The United States is accumulating uranium – Newspaper Kommersant No. 1 (7446) of 01/09/2023

The US authorities have begun building up a strategic reserve of uranium in an attempt to cut supplies from Russia. The Ministry of Energy of the country signed contracts for the purchase of 800 thousand pounds of uranium from local mines, as well as a state contract for $14 million with the only conversion plant for processing raw materials. A $75 million program to support local producers has been launched to revive the nuclear industry in the United States. The creation of reserves against the backdrop of sanctions risks is quite logical, experts say.

The US Department of Energy entered into the first contracts for the supply of uranium to create an internal strategic reserve. Specifically, the ministry will buy about 800,000 pounds of uranium oxide (U3O8) from five local factories at prices ranging from $59.5 to $70.5 per pound. For comparison, in 2021, US nuclear power plants purchased just 46.7 million pounds of U3O8 at an average price of $33.9 per pound.

A $14 million state contract was also won by the country’s only feedstock conversion plant, Honeywell (owned by ConverDyn), which will process U3O8 into uranium hexafluoride (UF6, a feedstock for further enrichment), S&P Global reports. Authorities hope the contract will allow the restart of Honeywell, which has been closed since late 2017.

Despite this, now the United States practically does not mine or process uranium on its own domestically. The country produced several million pounds of uranium every year, but since 2015, production has fallen sharply, hitting a historic low of 21,000 pounds of U3O8 in 2021. The U.S. also has no uranium conversion and enrichment facilities: the industry has effectively ground to a halt following the collapse in uranium prices following the 2011 Fukushima accident in Japan.

The creation of a strategic uranium reserve was originally the idea of ​​former US President Donald Trump. In 2022, the discussion of the program accelerated after the outbreak of hostilities in Ukraine, when local authorities and nuclear power plant operators began to demand a reduction in the supply of uranium from Russia. The total amount of the program is $75 million per year.

Russia is one of the main suppliers of uranium to the United States. For example, in 2021, Russia shipped 6.3 million pounds of U3O8 to the US at an average price of $22.8 per pound, according to the EIA. The share of Russia in the total structure of import supplies of uranium oxide was about 14%. Russia’s share in the supply of uranium enrichment services (the most capital-intensive area) is 34%.

Western countries have not imposed sanctions on Russia’s nuclear industry, including uranium mining and processing. However, prices for uranium and services for its processing went up sharply in 2022 against the backdrop of the desire of nuclear power plant operators to avoid supplies from the Russian Federation. The spot cost of uranium conversion services in November and December 2022 was at a record level in the entire history of observations – $40 per 1 kg, follows from UxC data. Prices for uranium enrichment services, as of the end of December, were $125 per unit of separation work (SWU). The average spot price for uranium oxide (U3O8) in December was about $48 per pound.

Against the backdrop of volatility in gas prices and the development of unstable renewable energy, nuclear generation is once again becoming one of the key elements of the energy sector, especially as part of the decarbonization commitments made, which applies primarily to the G7 countries, says Oleg Dudikhin from Kept. Despite the fact that the share of the price of uranium in the cost of a kilowatt-hour of nuclear power plants is less than 10%, due to the actualization of their role, as well as the dominance of the Russian Federation and Kazakhstan in the uranium market, it is logical that Western countries create their own storage facilities for uranium reserves, he believes: “ Such vaults can serve to compensate for price fluctuations, as well as be a reserve in case of imposition of sanctions that may be imposed by either side.”

Polina Smertina