A uranium ore pile near Tusayan, Arizona.Ross D. Franklin/The Associated Press
The United States is a lightweight in uranium, but it wasn’t always this way. From the 1950s through the 1980s, it was the world’s leading producer of the silvery-grey metal and was largely self-sufficient.
U.S. President Donald Trump now aims to return to this past, part of a broader effort to achieve what he calls “American energy dominance.” He has signed several orders aimed at fostering domestic uranium production and disadvantaging foreign producers.
Tim Gitzel, chief executive officer of Canadian uranium giant Cameco Corp. CCO-T, dismissed the fallout from Mr. Trump‘s recent actions as mere “distractions” during a conference call earlier this month with investors. The logic underpinning such nonchalance has implications for investors, miners and the Trump administration alike.
What‘s the current situation in the U.S.?
The U.S. uranium industry is on life support after a long illness.
According to the U.S. Department of Energy, there were 18 mines and four mills in 2009; by 2018, the country was down to just five mines and one mill. The entire industry recently employed just 340 people.
Cameco’s U.S. operations, Crow Butte in Nebraska and Smith Ranch-Highland in Wyoming, are emblematic of this decline. Citing market conditions, the company halted production at both properties in 2018; it reported in February that its U.S. production capacity “is higher-cost and the timing of a restart is uncertain.”
Canada, by comparison, is the world’s second-largest producer after Kazakhstan.
Most of the world’s reactors require enriched uranium, and here the U.S. is even more vulnerable. It has only one small commercial enrichment plant, and has relied heavily on enrichment services from Russia, France, Germany, the Netherlands and Britain. China also possesses significant enrichment capacity; Canada has none whatsoever.
There’s one area, though, where the U.S. remains a force to be reckoned with: Its fleet of 94 operating power reactors, which consume a lot of uranium. It‘s thus a crucial market for Canadian producers, who have much to lose from trade restrictions.
What has Trump done?
The U.S. President‘s most consequential acts involve erratic threats of tariffs, including a 10-per-cent tariff on Canadian energy products.
There were no tariffs on uranium at press time, but that could change. Mr. Trump‘s enthusiasm for tariffs knows few limits; he asserts that they will lead to a return of industrial activity to the U.S. and strengthen its economy, while having limited impacts on prices. His haphazard approach to applying them have produced an unpredictable, tense environment for uranium miners, investors and users.
Justifications for possible future tariffs are now being drawn up. Mr. Trump ordered his Commerce Secretary, Howard Lutnick, to prepare a report examining the effects imported critical minerals were having on national security. Mr. Lutnick was asked to consider “the imposition of tariffs as well as other import restrictions and their appropriate levels.”
Among Mr. Trump‘s first acts upon assuming office was ordering the U.S. Geological Survey to consider placing uranium on its list of critical minerals. Last month, he signed an executive order declaring that uranium was now a critical mineral.
Mr. Trump signed yet another executive order intended to boost domestic mineral production. He established the “National Energy Dominance Council” to serve as an advisory body. He invoked the Defense Production Act to expand domestic production capacity.
He’s called for fast-tracking of permits for minerals projects. In May, the Department of the Interior declared that the environmental review of the Velvet-Wood uranium-vanadium mine in Utah would be completed in just 14 days.
Most recently, on Friday, Mr. Trump ordered his Energy Secretary to evaluate possibilities for reprocessing spent nuclear fuel, and also make surplus plutonium available to industry for fabrication into new fuels.
U.S. President Donald Trump and Prime Minister Mark Carney talked about trade and tariffs at their Oval Office meeting in early May.
The Canadian Press
Why is Trump doing this?
The U.S. government has long worried that by relying on foreign uranium, it could find itself unable to obtain fuel for civilian and military reactors and bombs.
Mr. Trump‘s rationale appears to be informed by a 450-page report he ordered late in his first term from then-commerce secretary Wilbur Ross. That 2019 report accused state-owned producers in Russia, Kazakhstan, Uzbekistan and China of employing “non-market business practices” – including selling uranium below “fair value”- causing U.S. industry to atrophy.
Mr. Ross recommended that to boost U.S. uranium production significantly, imports should be restricted and uranium prices pushed to US$55 per pound, enabling American mines to supply six million pounds of uranium concentrate per year – enough to meet a quarter of U.S. utilities’ consumption.
That report wasn’t overtly hostile to Canada, naming the country among “likeminded allies” from which imports should continue largely unrestricted “based on their security and economic relationships” with the U.S. It sympathized with Canadian producers forced to idle mines amid poor market conditions, which it blamed on Russian and Chinese influence.
But in Mr. Trump‘s second term, Canada’s status as a “likeminded ally” now seems dubious.
What is Trump likely to accomplish?
Uranium markets are just one more corner of the global economy Mr. Trump has disrupted since assuming office.
The American Nuclear Society says falling uranium prices on the spot market have been widely attributed to Mr. Trump‘s policies. Most uranium, though, is sold through long-term arrangements. For the quarter ended March 31, Cameco reported long-term contracting had slowed, too. His flurry of executive announcements on Friday prompted a surge in uranium company stocks.
Trade restrictions can influence domestic production, albeit after years-long delays. The American Nuclear Society attributed modestly U.S. production gains last year to a ban on Russian uranium imposed by the Biden administration in response to Russia’s invasion of Ukraine. Further restrictions, if sustained, could have similar influence.
Yet Mr. Trump‘s plan to re-shore production faces considerable obstacles.
American utilities opposed previous proposals to restrict uranium imports, arguing the resulting costs would force early retirements of reactors. The Nuclear Energy Institute, an industry trade association, derided tariffs and quotas as “fundamentally flawed trade remedies.”
If more nuclear plants did close, the job losses could easily outweigh any employment gains at uranium mines. After all, a single station employs more workers than the entire U.S. uranium production industry.
Joseph Romm, a physicist and research fellow at the University of Pennyslvania, said Mr. Trump‘s actions will harm the entire U.S. nuclear industry.
“Any success the U.S. might have with small modular reactors depends on foreign sales, foreign uranium and foreign components,” Dr. Romm said during a recent webinar. Canada is therefore “not a great country to piss off, not a great country to set up ridiculous tariffs with.”
Prospects for a rapid restart seem dim. According to the U.S. Commerce Department, it takes two to five years to restart an idled uranium production facility, and several more years to add new capacity.
The workforce requires a wide range of educated and experienced professionals. And because many uranium mines are in remote locations, recruitment and retention has always been challenging. For years, U.S. uranium miners spent little on research and development, sapping their competitiveness.
Perhaps the greatest obstacle is that little uranium is known to exist within the U.S.’s borders.
Canada’s ores have concentrations up to 20-per-cent uranium, according to the World Nuclear Association, compared with a global average of around 0.10 per cent. It will be challenging for the U.S. to achieve “dominance” using inferior, less abundant ores.
Wyatt Bain, an assistant professor of geology at Western University, said the U.S.’s most promising options for quickly increasing production lie in areas already known to have uranium, such as southern Utah. Policies that reduce expenses or permitting requirements for mining exploration and development could help stimulate that activity.
“Making investments in exploration in those ‘brown fields’ is one of the low-hanging-fruit strategies that you would try anywhere,” Prof. Bain said.
But the U.S. lacks infrastructure to refine uranium and fabricate it into products, which would take many more years to build, he said.
“Having the rock in the ground and being able to dig that up and mill it into a concentrate, that‘s one thing. Turning it into a raw material that we can use for some industrial process, that‘s a much harder thing.”
What‘s Cameco got to say about all this?
Communicating with investors, Cameco consistently played down the significance of recent events. Addressing investors during a May 1 conference call, the CEO urged them to look “beyond the near-term geopolitical and trade policy distractions.”
“Two things are certain,” Mr. Gitzel said. “There’s no substitute for uranium in a nuclear fuel bundle, and there’s no elasticity to the demand for nuclear fuel. You need it to run your reactors and power your economy, regardless of tariffs or higher costs.”
Equity analysts covering the stock have repeated or echoed Cameco’s arguments.
“Fundamentally there remains a growing supply deficit over the next 15 years driven by a growing demand, while supply is depleting over time,” analysts at National Bank of Canada wrote in a research note.
Even so, observers have warned that tariffs and other trade measures could depress Canadian production. Cameco was worried enough about comparatively modest restrictions proposed in 2019, stating that they were “too broad, would restrict Canadian imports, and are unrealistic in their estimate of feasible U.S. production levels.” It sought to avoid quotas, but was content to see them applied to competitors from other countries.
What‘s the greatest risk to Cameco?
Even as Mr. Trump antagonizes Canada, he’s also courting Russia. This has prompted speculation that he might remove sanctions against imported Russian uranium.
That would do nothing to address the U.S. government‘s long-standing concerns over Russia’s behaviour in uranium markets. It has fretted that should conflict arise, Russia might ban uranium exports, and could even deny access to Kazakh and Uzbek uranium moving through Russian ports on the Baltic Sea and elsewhere.
Gracelin Baskaran and Meredith Schwartz, of the Center for Strategic and International Studies, wrote in a recent commentary that tariffs, or even Mr. Trump‘s volatile use of them, “have the potential to displace Canadian uranium exports to other countries, exacerbating an existing uranium shortage in the United States.”
Cameco chief financial officer Grant Isaac said recently that in spite of the company’s rosy outlook for uranium sales, it wasn’t ready to increase dividend payments to shareholders just yet – and cited Russia as one reason for hesitation.
“I would just point to you, for example, making sure we have clarity and certainty over the role of Russia going forward in the nuclear fuel cycle,” Mr. Isaac said, “because we’ve all seen what‘s happened in the past.”