U.S. on its way to independence from Russian uranium
In 2023, the U.S. doubled its uranium purchases from Russia, and a year later, President Joe Biden signed a "historic law" completely banning imports of Russian uranium. Before the restrictions were adopted, Russia supplied about a quarter of the uranium Washington needed and ranked first among its importers. It is assumed that the stockpile accumulated by the United States will be sufficient for the period of strengthening its energy power and stimulating investment in the U.S. nuclear fuel supply chain. In the event that domestic capacity is insufficient to supply the country's fuel cycle and alternative importers - France, Canada, Kazan and others - prove unable to fully meet the needs of the U.S. market, the U.S. Secretary of Energy has the right to lift the import ban until 2028.
HR 1042 and U.S. Production Capacity
According to the U.S. Statistical Service, the U.S. purchased a record $1.2 billion worth of uranium from Russia in 2023, which is 43% more than a year earlier. Such demand for Russian fuel was explained by the need to build up the necessary uranium stockpile before Joe Biden signed the bill banning its import from Russia. According to HR 1042, the restrictions apply to non-irradiated low-enriched uranium (LEU) produced in Russia or by Russian companies, as well as LEU obtained by any means that allows circumventing economic sanctions against Russia. The ban is valid until the end of 2040. At the same time, the law contains an important clause, according to which, if no alternative source of LEU supply is found and if it is in the national interest, the U.S. Secretary of Energy, in consultation with the Secretary of State and the Secretary of Commerce, has the authority to lift the import ban until January 1, 2028. The national interest in this case includes situations involving the need to maintain the viability of U.S. nuclear power companies, which are critical to the U.S. nuclear fuel supply chain, and to comply with existing fuel supply arrangements with other countries. In the second case, Washington seeks to minimize the potential for the buying country to seek an alternative, non-U.S. supplier of LEU.
During the transition period, in the event of a withdrawal from the ban on LEU imports, the mass of imported Russian uranium cannot exceed: in 2024 - 476,536 kg, in 2025 - 470,376 kg, in 2026 - 464,183 kg, in 2027 - 459,083 kg.
Experts believe that the law adopted in the United States is temporary and purely political in nature. In fact, the U.S. government is not looking for new partners, as it realizes that it is impossible to find an alternative supplier of LEU in such volumes, and having increased uranium supplies from Russia in recent years, it has formed the necessary reserve, which, according to rough estimates, will be sufficient until 2028. Thus, until that time, Washington will not need a large supplier that will completely replace Russia, but will stimulate domestic production, form its own processing capacity, and expect a change in the rhetoric of relations with Russia. This is also supported by the U.S. Congress' allocation of $2.72 billion to increase production capacity for uranium conversion and enrichment as part of the National Security Emergency Supplemental Appropriations Act.
A ban on Russian uranium imports is needed to release the $2.72 billion included in recent appropriations to revitalise a competitive domestic enrichment and conversion capability. It will take many years to build US capacity to serve the existing fleet and the deployment of next generation nuclear.
Before signing the ban on Russian uranium imports, President Joe Biden announced that the U.S. uranium enrichment plant in operation had produced 90 kilograms of LEU in November 2023. Although the name of the final producer is not disclosed, the only U.S. LEU production facility in the United States currently licensed to produce LEU is Centrus Energy Corp (Piketon, Ohio). The U.S. company is known to have made the first delivery of high-grade LEU under the first phase of a cost-share contract with the U.S. Department of Energy. It is expected that the company will be able to produce already 900 kilograms under the second phase, which will fall in 2024. However, according to some estimates, it will still not be able to reach the target volumes - only 100 kg of high-grade LEU was produced in the first half of 2024.
Also against the backdrop of a rapid decline in imports, US mining companies, including Uranium Energy Corporation, Ur-Energy Inc, Energy Fuels inc, announced plans to reopen uranium mines in the states of Utah, Wyoming, Texas and Arizona, which were previously closed. According to approximate estimates, the total uranium reserves in these states may amount to about 150 thousand tons.
Alternative suppliers of uranium fuel in the United States
In addition to Russia, the main suppliers of nuclear power fuel to the United States are Canada, Australia, the Netherlands, the United Kingdom, Germany, and other European countries. At the same time, the United States, together with the United Kingdom, Japan, Canada and France, is a member of the Sapporo-5 strategic partnership, under which the parties have agreed to provide $4.2 billion over the next three years in public and private investment in collective uranium enrichment and conversion facilities.
Canada is the second largest uranium enrichment country in the world, accounting for about 15% of the world production estimated at $2 billion, and the third largest uranium reserve at 588,500 tons (based on 2023 data), which is about 10% of the total world production. At the same time, more than 85% of uranium is exported abroad. Canada is currently working to increase uranium production: in January 2024, McClean Lake (MLJV), a joint venture between Canadian companies Denison Mines and Orano Canada, released an announcement to restart the McClean Lake mine, conserved 15 years ago, located in the uranium-rich Athabasca Basin in northern Saskatchewan. The companies plan to produce 800,000 pounds of uranium oxide in 2025. And in February, Cameco and Orano, which owns the McArthur River mine, announced plans to increase production to 6,900 tons, even though operations at the mine were suspended between 2018 and 2022 due to volatile market prices.
European countries are also working on projects to increase production capacity, although about 90% of uranium continues to be imported into the EU from Kazakhstan, Niger, Canada, and Russia. For example, France's Orano, a leader in nuclear energy, has approved a $1.8 billion investment to increase enrichment capacity at facilities in southern France by 30% by 2028. These improvements will fully meet demand for the current fleet of reactors. In the Netherlands, Urenco Nederland B.V. operates a uranium enrichment plant at its Urenco Nederland B.V. site, with an annual production capacity of about 5,100,000, expected to increase to 5,850,000 this year. A similar project to improve production capacity is also being implemented in Germany at the Urenco Deutschland GmbH site.
The UK government announced that it will invest $381 million to launch the Highly Enriched Low Enriched Uranium (HALEU) program, making the UK the first country in Europe to launch such a nuclear fuel production program. The new plant is expected to be able to produce 10 tons of HALEU by 2031, thereby providing nuclear fuel to other countries.
HALEU is uranium enriched to 5-20%, which can be used as advanced nuclear fuel required for most of the new generation reactors under development. Currently, only Russia and China have the infrastructure for its large-scale production.
Australia is the country with the largest uranium reserves of 2,049,400 tons (28% of the world's reserves). In 2023 it produced 4.27 thousand tons of uranium, it is projected that Australia's production will grow by about 8% year-on-year in 2024 to 5.1 thousand tons, and in 2029 will reach a peak of 6.83 thousand tons. This will be achieved by restarting uranium mines that were mothballed due to high costs: Mulga Rock, Wiluna, Yelerri and Kintyre. In addition, a further 59 uranium exploration prospects have been identified: 14 in Western Australia, 24 in Northern Australia, 14 in Southern Australia and 7 in Queensland.
At the same time, Australian companies are actively involved in uranium mining and exploration abroad. For example, Paladin Energy plans to start production at the newly opened Langer Heinrich mine in Namibia, three other Australian-owned projects in Namibia and Tanzania have completed feasibility studies and are preparing for launch. There are 40 other Australian-operated uranium exploration projects in Africa, Canada, the US and Argentina.
Uranium reserves in Central Asia
Central Asian markets are other potential uranium markets towards which the U.S. is directing its policy. According to the World Nuclear Association, Kazakhstan is the leader in uranium mining, possessing 12% of the world's reserves (969,200 tons) and producing 43% of the world's uranium (21,200 tons in 2022). Many experts call Kazakhstani uranium the main candidate to replace Russian uranium, as it already covers about 40% of the US energy needs and 44% of the European Union's needs. Kazakhstan has existing contracts to supply uranium products to companies such as Southern Co., Constellation Energy Corp. and Duke Energy Corp. until 2032.
However, in 2024, uranium supplies from Kazakhstan began to decline, also due to problems with the supply of sulfuric acid needed for its production. In addition, there remains a fairly high level of dependence on other countries. According to analysts' calculations, Russia has control over more than 26% of Kazakhstan's uranium deposits and the rights to an additional 22% of annual production, while China National Uranium Corporation (CNUC) and its partners own the rights to almost 60% of future production from ongoing projects. Moreover, although Kazakhstan is one of the world's largest uranium suppliers, most of its processed uranium passes through Russian conversion plants before being exported to global markets. It will be extremely difficult to change this chain, as Russia dominates the sector, accounting for about 40% of the world's uranium conversion infrastructure.
Another important uranium supplier in Central Asia is Uzbekistan. In 2022, it was ranked as the fifth largest producer in the world with 3502 tons of production and was listed as one of the top three uranium suppliers to the US, with an 11% share of the US market. In July 2023, Shavkat Mirziyoyev approved initiatives to increase uranium mining and processing in Uzbekistan, setting a target of 7,100 tons by 2030.
Washington is unlikely to find a complete alternative to Russian uranium in the near term, but Canada, Kazakhstan, and Australia will continue to play a significant role in U.S. imports. If enrichment capacities are increased, European countries will also be able to compete with them, since the EU currently allows imports of Russian uranium, which means that there is a possibility that uranium from Russia could be supplied to EU countries for processing and then re-exported to the United States.
Thus, the U.S. ban on uranium imports from Russia has a pronounced foreign policy context and is aimed more at developing its own nuclear energy industry. This is indicated both by the budget allocated for conversion and enrichment capacities of enterprises and by the actions of companies seeking to increase uranium mining and LEU production.
