relief to us this year, in calendar 2020, but what we really need to come away with are contracts."
Klenda noted that the last contract cycle was 2010-2014.
"We need there to be a new contracting cycle," he said. "If that's with the utilities, great. If it's with the Department of Commerce or the Department of Energy, that's fine, too. But the industry needs new contracts."
There are also a number of other questions about the strategy outlined in the report and about the Trump administration's intentions, analysts say, including Trump's "Budget for America's Future" unveiled on Feb. 10, which requested that the U.S. Congress approve a total of US$1.5 billion between 2021 and 2030 to set up a strategic uranium reserve. Indeed, the strategy report relies on an immense US$4.8 trillion budget, whose passage is anything but certain.
"A presidential budget, without the approval and endorsement of Congress, is really just symbolic of what the government is prioritizing," Colin Healey, a research analyst with Haywood Securities, said in an interview.
"It doesn't mean that the money will be spent," he said. "Many times, things that are in a budget don't get spent. All we really have here is a report published from the current government stating its recognition of the importance of nuclear power and the entire nuclear cycle, and the desire to restore the U.S.'s global competitiveness in the industry."
While the NFWG roadmap seems like a positive step forward for U.S. uranium miners, the unfortunate truth, some observers say, is that it remains something of a paper tiger.
Though the administration could commit to an executive action that would jumpstart the purchase of domestic uranium, it has so far held off doing so. And passage of the budget as envisioned in February remains questionable within the framework of a polarized Congress, the ongoing costs of dealing with the COVID-19 pandemic and a looming presidential election.
Still, some analysts like Healey remain cautiously optimistic. "I think that the message here is that to restore global competitiveness, including exporting nuclear technology, you have to support the entire sector. So, is this important for [U.S.] domestic uranium production? For sure: It says the government is behind the entire industry."