Uranium imports studied; U.S. producers seek protection

Posted: July 19, 2018 at 4:30 a.m.

WASHINGTON -- The Trump administration said Wednesday it is starting an investigation into uranium imports, potentially opening another front in an expansive trade war that has shaken alliances with countries around the world.

Commerce Secretary Wilbur Ross said the department would investigate whether depending on imports of uranium ore and related products -- key ingredients in the U.S. nuclear arsenal, and used in power production and nuclear submarines and aircraft carriers -- threatens national security.

Uranium produced domestically now fills only 5 percent of U.S. needs, Ross said, down from half in 1987.

The uranium inquiry is the latest of several trade-related steps the Trump administration has taken with an eye toward imposing stiff tariffs on imports. Levies have already been placed on washing machines, solar-power products, steel and aluminum from overseas, and on an array of Chinese goods. The administration is also considering whether to impose tariffs on imported cars and car parts.

The investigation announced Wednesday was requested by two U.S. uranium mining companies, Ur-Energy and Energy Fuels. The firms say low-priced imports, especially those from competitors supported by foreign government subsidies, had caused them to slash jobs in recent years. Nuclear power producers have responded by warning that sharp restrictions on uranium imports could lead to the closure of plants.

The uranium imported into the United States now comes mostly from Australia, Canada, Kazakhstan and Russia.

"If we did not take this action, this industry would become extinct," said Jeffrey T. Klenda, the chief executive of Ur-Energy. "And if we allow it to die, resurrecting it will be monumentally expensive. We cannot leave the fuel cycle in the hands of Vladimir Putin and his confederates, and increasingly the Chinese."

Klenda said that uranium producers in the United States, as well as those in allied countries like Canada and Australia, were suffering, while state-subsidized companies in Kazakhstan have rapidly gained global market share.

The U.S. Energy Information Administration said in May that uranium production plummeted in the first quarter of this year to 226.8 million pounds. That is 50 percent lower than just a year earlier. The two companies say it is the lowest level since the late 1940s. As recently as the first three months of 2014, U.S. production was 1.2 million pounds.

But the nuclear power industry has warned that an aggressive attempt to restrict access to imported uranium could increase the cost of operating U.S. nuclear power plants, many of which already struggle to compete with lower-price natural gas and renewable energy.

Nuclear power provides 20 percent of the United States' electricity, a fraction that is set to wane in the coming years: Since 2013, six of the nation's nuclear reactors have shut down permanently and 11 others are scheduled to be retired by 2025.

"Maintaining all the elements of the domestic uranium fuel supply is in our national interest and we urge the federal government to take appropriate action, without harming the fleet of nuclear reactors," Maria G. Korsnick, head of the Nuclear Energy Institute, said in a statement.

The companies that requested the trade case asked that the Commerce Department limit imports so that 25 percent of the uranium used in the United States would be produced domestically. The companies argue that doing so would pose minimal burdens on nuclear power plants.

The companies that operate the plants dispute that idea, pointing to a recent study from NorthBridge Group, a consulting firm, that looked at the impact of such a quota, which would require domestic producers to expand their operations sharply in just a few years. Doing so would cost the nuclear power industry $500 million to $800 million per year, the study found, increasing the average cost of electricity from nuclear reactors by around 2-3 percent.

"We sympathize with the plight of uranium suppliers," Korsnick said Wednesday. "However, NEI does not support the implementation of quotas as described in the petition. Potential remedies could put even more generating units at risk for premature closure."

Prices for the commodity have slumped since the 2011 Fukushima nuclear plant disaster in Japan led big buyers including Japan and Germany to shut down or decommission reactors. Compounding the problem was a global supply glut that prompted Kazakhstan, the world's biggest producer, to cut back last year. Canada's Cameco Corp., the top North American supplier, followed suit in November.

Canada and Kazakhstan are the main sources of U.S. uranium imports, each accounting for about a quarter of the total, followed by Australia, Russia and Uzbekistan, according to the Energy Information Administration. Almost 90 percent of uranium delivered to U.S. reactors was from foreign nations in 2016, according to the government agency.

It is unclear what the Trump administration will ultimately propose with regard to imported uranium. If it determines that unfair trade practices are hurting domestic mining companies, the Commerce Department can recommend a broad range of remedies, from strict quotas to temporary tariffs. Such a decision would be expected to play out over several months as the department continues its investigation and holds public hearings.

Information for this article was contributed by Ana Swanson and Brad Plumer of The New York Times; by Christopher Rugaber of The Associated Press; and by Andrew Mayeda, Jim Efstathiou Jr., Joe Deaux and Josh Wingrove of Bloomberg News.

A Section on 07/19/2018