Australia’s uranium industry welcomes President Trump’s decision against punitive import measures
US President Donald Trump’s decision not to impose punitive measures on uranium imports has been welcomed by Australian producers.
Australia’s uranium industry has openly welcomed US President Donald Trump’s decision not to impose a tariff or quota on uranium imports into the US, with Vimy Resources (ASX: VMY) chief executive officer Mike Young describing the news as “fantastic” and Boss Resources (ASX: BOE) managing director Duncan Craib noting it would underpin a uranium price rise.
US uranium miners Energy Fuels Inc and Ur-Energy sparked the investigation in early 2018 after filing a petition under section 232 of the US 1962 Trade Expansion Act citing the US’ increasing reliance on uranium imports, particularly from high risk countries, was a threat to national security.
Energy Fuels claimed the petition was to “even the playing field” and ensure US energy security was not compromised by being “overly dependent on geopolitical foes for uranium and nuclear fuel”.
US Secretary of Commerce Wilbur Ross took charge of the investigation and reported his findings to President Trump in mid-April this year.
Unsurprisingly, with nuclear power providing 20% of the country’s energy, Secretary Ross stated the high reliance on imports was indeed a threat to US energy and national security.
After sitting on the report for 90 days, President Trump released an official memorandum on Friday stating he did not “concur” with the investigation’s findings that continuing uranium imports would impair the country’s security under section 232.
However, President Trump noted a full analysis of national security including the entire nuclear fuel supply chain was necessary because the findings did raise “significant concerns” regarding the country’s domestic uranium mining sector.
As a result, President Trump said a Nuclear Fuel Working Group would be established to develop recommendations into reviving the entire US nuclear fuel supply chain.
The group will be charged with reporting its findings to the president by 10 October 2019.
Trump’s decision pleases Australian uranium explorers
Now the initial section 232 investigation has been officially closed, US utilities have been freed up to re-engage with global uranium suppliers regarding potential contracts.
“This is fantastic news,” Mr Young said of Trump’s decision.
“It is the starting gun to the uranium revival that had been picking up steam before this section 232 investigation stopped everything in its tracks.”
Mr Young said Vimy has been negotiating with US utilities to finalise contracts that would underpin the development of the company’s Mulga Rock uranium project in Western Australia’s Great Victoria Desert – about 290km from Kalgoorlie.
Agreeing with Mr Young this morning was Mr Craib who said the decision would re-open buying activity from US utilities and, consequently, boost the uranium price.
“The outlook on improved uranium prices is positive,” Mr Craib said.
Boss wholly-owns the Honeymoon uranium project in South Australia, which Mr Craib says is positioned to participate in the early stages of the “new bull market”.
“President Trump’s announcement is timely as Boss advances its restart strategy and continues contractual discussions with US utilities, in concert with the underlying price of uranium.”
“Australia has been a long-term reliable and important supplier of uranium to the US and this decision will see this continue, underpinning project development in Australia as well as providing foreign investment.”
The US currently sources about 20% of its uranium needs from Australian producers.
US uranium market
At present, the US imports more than 90% of its uranium – up from 85.8% in 2009 and the country accounts for 30% of global uranium consumption.
US uranium producers Energy Fuels and Ur-Energy believe at least 25% of US uranium demand should be sourced domestically to shore up the country’s energy security.
Last year, more than 40% of US’ uranium came from “higher risk” countries like Russia and Kazakhstan.
It was found this was largely because US producers could not compete with the lower operational costs in these countries.
Although Secretary Ross’ findings revealed “significant concerns” on how imports impact the US’ uranium mining industry, Mr Trump reiterated a full evaluation of the country’s uranium and nuclear supply chain would provide a better understanding of the situation.
Mr Trump added he was also concerned that imposing an import quota would push up costs for nuclear operators and, subsequently, power costs for millions of US households.
US uranium producers
Despite losing out on the call for a uranium import quota, Energy Fuels and Ur-Energy released a joint statement welcoming President Trump’s decision to create the Nuclear Fuel Working Group.
“The entire front end of the US nuclear fuel cycle is under siege,” the companies stated, pointing out that the US uranium sector would produce less than 1% of the country’s uranium needed to fuel its plants this year.
“We need nuclear power, supported by a robust and reliable domestic uranium and nuclear fuel industry to power our 21st Century economy and ensure our national security,” the companies explained.
The companies added they were looking forward to the Nuclear Fuel Working Group’s recommendations.