Last week, the Russian state’s news agency quoted comments made by the country’s deputy prime minister, Alexander Novak, who stated that Russia was considering imposing a ban on uranium exports. It is presumed that the potential ban on uranium is retaliation for President Joseph Biden’s decision to stop purchasing oil from Russia.
While it isn’t clear whether the Eastern European country will implement the policy, following through on its threat would cause a significant increase in the price of uranium. Currently, Russia supplies more than 15% of the uranium that nuclear plants in America use to generate power.
In the United States, several GOP senators are calling for President Biden to cease the purchase of uranium from Russia and instead focus on domestic mines. States such as Wyoming hold considerable uranium deposits. However, low prices of uranium in the past and inactivity led to the closure of many of these mines.
As a whole, America mines a minimal amount of the uranium used by its commercial nuclear plants annually. During the last six or so years, the production of uranium in the country has rapidly decreased, to a point so low that the Energy Information Administration doesn’t release figures for the total amount of uranium produced yearly anymore.
While ramping up production of uranium in domestic mines may not be hard, the multicountry, multistep process needed to convert uranium into nuclear fuel rods may be a hitch in the government’s decision. Countries that possess uranium enrichment and refining facilities include Kazakhstan and Uzbekistan, which are both former Russian states and large producers of uranium. The two countries currently provide 8% and 22% of the uranium purchased by America.
It isn’t clear the amount of uranium ore that the two countries buy from Russia, which raises the question whether imports from Uzbekistan and Kazakhstan will be impacted as well? Uranium ore is an essential input to the fuel rods these nations produce.
Spot prices for uranium are currently trading at new highs, going for about $58 a pound. Over the last month, the price has increased by almost $13, mainly fueled by supply fears. It should be noted, however, that spot uranium makes up a fraction of the total uranium used around the globe, with the majority of the transactions being conducted through long-term contracts.
It is expected that the price of uranium will increase in the long term, especially as more countries in Europe transition to the use of more renewable energies and uranium in an attempt to meet their emission reduction targets.
Whichever way this Ukraine conflict pans out, the U.S. is likely to regard domestic uranium extractors such as Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) in a different light as the importance of the country becoming self-reliant in meeting its green energy needs becomes very clear.
NOTE TO INVESTORS: The latest news and updates relating to Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) are available in the company’s newsroom at http://ibn.fm/UUUU
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