The U.S. Senate's approval this week of a ban on enriched uranium from Russia handed North American uranium miners a victory as they ramp up production in anticipation of long-term demand for the nuclear fuel.
The upper chamber passed the measure unanimously after the House of Representatives approved the bill in December. Given broad bipartisan support and the United States' continuing efforts to deprive Moscow of funding for the war in Ukraine, President Joe Biden is expected to sign the bill into law. The White House National Security Council said the president "looks forward" to signing the ban, Bloomberg reported.
A ban would be icing on the cake for miners already benefiting from higher uranium prices amid a renaissance in nuclear power after a yearslong deep freeze following a 2011 reactor disaster in Japan. Nations are now expanding their fleets of nuclear plants as they seek to transition away from fossil fuels.
"The Senate's approval of the bill to ban Russian uranium imports is a welcome action advancing U.S. efforts to pivot away from reliance on Russian nuclear fuel," said Veronica Baker, spokeswoman for Canada-based Cameco Corp. CCJ, the world's biggest uranium miner by market value and second-largest by production volume.
"This legislation provides for a rational transition with an immediate ban on Russian fuel imports and includes appropriate considerations for certain situations where alternative supply is not available," she told Benzinga.
The ban will go into effect 90 days after the bill becomes law, but it includes the possibility of U.S. Energy Department waivers under certain circumstances until 2028 so that utilities have time to adjust.
If the ban becomes law, it will unlock some $2.7 billion in funding to build up a domestic nuclear uranium conversion and enrichment supply chain in the face of longtime reliance on Russia. The funding was already approved, but was contingent on a halt to Russian uranium imports.
Russia supplied 12% of uranium purchased by U.S. nuclear power plants in 2022, according the U.S. Energy Information Administration. That year, Russia supplied 24% of the nation's enriched uranium, the administration said.
Will Russia Retaliate?
The news has raised concerns that Russia might retaliate by immediately cutting uranium exports to the United States, which would leave some utilities scrambling for supplies.
"Everybody's biting their nails to see what Russia's reaction is to it," Alex Dolesky, founder of uranium-backed crypto token project Uranium3o8, told Benzinga.
Jonathan Hinze, president of nuclear energy research firm UxC, told Benzinga that Russian suppliers have said they will continue to honor contracts.
"But if Russia’s government wants to retaliate, they definitely have that option," he said. "If this happens, many U.S. utilities will be scrambling, and demand in the spot markets will spike."
Under that scenario, per-pound uranium prices could rise from their current place in the low $90s to the $120-$150 range, Hinze said. Three years ago, prices were in the high $20s.
If supply is immediately curtailed, some utilities would find it difficult to quickly find supply elsewhere given the tight supply situation that has emerged in recent years, he said.
"Longer term, there should be no issues that utilities can shift away from Russia, but the next few years might get dicey," he said.
Effect on Utilities
Constellation Energy Corp. CEG, the nation's biggest nuclear power plant operator by generation capacity, has secured enough nuclear fuel to power its operations into 2029 and has contracts extending beyond then, spokesman Paul Adams told Benzinga.
In 2022, the year Russia invaded Ukraine, Duke Energy Corp. DUK, the United States' No. 2 nuclear reactor operator by capacity, began taking additional steps to bulk up its non-Russian uranium supply chain, spokeswoman Mary Kathryn Green told Benzinga. The company has contracts with more than 10 different suppliers across at least six different countries as well as a working stock of nuclear material, she said.
U.S. government-owned nuclear operator Tennessee Valley Authority by law doesn't use Russian uranium conversion or enrichment services. Although it would not be directly impacted by restrictions on Russian supply, it has been working with its suppliers to help limit the impact of a Russian fuel disruption on other utilities, spokesman Adam May told Benzinga.
Effect on Miners
Experts expect the reshuffling in the U.S. nuclear utility industry to result in higher uranium prices.
"Fundamentally the market is short of uranium," Leigh Curyer, CEO of NexGen Energy Ltd. NXE told Benzinga. The Canada-headquartered company is working to advance a uranium mine and mill project in Saskatchewan.
"Any disruptions can and will influence spot prices," he said. "We do expect pricing to move back above and materially over $100 per pound and remain so to incentivize more, much needed, production."
Long-term contract activity between uranium suppliers and utilities is picking up, Duane Parnham, CEO of Madison Metals Inc. MMTLF, told Benzinga. The Canada-headquartered company has uranium projects in Namibia.
"This results in the supply-demand curve favoring stronger future pricing and less supply," he said. "Miners need to increase production, and developers need to find new deposits and build new mines now to meet this growth and longer-term demand."
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