BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR
COOKIE NOTICE

Register with us today

and in less than 60 seconds continue your access to: Latest news headlines Analytical topics and features Commodities videos, podcast & blogs Sample market prices & data Special reports Subscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber (https://pmc.platts.com), Please navigate to Platts Market Center to reset your password.

In this list
Electric Power

'Buy America' uranium petition prompts fuel buyers to re-examine sourcing

Fuel Oil | Marine Fuels

Off-spec Houston bunker fuel sparks contamination crisis

Electric Power

Platts Market Data – Electric Power

Commodities | Electric Power | Metals

Battery Metals Conference, Inaugural

Electric Power

Potential federal power plant subsidies complicate PJM capacity market rulemaking

'Buy America' uranium petition prompts fuel buyers to re-examine sourcing

A petition filed by two US uranium-producing companies that asks the Trump administration to require that 25% of US reactor operator uranium requirements be met with domestically sourced material will prompt many US nuclear fleet fuel buyers to re-examine their near- and long-term uranium sourcing strategies, an industry consultant said in a January 29 interview.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

"Some companies will want to go back to the drawing board and re-evaluate their sourcing programs, as they very likely haven't budgeted" for a substantial increase in uranium prices, said Dustin Garrow, managing principal of Nuclear Fuel Associates.

However, before companies sign contracts for new long-term supplies, Garrow said some might wait to hear comments made at a Department of Commerce hearing on the petition, seeking to gauge agency officials' positions on a requested "buy America" requirement for US uranium.

Energy Fuels and Ur-Energy filed the petition with the department January 16 under Section 232 of the Trade Expansion Act of 1962, asking the Trump administration to require the 25% set-aside to ensure the viability of US uranium producers threatened by imports.



The companies said in their petition that the US uranium industry needs government support in order to survive foreign imports , particularly from Russia and Kazakhstan, saying imports from those countries have "undermined the U.S. uranium industry while new players -- particularly China -- will soon make the situation worse."

The petitioners also sought a buy-America policy for all uranium used by the federal government.

The petition said uranium imported from Kazakhstan, Russia and Uzbekistan meets nearly 40% of the US demand while domestic production meets 5%.

Origin of uranium for US reactors 2016

Under Section 232 of the act, once the Department of Commerce initiates an investigation, the commerce secretary has 270 days to submit a report to the president. There is no statutory deadline for the department to decide whether it will initiate such an investigation. The president then would have 90 days to act on the secretary's recommendations and to take any necessary action "to adjust the imports."

An analysis attached to the petition estimated that if the 25% mandate were in place this year, it would boost the price per pound of U3O8 sold by US companies by $21, with this price premium rising to $32 a pound by 2022. It did not say whether this premium would be paid over a spot- or long-term price. Paul Goranson, Energy Fuels' executive vice president operations, said in a January 24 email, "There is no reference price used or inferred."

The spot price of uranium January 30 was $22.25/lb, according to price reporting company TradeTech.

Although many reactor operators have uranium supply contracts in place through the early 2020s, Garrow said it would amount to a "gamble" by reactor operators that President Donald Trump would not set any domestic uranium purchase quota.

Should a specific US sourcing mandate be established, there could be intense competition among buyers, he said, noting that US reactors use about 50 million pounds annually, with a 25% mandate equaling 12.5 million lb.

The last time US companies produced approximately that total was in 1989, with 13.8 million lb. The production total dropped to 2.9 million lb in 2016, according to the US Energy Information Administration. The petitioners estimated US uranium production was less than 1.4 million lb in 2017.

It is possible, Garrow said, that should Trump impose a US sourcing mandate, this could be phased in over several years. Even if this were done, he noted that if reactor operators believe such a mandate would be imposed, they likely could get a better price deal by signing long-term supply contract with US companies before Trump issues a decision.

Two US fuel buyers interviewed separately January 26, on the condition they not be identified, said the petition's filing is prompting a re-evaluation of their companies' uranium purchase strategies.

"[W]hat we're trying to figure out", is it better to buy now when prices are relatively low, rather than take a chance we'll have to buy from US producers?" one buyer said. "If the petition is granted, US uranium prices inevitably will be higher than world prices, but we 'd have no choice but to buy at higher prices. There's much to figure out. Until we do, our buying plans are on hold."

A second fuel buyer interviewed the same day said: "I anticipate some companies will buy ahead of a decision on the petition. If I can get good deals this year from foreign suppliers I probably will buy some material now rather than waiting until 2019 when I might not be able to buy from them."

Garrow, though, said the imposition of a 25% US-sourced uranium mandate could cause downward pressure on the price of imported uranium because foreign supplies "would have to compete more aggressively for a smaller part of the market." He could not quantify the potential price-depressing effect in this scenario.

Margaret Harding, president of consulting firm 4 Factor Consulting, said in a January 29 interview that should a buy-America quota be put in place it could disproportionately affect companies that operate a small number of reactors, especially one or two units, compared with large-fleet operators such as Exelon and Entergy.

While the largest of commodity buyers nearly always have an advantage in getting better deals due to bulk purchases, she said the largest nuclear fleet operators potentially could work through brokers to get a better price from domestic suppliers. Since these supplies will be limited for several years, smaller operators likely will have to pay substantially more, she said.

To this point, the first fuel buyer said: "With a quota in place, even if there were 12 million pounds produced domestically, if you need to buy the last 100,000 pounds available what will the price be? It might not be twice the spot price, but ten times that price. It's simply supply and demand."

Harding said that "a 10% increase in [uranium ] ore cost would increase the total [fuel procurement] cost by 2.3%. This is modest enough not to be overwhelming" for plant operators, she said.

However, she said the economic effects of such a quota, if it is established, would depend on an individual unit's financial performance and whether such a unit is operating in a regulated or deregulated market. On average, she said, the cost to purchase uranium equals 23% of a plant's total fuel costs; conversion equals roughly 11% and enrichment 66%.

Harding could not estimate the cost of uranium procurement on a reactor's overall operating costs, but noted in a January 30 email: "Uranium ore costs just don't have a huge impact on the costs of doing business."

She said the cost of fuel, which include the costs associated with uranium procurement through fuel fabrication and the placement of fuel assembly bundles in a reactor core, equal about $0.02/kilowatt-hour for electricity generated. Operating and maintenance costs "for a large plant site with 2 units is about $0.02/kwhr," compared with "a small single unit [which] might have O&M costs at $0.04/kwhr."

--Jim Ostroff, james.ostroff@spglobal.com