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(Bloomberg) – President Donald Trump has discovered a commercial battle he does not like.
After disrupting global markets by imposing tariffs on steel, hundreds of billions of dollars worth of Chinese goods, and even washing machines and solar panels, Trump decided not to cap imports. Uranium, at least for the moment.
This decision is hitting hard on national uranium miners, while freeing the already struggling nuclear industry from the prospect of rising fuel costs.
The administration is trying to identify other available options, according to the people who know the situation, who have asked not to be identified because the information is not public. The US Department of Commerce opened an investigation in July 2018 after two national companies – Energy Fuels Inc. and Ur-Energy Inc. – asked the government to impose a limit on the amount of uranium that US nuclear power plants have. Were sourcing abroad.
Trump made international trade one of his main campaign problems and was called "fare man" when he discussed one of his favorite strategies.
Steel prices
While Trump has helped the domestic steel and aluminum industries with tariffs, these companies employ many workers in states such as Ohio, Michigan and Pennsylvania, which have played a crucial role in his 2016 election victory and will continue to be so during his bid for re-election in 2020. In comparison, the troubled uranium industry employs far fewer voters.
But as far as uranium is concerned, the case has run into another of its favorite problems: nuclear power. Trump urged the energy department to develop policies to support the sector, which strives to remain competitive in the face of a cheap natural gas assault.
The agency's review – on which Trump was to act as early as Saturday – was controversial from the beginning, as the nuclear industry warned that a limit could increase the operating costs of reactors that provide one-fifth of the country's electricity. .
US government data shows that more than 90 percent of the industry's uranium fuel supplies come from abroad. Limiting imports would also have been contrary to previous Trump administration efforts to bail out nuclear power plants in early retirement due to cheaper natural gas resources and renewable energy.
The shares of energy fuels and Ur-Energy fell to news, dropping by 46% and 36% respectively. In their petition, the companies said that the production of this fuel abroad, subsidized by the government, impeded the ability of American miners to face the global competition.
The leaders of the two companies, who said they have not yet seen an official decision, warned that the decision could result in the disappearance of the entire domestic industry. US companies are not producing enough uranium to power a single nuclear reactor, "said Mark Chalmers, President and CEO of Energy Fuels. Prices are currently around $ 20, and they need to see more than $ 50 a pound before they can increase production.
"We have essentially sold the entire fuel cycle to China and Russia," said John Cash, vice president of regulatory affairs at Ur-Energy.
The Commerce Department has investigated the case under Section 232 of the Trade Expansion Act of 1962, which allows for rights without a congressional vote if the imports are considered a threat to national security. The Trump administration applied the same law to apply tariffs on imports of steel and aluminum. The findings of the Commerce Department's report, which was submitted to Trump in April, remain confidential.
Canada is the largest exporter of uranium in the United States, accounting for 35% of all imports, said the Energy Information Administration, citing data for 2017. Australia, Russia and Kazakhstan are also big suppliers.
Uranium prices have fallen since the Fukushima disaster in 2011, which has led major buyers, including Japan and Germany, to shut down reactors. The problem was exacerbated by a global supply glut that prompted Kazakhstan, the world's largest producer, to cut spending in 2017. Cameco Corp., Canada's largest North American supplier, followed suit.
According to the Nuclear Energy Institute, uranium accounts for about 20% of nuclear operators' costs, although most utilities have uranium supplies contracted until 2020 or 2021.
The ad hoc group on utilities, representing operators of nuclear power plants in the United States, warned that imposing trade barriers on uranium imports would put jobs in the country's reactors at risk.
– With the help of Jim Efstathiou Jr., Jennifer A. Dlouhy and Joe Deaux.
To contact the reporters on this story: Jennifer Jacobs in Washington at [email protected], Ari Natter in Washington at [email protected], Will Wade in New York at [email protected]
To contact the editors in charge of this story: Lynn Doan at [email protected], Sarah McGregor
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