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DEPARTMENT OF COMMERCE III. Investigation Process Producers Will Face Increasing Import A. Initiation of Investigation Competition Bureau of Industry and Security B. Public Comments VIII. Conclusion C. Site Visits and Information Gathering A. Determination RIN 0694–XC078 Activities B. Economic Impacts of 25 Percent U.S.- D. Interagency Consultation Origin Requirement Publication of a Report on the Effect of E. Review of the Department of Commerce C. Public Policy Proposals Imports of Uranium on the National 1989 Section 232 Investigation on Security: An Investigation Conducted Uranium Imports Appendices Under Section 232 of the Trade IV. Product Scope of the Investigation Appendix A: Section 232 Investigation Expansion Act of 1962, as Amended V. Background on the U.S. Nuclear Industry Notification Letter to Secretary of Defense A. Summary of the U.S. Uranium Fuel James Mattis, July 18, 2018 AGENCY: Bureau of Industry and Cycle Appendix B: Federal Register Notices— Security, Commerce. B. Summary of U.S. Nuclear Power Notice of Requests for Public Comments on Generation Industry ACTION: Publication of a report. Section 232 National Security Investigation VI. Global Uranium Market Conditions of Imports of Uranium, July 25, 2018; SUMMARY: The Bureau of Industry and A. Summary of the Global Uranium Market Change in Comment Deadline for Section Security (BIS) in this notice is B. Uranium Transactions: Book Transfers 232 National Security Investigation of and Flag Swaps publishing a report that summarizes the Imports of Uranium, September 10, 2018 C. The Effect of the Fukushima Daiichi Appendix C: Summary of Public Comments findings of an investigation conducted Incident on U.S. and Global Uranium Appendix D: Survey for Data Collection by the U.S. Department of Commerce Demand (Front-End Uranium Industry) (the ‘‘Department’’) pursuant to Section D. The Effect of State-Owned Enterprises Appendix E: Survey for Data Collection on Global Uranium Supply 232 of the Trade Expansion Act of 1962, (Nuclear Electric Power Generation VII. Findings as amended (‘‘Section 232’’), into the Industry) A. Uranium Is Important to U.S. National effect of imports of uranium on the Appendix F: Uranium Product Specific Trade Security national security of the United States. Flows 1. Uranium Is Needed for National Defense This report was completed on April 14, Appendix G: Summary of Commerce Systems Department 1989 Section 232 Uranium 2019 and posted on the BIS website in 2. Uranium Is Required for Critical Investigation July 2021. BIS has not published the Infrastructure Appendix H: The National Security Aspect of appendices to the report in this B. Imports of Uranium in Such Quantities U.S. Uranium Industry Regulation notification of report findings, but they as Are Presently Found Adversely Appendix I: The Role of State Owned Impact the Economic Welfare of the U.S. are available online at the BIS website, Enterprises in the Global Uranium Market Uranium Industry along with the rest of the report (see the Appendix J. U.S. Naval and Nuclear 1. U.S. Utilities’ Reliance on Imports of ADDRESSES section). Weapons Uses of Uranium Uranium in 1989 DATES: The report was completed on Appendix K: Glossary 2. U.S. Utilities’ Reliance on Imports of April 14, 2019. The report was posted Uranium Continue To Rise Prepared by Bureau of Industry and on the BIS website in July 2021. 3. High Import to Export Ratio Security ADDRESSES: The full report, including 4. Uranium Prices the appendices to the report, are 5. Declining Employment Trends http://www.bis.doc.gov 6. Loss of Domestic Long Term Contracts available online at https://bis.doc.gov/ I. Executive Summary 232. Due to Imported Uranium 7. Financial Distress This report summarizes the findings FOR FURTHER INFORMATION CONTACT: For 8. Research and Development Expenditures of an investigation conducted by the further information about this report 9. Capital Expenditures U.S. Department of Commerce (the contact Erika Maynard, Special Projects C. Trade Actions: Anti-Dumping and ‘‘Department’’) pursuant to Section 232 Manager, (202) 482–5572; and Leah Countervailing Duties of the Trade Expansion Act of 1962, as Vidovich, Trade and Industry Analyst, D. Displacement of Domestic Uranium by amended (19 U.S.C. 1862 (‘‘Section (202) 482–1819. For more information Excessive Quantities of Imports Has the 232’’)), into the effect of imports of about the Office of Technology Serious Effect of Weakening Our Internal uranium 1 on the national security of the Evaluation and the Section 232 Economy 1. U.S. Production Is Well Below Demand United States. Investigations, please visit: http:// and Utilization Rates Are Well Below In conducting this investigation, the www.bis.doc.gov/232. Economically Viable Levels Secretary of Commerce (the ‘‘Secretary’’) SUPPLEMENTARY INFORMATION: 2. Domestic Uranium Production Is noted the Department’s prior Severely Weakened and Concentrated The Effect of Imports of Uranium on the 3. Reduction of Uranium Production investigations under Section 232. This National Security Facilities Limits Capacity Available report incorporates the statutory analysis from the Department’s 2018 An Investigation Conducted Under E. Uranium Market Distortion by State- reports on the imports of steel and Section 232 of the Trade Expansion Act Owned Enterprises Is a Circumstance That Contributes to the Weakening of the aluminum 2 with respect to applying the of 1962, As Amended Domestic Economy U.S. Department of Commerce 1. Excess Russian, Kazakh, and Uzbek 1 See Figure 1 in Section IV, ‘‘Product Scope of Production Adversely Affects Global the Investigation,’’ for the uranium products Bureau of Industry and Security Markets and Creates a Dangerous U.S. addressed by this report. Office of Technology Evaluation Dependence on Uranium From These 2 U.S. Department of Commerce. Bureau of Countries Industry and Security. The Effect of Imports of Steel April 14, 2019 2. The Increasing Presence of China in the on the National Security (Washington, DC: 2018) Global Uranium Market Will Further (‘‘Steel Report’’) and U.S. Department of Commerce. Table of Contents Bureau of Industry and Security. The Effect of Weaken U.S. and Other Market Uranium Imports of Aluminum on the National Security I. Executive Summary Producers (Washington, DC: 2018) (‘‘Aluminum Report’’). II. Legal Framework 3. Increasing Global Excess Uranium https://www.bis.doc.gov/index.php/documents/ A. Section 232 Requirements Production Will Further Weaken the steel/2224-the-effect-of-imports-of-steel-on-the- B. Discussion Internal Economy as U.S. Uranium national-security-with-redactions-20180111/file.

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terms ‘‘national defense’’ and ‘‘national international agreements on the use of uranium used in naval nuclear fuel and security’’ in a manner that is consistent most imported uranium, to satisfy the tritium production in the future. with the statute and legislative intent.3 U.S. Department of Defense (DoD) 4. Since 1946, U.S. legislation As required by the statute, the requirements for maintaining effective governing the uranium production and Secretary considered all factors set forth military capabilities, including nuclear nuclear power generation industries has in Section 232(d). In particular, the fuel for the U.S. Navy’s fleet of 11 consistently made explicit written Secretary examined the effect of imports nuclear powered aircraft carriers and 70 reference to these industries’ national on national security requirements, nuclear powered submarines, source security functions.9 specifically: material for nuclear weapons, depleted B. Imports in Such Quantities as i. Domestic production needed for uranium for ammunition, and other Presently Found Adversely Affect the projected national defense functions. Economic Welfare of the U.S. Uranium requirements; 2. Uranium is also essential to Industry ii. the capacity of domestic industries maintaining U.S. critical infrastructure 1. In 2018, almost all uranium used to meet such requirements; sectors, specifically the nation’s 98 iii. existing and anticipated for civilian U.S. nuclear electric power reactors for nuclear power generation to generation was imported, totaling availabilities of the human resources, support the Nation’s commercial power products, raw materials, and other approximately 94 percent of grid. Nuclear reactors supply 19 percent consumption. Between 2009 and 2018, supplies and services essential to the of U.S. electricity consumed in the U.S. national defense; U.S. nuclear electric power generators and they support 15 of the 16 critical increased their reliance on imported iv. the requirements of growth of such infrastructure sectors identified by the industries and such supplies and uranium products from 85.8 percent to Department of Homeland Security 93.3 percent of their annual services including the investment, 6 (DHS). Maintaining a robust civilian requirements.10 In comparison, the exploration, and development necessary nuclear power industry is essential to Department’s 1989 Section 232 to assure such growth; and U.S. national security, including both investigation into ‘‘The Effect of Imports v. the importation of goods in terms national defense and critical of Uranium on the National Security’’ of their quantities, availabilities, infrastructure requirements. DoD found that imported uranium satisfied character, and use as those affect such installations in the U.S. rely on the just 51 percent of U.S. nuclear electric industries; and the capacity of the commercial power grid for 99 percent of power generators’ requirements at that United States to meet national security 7 their electricity needs. The entire U.S. time. 11 requirements. nuclear enterprise—weapons, naval 2. Uranium is imported into the The Secretary also recognized the propulsion, nonproliferation, United States in eight forms, with the close relation of the economic welfare of enrichment, fuels services, and two largest categories being uranium the United States to its national negotiations with international concentrate and enriched uranium. security. Factors that can compromise partners—depends on a robust U.S. Uranium concentrate is primarily the nation’s economic welfare include, civilian nuclear power industry. imported from Australia, Canada, but are not limited to, the impact of 3. Domestic uranium production and Kazakhstan, and Uzbekistan. Enriched ‘‘foreign competition on the economic processing, referred to in this report as uranium is primarily imported from welfare of individual domestic the ‘‘front-end’’ of the fuel cycle, Russia, the United Kingdom, Germany, industries; and any substantial depends on an economically viable, France, and the Netherlands. unemployment, decrease in revenues of competitive U.S. commercial uranium 3. Between 2014 and 2018, an average government, loss of skills, or any other industry.8 The distinct stages of the U.S. of 52 percent of U.S. nuclear electric serious effects resulting from the nuclear fuel cycle extract uranium from power generator requirements of displacement of any domestic products the ground and ultimately transform it uranium concentrate was provided by by excessive imports.’’ 19 U.S.C. into fuel suitable for civilian nuclear Australia and Canada, 25 percent from 1862(d). In particular, this report power. The same stages of the U.S. Kazakhstan and Uzbekistan, and the assesses whether uranium is being nuclear fuel cycle are needed to fulfill remainder from Namibia (8.4 percent), imported ‘‘in such quantities’’ and national defense requirements for Niger (2.5 percent), South Africa (2.2 ‘‘under such circumstances’’ as to percent), Malawi (1.4 percent), China ‘‘threaten to impair the national (0.3 percent), and Russia (0.2 percent). 4 milling, uranium conversion, uranium enrichment, security.’’ and nuclear fuel fabrication. Uranium mining and The Department notes that between Findings milling produce uranium concentrate, uranium 2014 and 2018, an average of 24.2 conversion produces uranium hexafluoride (UF6), percent of the uranium concentrate In conducting the investigation, the uranium enrichment produces enriched uranium product (EUP), and nuclear fuel fabrication provided by Australian and Canadian Secretary found: produces finished nuclear fuel assemblies. A. Domestic Uranium Production Is 6 U.S. White House. Office of the Press Secretary. 9 Atomic Energy Act of 1946, as amended; Atomic 5 Critical Infrastructure Security and Resilience. Energy Act of 1954; 1964 Private Ownership of Essential to U.S. National Security. Presidential Policy Directive 21. (Washington, DC: Special Nuclear Materials Act; The Energy Policy 1. Domestic uranium is required, 2013) https://obamawhitehouse.archives.gov/the- Act of 1992; The United States Enrichment based on U.S. policy and restrictions in press-office/2013/02/12/presidential-policy- Corporation Privatization Act of 1996. directive-critical-infrastructure-security-and-resil. 10 U.S. Energy Information Administration, 7 U.S. Department of Defense. Office of the ‘‘Table S1a. Uranium purchased by owners and https://www.bis.doc.gov/index.php/documents/ Undersecretary of Defense for Acquisition, operators of U.S. civilian nuclear power reactors, aluminum/2223-the-effect-of-imports-of-aluminum- Technology, and Logistics. Report of the Defense 1994–2017’’, 2017 Uranium Marketing Annual on-the-national-security-with-redactions-20180117/ Science Board Task Force on DoD Energy Strategy. Report (May 31, 2018), https://www.eia.gov/ file. (Washington, DC: 2008), 18. https://apps.dtic.mil/ uranium/marketing/pdf/umartableS1afigureS1.pdf. 3 Steel Report at 13–14; Aluminum Report at 12– dtic/tr/fulltext/u2/a477619.pdf. 11 U.S. Dept. of Commerce. Bureau of Export 13. 8 For the purposes of this report, the front-end Administration; The Effect of Imports of Uranium 4 19 U.S.C. 1862(b)(3)(A). industry is defined as companies owning or on the National Security; 1989 (‘‘1989 Report’’) 5 Domestic uranium production refers to all stages operating uranium mines, uranium mills, uranium available at https://www.bis.doc.gov/index.php/ of the nuclear fuel cycle and their associated converters, uranium enrichers, and nuclear fuel documents/section-232-investigations/88-uranium- products, including uranium mining, uranium fabricators. 1989/file.

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companies to U.S. nuclear power compensate nuclear power and other reached over 94 percent of U.S. utility generators was originally sourced from fuel-secure generation resources for consumption. Kazakhstan and Uzbekistan. In the same their resilience value. In addition, 2. The Fukushima incident caused period, 20 percent of enrichment subsidized renewable energy and lower similar declines in other elements of the services purchased by U.S. utilities were natural gas prices are causing premature U.S. front-end nuclear fuel business, from Russia. While a significant portion retirements of U.S. civilian nuclear including conversion, enrichment, and of imports come from Australia and power plants before the end of their fuel fabrication companies. [TEXT Canada, the non-market practices of useful lives. To cut costs and remain REDACTED] As of 2018, the total state-owned enterprises (SOEs) have viable in distorted U.S. electricity domestic front-end uranium industry similarly harmed the financial markets, many nuclear power operators employs 4,958 workers, compared to operations of uranium producers in have ended long-term contracts with 9,232 workers in 2009, a decline of 47 these countries and threaten their higher-priced U.S. uranium producers percent. continued ability to supply uranium and turned to foreign SOEs for 3. During this same period SOEs in mined in Australia or Canada to the U.S. artificially low-priced uranium imports. Russia, Kazakhstan, and Uzbekistan market. China is also making steady The loss of long-term contracts, which undercut U.S. uranium producers with strides to become a major supplier in provided the revenue stability needed to lower priced uranium. SOEs in China the U.S. and global nuclear fuel market. adequately support capital investment, also injected additional quantities of 4. The entrance of China’s state- research and development (R&D), and uranium into the marketplace despite owned nuclear fuel companies as facility expansion, as well as to lower prices and a drop in overall potential actors in the global nuclear maintain workforce and production, has demand. In contrast, U.S. producers fuel industry will further intensify adversely impacted all elements of the significantly cut production, shut down pressure on market economy producers U.S. uranium industry. capacity, and shrank workforce levels. 4. Market economy uranium in Canada, Australia, Europe, and the 2. High dependence on uranium U.S. By 2020, China could have producers such as Australia, Canada, imports—averaging 93.3 percent of South Africa, France, Germany, the enrichment capacity beyond their annual U.S. nuclear power utility domestic needs. U.S. utilities have Netherlands, and the United Kingdom consumption in 2018—has caused all have also been forced to curtail or reported purchases of uranium elements of the U.S. uranium sector to concentrate and enrichment services suspend operations due to the excess shut down production capacity, struggle production by SOE uranium producers from Chinese controlled companies in to maintain financial viability, reduce the 2014–2018 period. China provided that has depressed global uranium workforce, cut R&D, and slash capital two percent of U.S. utilities’ enrichment prices. SOE competition has displaced expenditures. Excessive imports have services contracts during this period, demand for Canadian and Australian dropped U.S. uranium mining and is expected to supply even more in product. Between 2016 and 2017, production to some of the lowest levels the coming years. Overall, the non- Canada cut back domestic production seen since uranium mining began in the market business practices of Russia, approximately 6.6 percent. Australia late 1940s. Kazakhstan, Uzbekistan, and China’s reduced output by 6.9 percent. In uranium industries continue to erode 3. Without a viable U.S. uranium contrast, Russia and Kazakhstan U.S. uranium mining and processing industry, the United States cannot decreased their production by only 5.1 capacity. effectively respond to moderate or and 2.9 percent, respectively; but China 5. Import competition from state- extended national security emergencies, increased production by 16 percent. owned uranium enterprises has caused or over the long-term meet the domestic Uzbekistan made no production cuts. a significant atrophy in U.S. uranium uranium requirements of the U.S. 5. U.S. nuclear electric power infrastructure to the point where Department of Defense. Moreover, U.S. generators maintain only a limited production levels from front-end nuclear electric power generators would amount of nuclear fuel materials in companies are no longer economically not be able to operate at full capacity reserve to address potential supply sustainable. Documented declines in and would not be able to support disruptions. The U.S. Government employment and skilled workforce critical infrastructure electric power maintains only a small stockpile of (front-end employment is down 47 needs if foreign nations, particularly enriched uranium for utility use in the percent since 2009), as well as idling Russia and other former Soviet states, event of a fuel supply disruption. U.S. and closures of mining (13 since 2009), chose to suspend or otherwise end nuclear electric power generators are milling (only one of five remaining U.S. uranium exports to the United States. therefore vulnerable to sudden and mills is presently active), and uranium D. Uranium Market Distortion by State- extended disruptions in the nuclear fuel conversion operations (the last U.S. Owned Enterprises Is a Circumstance supply chain, especially product facility is idled), demonstrate the steep That Contributes to the Weakening of supplied through Russia and decline in U.S. production capacity. the Domestic Economy Kazakhstan. Additionally, loss of long-term contracts Conclusion with nuclear utilities, minimal market 1. The 2011 Fukushima Daichii share, falling marginal net income, and incident prompted the shutdown and/or Based on these findings, the Secretary a tenuous financial outlook indicate a idling of existing nuclear operators in of Commerce has concluded that the moribund U.S. uranium industry. Japan, Germany, and other countries. present quantities and circumstance of Additionally, many proposed nuclear uranium imports are ‘‘weakening our C. Displacement of Domestic Uranium reactors around the world, including in internal economy’’ and ‘‘threaten to by Excessive Quantities of Imports Has the United States, were cancelled. These impair the national security’’ as defined the Serious Effect of Weakening Our actions decreased global demand for in Section 232. An economically viable, Internal Economy uranium, creating a supply glut and low secure supply of U.S.-sourced uranium 1. U.S. nuclear electric power utilities uranium prices. This has severely is required for national defense needs. and uranium suppliers face multiple affected the financial viability of U.S. International obligations, including challenges. Federal Energy Regulatory uranium mining and milling in agreements with foreign partners under Commission (FERC) market rules do not particular, as uranium imports have Section 123 of the Atomic Energy Act of

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1954, govern the use of most imported Further decreases in U.S. uranium pricing challenges confronting the U.S. uranium and typically restrict it to production and capacity, including nuclear power utilities. peaceful, non-explosive uses. As a domestic fuel fabrication, will cause Recommendation result, uranium used for military even higher levels of U.S. dependence purposes must generally be on imports, especially from Russia, Due to the threat to the national domestically produced from mining Kazakhstan, Uzbekistan, and China. security, as defined in Section 232, from through the fuel fabrication process. Increased imports from SOEs in those excessive uranium imports, the Furthermore, the predictable countries, and in particular Russia and Secretary recommends that the maintenance and support of U.S. critical China, which the 2017 National President take immediate action by infrastructure, especially the electric Security Strategy noted present a direct adjusting the level of these imports power grid, depends on a diverse challenge to U.S. influence, are through the implementation of an supply of uranium, which includes detrimental to the national security.12 import waiver to achieve a phased-in U.S.-sourced uranium products and The high risk of loss of the remaining reduction of uranium imports. The services. U.S. domestic uranium industry if the reduction in imports of uranium should The Secretary further recognizes that present excessive level of imports be sufficient to enable U.S. producers to the U.S. uranium industry’s financial continue threatens to impair the recapture and sustain a market share of and production posture has significantly national security as defined by Section U.S. uranium consumption that will deteriorated since the Department’s 232. allow for financial viability, and would 1989 Report. That investigation noted enable the maintenance of a skilled The Secretary has determined that to that U.S. nuclear power utilities workforce and the production capacity remove the threat of impairment to imported 51.1 percent of their uranium and uranium output needed for national national security, it is necessary to requirements in 1987. By 2018, imports defense and critical infrastructure reduce imports of uranium to a level had increased to 93.3 percent of those requirements. The reduction imposed utilities’ annual requirements. Based on that enables U.S. uranium producers to should be sufficient to enable U.S. comprehensive 2019 industry data return to an economically competitive producers to eventually supply 25 provided by U.S. uranium producers and financially viable position. This percent of U.S. utilities’ uranium needs and U.S. nuclear electric power utilities will allow the industry to sustain based on 2018 U.S. U308 concentrate to the Department in response to a production capacity, hire and maintain annual consumption requirements. mandatory survey, U.S. utilities’ usage a skilled workforce, make needed Based on the survey responses, the of U.S. mined uranium has dropped to capital expenditures, and perform Department has determined that U.S. nearly zero. [TEXT REDACTED] Based necessary research and development uranium producers require an amount on the current and projected state of the activities. A modest reduction of equivalent to 25 percent of U.S. nuclear U.S. uranium industry, the Department uranium imports will allow for the power utilities’ 2018 annual U308 has concluded that the U.S. uranium revival of U.S. uranium mining and concentrate consumption to ensure industry is unable to satisfy existing or milling, the restart of the sole U.S. financial viability. Based on the future national security needs or uranium converter, and a reduction in Department’s analysis, if U.S.-mined respond to a national security import challenges to fuel fabricators, uranium supplied 25 percent of U.S. emergency requiring a large increase in while also recognizing the market and nuclear power utilities’ annual U308 domestic uranium production. concentrate consumption, U.S. uranium Absent immediate action, closures of 12 U.S. White House Office. National Security prices will increase to approximately Strategy of the United States of America. the few remaining U.S. uranium mining, (Washington, DC: 2017), 2 https:// $55 per pound (see Figure 1A). The milling, and conversion facilities are www.whitehouse.gov/wp-content/uploads/2017/12/ current spot price is low due to anticipated within the next few years. NSS-Final-12-18-2017-0905-2.pdf. distortions from SOEs.

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Figure lA: U.S. Uranium Supply Curve $90 $80 Approximate optimal price ($55/lb.} to ensure ..•.. ,,.,... I $70 '""''" CUmlnt U.S. U308 economic viebility...... concentrate price ("'$40). ... 7 ,~,, ✓ ..... ~·· .,,a $60 J 'f" - ······ ::, $50 ,.. :! ./ ..-- , ... l $4o ... An 1nc;ra.. of $15/lb. would 1ncntM8 U.S. U308 concentrate production by ,,, .. $30 ...."'"'""""" Uranium spot price "'$25 ..S.5 million lbs • $20 • (April 1, 2019) $10 $0 0.0 2.0 4,0 6.0 8.0 10.0 12.0 Pounds Supplied (Millions)

I Anumes only production at currently permitted mines.

Source: U.S. Department of Commerce, Bureau of Industry and Security, Front;End SurveY, Tab 4b

The $55 per pound price will increase The Secretary recommends that either Kazakhstan, Uzbekistan, and China (the mine capacity to the point where U.S. a targeted or global quota be used to ‘‘SOE countries’’) to enable U.S. uranium mines can supply adjust the level of imports and that such uranium producers to supply approximately 6 million pounds of quota should be in effect for a duration approximately 25 percent of U.S. uranium concentrate per year, which is sufficient to allow the necessary time nuclear power utility consumption. A approximately 25 percent of U.S. needed to stabilize and revitalize the U.S. nuclear power utility or other nuclear power utilities’ consumption for U.S. uranium industry. According to domestic user would be eligible for a U308 concentrate in any given year. survey responses, the average time to waiver that allows the import of restart an idle uranium production uranium from the SOE countries, with The Secretary recommends that the facility is two to five years, and several any import of uranium from Russia import reduction be phased in over a additional years are needed to add new subject to the Russian Suspension five-year period. This will allow U.S. capacity. Market certainty, which can be Agreement, after such utility or user uranium mines, mills, and converters to provided by long-term contracts with files appropriate documentation with reopen or expand closed or idled U.S. nuclear power utilities, is needed the Department. In the case of a U.S. facilities; hire, train and maintain a to build cash flow, pay down debt, and nuclear power utility, the skilled workforce; and make necessary raise capital for site modernization; documentation must show that such investments in new capacity. This workforce recruitment; and to conduct utility has a contract or contracts to phased-in approach will also allow U.S. environmental and regulatory reviews. purchase for their consumption on an nuclear power utilities time to adjust annual basis not less than the Option 1—Targeted Zero Quota and diversify their fuel procurement percentage of U.S. produced uranium contracts to reintroduce U.S. uranium This targeted zero quota option would U308 concentrate shown in the phase- into their supply chains. prohibit imports of uranium from in table below.

PERCENT OF ANNUAL U308 CONCENTRATE CONSUMPTION REQUIRED TO BE SOURCED FROM THE U.S.

2024 and Year 2020 2021 2022 2023 beyond

Percent of Annual U308 Concentrate Consumption Required to be Sourced from the U.S...... 5 10 15 20 25

Phased-in incrementally over five that U.S. uranium producers can make financial harm to U.S. nuclear power years, this option will help facilitate the investments required for future financial utilities by affording them sufficient reopening and expansion of U.S. viability without causing unintentional time to adjust their fuel procurement uranium mining, milling, and harm to other market economy uranium strategies. conversion facilities, and will ensure producers. This option avoids undue The zero quota on uranium imports from SOE countries would not apply to

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uranium imports from SOE countries for third of the materials delivered to U.S. discriminate against secure nuclear fuel use by U.S. milling, conversion, nuclear power utilities, at this time, is generation resources in favor of enrichment, and fuel fabrication not sourced directly from the country of intermittent resources, such as natural services that produce uranium products import. gas, solar, and wind, result in unjust, for export from the United States. A U.S. Imports of uranium from Russia under unreasonable, and unduly milling, conversion, enrichment, or fuel a waiver would also be subjected to the discriminatory rates that distort energy fabricator seeking to import uranium Russian Suspension Agreement. This markets, harm consumers, and from an SOE country for use to produce option assumes that such agreement undermine electric reliability. If so, uranium products for export would will continue to be in effect over the FERC should consider taking need to file appropriate documentation relevant time period and would apply to appropriate action to ensure that rates with the Department to obtain a waiver any Russian uranium imports by U.S. are just and reasonable. for the import of such uranium for nuclear power utilities, thus holding The Department of Commerce, in Russian uranium imports to their export. consultation with other appropriate current level of approximately 20 The Secretary believes that this option departments and agencies, will monitor percent of U.S. enrichment demand. In to impose a zero quota for imports of the status of the U.S. uranium industry the event that the Russian Suspension uranium from SOE countries, while and the effectiveness of this remedy and Agreement is not extended and continuing to allow unrestricted will make recommendations to the terminates, then the Secretary importation of uranium from Canada, President regarding whether it should recommends that a quota on uranium Australia, and EURATOM 13 member be modified, extended, or terminated. imports under a waiver of Russian countries based on their security and Uranium Products (as defined in the Option 2—Global Zero Quota economic relationships with the United Russian Suspension Agreement) of up to States, should address the threatened 15 percent of U.S. enrichment demand This option would establish a zero impairment of U.S. national security. be imposed. If adopted this quota would quota on imports of uranium from all This would be accomplished by be administered by the Department in countries until specific conditions are promoting the economic revival of the the same manner as the Russian met to enable U.S. producers to supply U.S. uranium industry, so long as there Suspension Agreement is presently 25 percent of U.S. nuclear power is not significant transshipment or administered. utilities’ annual consumption of reprocessing of SOE country uranium The adjustment of imports proposed uranium U308 concentrate. A U.S. through these unrestricted countries. under this option would be in addition nuclear power utility or other domestic The Department will monitor these to any applicable antidumping or user would be eligible for a waiver to unrestricted imports to ensure there is countervailing duties collections. import uranium from any country after not significant transshipment, To complement the proposed trade submitting appropriate documentation reprocessing, or book transfers from action, the Secretary recommends that to the Department. In the case of a U.S. SOE countries to unrestricted countries the Federal Energy Regulatory nuclear power utility, the in an attempt to circumvent and Commission (FERC) should act documentation must show that such undermine the U.S. uranium producers’ promptly to ensure that regulated utility has a contract or contracts to ability to provide 25 percent of U.S. wholesale power market regulations purchase for their consumption on an annual U308 concentrate consumption. adequately compensate nuclear and annual basis not less than the Many companies in unrestricted other fuel-secure generation resources. percentage of U.S. produced uranium countries supply uranium sourced from Specifically, FERC should determine U308 concentrate shown in the phase- SOE countries. Consequently, up to one- whether current market rules, which in table below.

PERCENT OF ANNUAL U308 CONCENTRATE CONSUMPTION REQUIRED TO BE SOURCED FROM THE U.S.

2024 and Year 2020 2021 2022 2023 beyond

Percent of Annual U308 Concentrate Consumption Required to be Sourced from the U.S...... 5 10 15 20 25

Phased-in incrementally over five use by U.S. milling, conversion, being implemented globally. Based on years, this option will help facilitate the enrichment, and fuel fabrication information received during the reopening and expansion of U.S. services that produce uranium products investigation, the Department believes uranium mining, milling, and for export from the United States. A U.S. that this option will not cause undue conversion facilities, and will ensure milling, conversion, enrichment, or fuel burdens. that U.S. uranium producers can make fabricator seeking to import uranium for The Secretary believes that this option investments required for future financial use to produce uranium products for to impose a zero quota for imports of viability. This option avoids undue export would need to file appropriate uranium will address the threatened financial harm to U.S. nuclear power documentation with the Department to impairment of U.S. national security by utilities by affording them sufficient obtain a waiver for the import of promoting the economic revival of the time to adjust their fuel procurement uranium. U.S. uranium industry. This option also strategies. The Department will provide prevents the possibility of The zero quota on uranium imports adequate time for U.S. industry to transshipment of SOE overproduction would not apply to uranium imports for receive a waiver prior to a zero quota through third countries and avoids

13 As of April 2019, EURATOM includes all 28 if and when it leaves the European Union. Should to EURATOM members will also be applied to the members of the European Union. The United the United Kingdom cease to be a member of United Kingdom. Kingdom will cease to be a member of EURATOM EURATOM, the same preferential treatment given

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undue harm to U.S. enrichment and fuel The Department of Commerce, in Alternatively, the Secretary may initiate fabrication export operations. These consultation with other appropriate another investigation under Section 232. domestic export operations rely on an departments and agencies, will monitor The Secretary also makes public ability to access working uranium stock the status of the U.S. uranium industry policy recommendations for additional regardless of the specific mining origin and the effectiveness of this remedy to measures that complement these three of a given uranium-based material. determine if it should be modified, options. Tennessee Valley Authority (TVA) extended, or terminated. II. Legal Framework purchases of Canadian UO3 natural Option 3—Alternative Action uranium diluent in its execution of the A. Section 232 Requirements Should the President determine that National Nuclear Security Section 232 provides the Secretary Administration’s current highly- the threatened impairment of national security does not warrant immediate with the authority to conduct enriched uranium (HEU) down-blending investigations to determine the effect on campaign would be excluded from the adjustment of uranium imports at this time but that alternative action should the national security of the United zero quota on imports of uranium. In States of imports of any article. It addition, any transfer pursuant to a be taken to improve the condition of the U.S. uranium industry to enable the authorizes the Secretary to conduct an Mutual Defense Agreement that investigation if requested by the head of references special nuclear material U.S. industry to supply 25 percent of U.S nuclear power utilities annual any department or agency, upon would be excluded from the zero quota application of an interested party, or on imports of uranium. consumption of uranium U308 concentrate, the President could direct upon his own motion. See 19 U.S.C. Imports of uranium from Russia under the Department of Defense (DOD) and 1862(b)(1)(A). a waiver would also be governed by the the Department of Energy (DOE) to Section 232 directs the Secretary to Russian Suspension Agreement. This report to the President within 90 days submit to the President a report with option assumes that such agreement on options for increasing the economic recommendations for ‘‘action or will continue to be in effect over the viability of the domestic uranium inaction under this section’’ and relevant time period and would apply to mining industry. The report should requires the Secretary to advise the any Russian uranium imports by U.S. include, but not be limited to, President if any article ‘‘is being nuclear power utilities, thus holding recommendations for: (1) The imported into the United States in such Russian uranium imports to their elimination of regulatory constraints on quantities or under such circumstances current level of approximately 20 domestic producers; (2) incentives for as to threaten to impair the national percent of U.S. enrichment demand. In increasing investment; and (3) ways to security.’’ See 19 U.S.C. 1862(b)(3)(A). the event that the Russian Suspension work with likeminded allies to address Section 232(d) directs the Secretary Agreement is not extended and unfair trade practices by SOE countries, and the President to, in light of the terminates, then the Secretary including through trade remedy actions requirements of national security and recommends that a quota on uranium and the negotiation of new rules and without excluding other relevant imports under a waiver of Russian best practices. The President could also factors, give consideration to the Uranium Products (as defined in the direct the United States Trade domestic production needed for Russian Suspension Agreement) of up to Representative to enter into negotiations projected national defense requirements 15 percent of U.S. enrichment demand with the SOE countries to address the and the capacity of the United States to be imposed. If adopted, this quota causes of excess uranium imports that meet national security requirements. would be administered by the threaten the national security. See 19 U.S.C. 1862(d). Department in the same manner as the To complement the proposed Section 232(d) also directs the Russian Suspension Agreement is alternative action, the Secretary Secretary and the President to presently administered. recommends that the Federal Energy ‘‘recognize the close relation of the The adjustment of imports proposed Regulatory Commission (FERC) should economic welfare of the Nation to our under this option would be in addition act promptly to ensure that regulated national security, and . . . take into to any applicable antidumping or wholesale power market regulations consideration the impact of foreign countervailing duties collections. adequately compensate nuclear and competition on the economic welfare of To complement the proposed trade other fuel-secure generation resources. individual domestic industries’’ by action, the Secretary recommends that Specifically, FERC should determine examining whether any substantial the Federal Energy Regulatory whether current market rules, which unemployment, decrease in revenues of Commission (FERC) should act discriminate against secure nuclear fuel government, loss of skills or investment, promptly to ensure that regulated generation resources in favor of or other serious effects resulting from wholesale power market regulations intermittent resources, such as natural the displacement of any domestic adequately compensate nuclear and gas, solar, and wind, result in unjust, products by excessive imports, or other other fuel-secure generation resources. unreasonable, and unduly factors, results in a ‘‘weakening of our Specifically, FERC should determine discriminatory rates that distort energy internal economy’’ that may impair the whether current market rules, which markets, harm consumers, and national security.14 See 19 U.S.C. discriminate against secure nuclear fuel undermine electric reliability. If so, 1862(d). generation resources in favor of FERC should consider taking Once an investigation has been intermittent resources, such as natural appropriate action to ensure that rates initiated, Section 232 mandates that the gas, solar, and wind, result in unjust, are just and reasonable. Secretary provide notice to the Secretary unreasonable, and unduly The Department of Commerce, in of Defense that such an investigation discriminatory rates that distort energy consultation with other appropriate has been initiated. Section 232 also markets, harm consumers, and departments and agencies, will monitor undermine electric reliability. If so, the status of the U.S. uranium industry 14 An investigation under Section 232 looks at FERC should consider taking and the effectiveness of this remedy and excessive imports for their threat to the national appropriate action to ensure that rates recommend to the President if any security, rather than looking at unfair trade are just and reasonable. additional measures are needed. practices as in an antidumping investigation.

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requires the Secretary to do the (1) ‘‘Determine whether the President circumstances, standing alone, may be following: concurs with the finding of the sufficient to support an affirmative (1) ‘‘Consult with the Secretary of Secretary’’; and finding. They may also be considered Defense regarding the methodological (2) ‘‘If the President concurs, together, particularly where the and policy questions raised in [the] determine the nature and duration of circumstances act to prolong or magnify investigation;’’ the action that, in the judgment of the the impact of the quantities being (2) ‘‘Seek information and advice President, must be taken to adjust the imported. from, and consult with, appropriate imports of the article and its derivatives The statute does not define a officers of the United States;’’ and so that such imports will not threaten to threshold for when ‘‘such quantities’’ of (3) ‘‘If it is appropriate and after impair the national security’’ (see 19 imports are sufficient to threaten to reasonable notice, hold public hearings U.S.C. 1862(c)(1)(A)). impair the national security, nor does it or otherwise afford interested parties an define the ‘‘circumstances’’ that might B. Discussion opportunity to present information and qualify. advice relevant to such While Section 232 does not Likewise, the statute does not require investigation.’’ 15 See 19 U.S.C. specifically define ‘‘national security,’’ a finding that the quantities or 1862(b)(2)(A)(i)–(iii). both Section 232, and the implementing circumstances are impairing the As detailed in the report, all of the regulations at 15 CFR part 705, contain national security. Instead, the threshold requirements set forth above have been non-exclusive lists of factors that the question under Section 232 is whether satisfied. Secretary must consider in evaluating those quantities or circumstances In conducting the investigation, the effect of imports on the national ‘‘threaten to impair the national Section 232 permits the Secretary to security. Congress in Section 232 security.’’ See 19 U.S.C. 1862(b)(3)(A). request that the Secretary of Defense explicitly determined that ‘‘national This makes evident that Congress provide an assessment of the defense security’’ includes, but is not limited to, expected an affirmative finding under requirements of the article that is the ‘‘national defense’’ requirements. See 19 Section 232 before an actual impairment subject of the investigation. See 19 U.S.C. 1862(d)). of the national security. 20 U.S.C. 1862(b)(2)(B). The Department in 2001 determined Section 232(d) contains a list of Upon completion of a Section 232 that ‘‘national defense’’ includes both factors for the Secretary to consider in investigation, the Secretary is required defense of the United States directly and determining if imports ‘‘threaten to to submit a report to the President no the ‘‘ability to project military impair the national security’’21 of the later than 270 days after the date on capabilities globally.’’ 16 The United States, and this list is mirrored which the investigation was initiated. Department also concluded in 2001 that, in the implementing regulations. See 19 See 19 U.S.C. 1862(b)(3)(A). The report ‘‘In addition to the satisfaction of U.S.C. 1862(d) and 15 CFR 705.4. must: national defense requirements, the term Congress was careful to note twice in (1) Set forth ‘‘the findings of such ‘‘national security’’ can be interpreted Section 232(d) that the list provided, 22 investigation with respect to the effect more broadly to include the general while mandatory, is not exclusive. of the importation of such article in security and welfare of certain Congress’ illustrative list is focused on such quantities or under such industries, beyond those necessary to the ability of the United States to circumstances upon the national satisfy national defense requirements, maintain the domestic capacity to security;’’ which are critical to the minimum provide the articles in question as (2) Set forth, ‘‘based on such findings, operations of the economy and needed to maintain the national security 23 the recommendations of the Secretary government.’’ The Department called of the United States. Congress broke for action or inaction under this these ‘‘critical industries.’’ 17 This report once again uses these reasonable 20 The 2001 Iron and Steel Report used the phrase section;’’ and ‘‘fundamentally threaten to impair’’ when (3) ‘‘If the Secretary finds that such interpretations of ‘national defense’’ and discussing how imports may threaten to impair article is being imported into the United ‘‘national security.’’ However, this national security. See 2001 Iron and Steel Report at States in such quantities or under such report uses the more recent 16 critical 7 and 37. Because the term ‘‘fundamentally’’ is not circumstances as to threaten to impair infrastructure sectors identified in included in the statutory text and could be 18 perceived as establishing a higher threshold, the the national security . . . so advise the Presidential Policy Directive 21 Secretary expressly does not use the qualifier in this President . . . See 19 U.S.C. instead of the 28 industry sectors used report. The statutory threshold in Section 1862(b)(3)(A). by the Bureau of Export Administration 232(b)(3)(A) is unambiguously ‘‘threaten to impair’’ All unclassified and non-proprietary in the 2001 Report.19 and the Secretary adopts that threshold without Section 232 directs the Secretary to qualification. 19 U.S.C. 1862(b)(3)(A). portions of the report submitted by the 21 19 U.S.C. 1862(b)(3)(A). Secretary to the President must be determine whether imports of any 22 See 19 U.S.C. 1862(d) (‘‘the Secretary and the published. article are being made ‘‘in such President shall, in light of the requirements of Within 90 days after receiving a report quantities’’ or ‘‘under such national security and without excluding other in which the Secretary finds that an circumstances’’ that those imports relevant factors . . .’’ and ‘‘serious effects resulting from the displacement of any domestic products by article is being imported into the United ‘‘threaten to impair the national excessive imports shall be considered, without States in such quantities or under such security.’’ See 19 U.S.C. 1862(b)(3)(A). excluding other factors . . .’’). circumstances as to threaten to impair The statutory construction makes clear 23 This reading is supported by Congressional the national security, the President that either the quantities or the findings in other statutes. See, e.g., 15 U.S.C. 271(a)(1)(‘‘The future well-being of the United shall: States economy depends on a strong manufacturing 16 Department of Commerce, Bureau of Export base . . . ’’) and 50 U.S.C. 4502(a)(‘‘Congress finds 15 Department regulations (i) set forth additional Administration; The Effects of Imports of Iron Ore that—(1) the security of the United States is authority and specific procedures for such input and Semi-Finished Steel on the National Security; dependent on the ability of the domestic industrial from interested parties, see 15 CFR 705.7 and 705.8, Oct. 2001 (‘‘2001 Iron and Steel Report’’) at 5. base to supply materials and services . . . (2)(C) to and (ii) provide that the Secretary may vary or 17 Id. provide for the protection and restoration of dispense with those procedures ‘‘in emergency 18 Presidential Policy Directive 21; Critical domestic critical infrastructure operations under situations, or when in the judgment of the Infrastructure Security and Resilience; February 12, emergency conditions . . . (3) . . . the national Department, national security interests require it.’’ 2013 (‘‘PPD–21’’). defense preparedness effort of the United States Id., 705.9. 19 See Op. Cit. at 16. Continued

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the list of factors into two equal parts the foreseeable future, face increasing written comments, opinions, data, using two separate sentences. The first competition from state-owned uranium information, or advice relevant to the sentence focuses directly on ‘‘national producers as well as foreign market- criteria listed in Section 705.4 of the defense’’ requirements, thus making based competitors. National Security Industrial Base clear that ‘‘national defense’’ is a subset After careful examination of the facts Regulations (15 CFR 705.4) as they of the broader term ‘‘national security.’’ in this investigation, the Secretary has affect the requirements of national The second sentence focuses on the concluded that excessive imports of security, including the following: broader economy and expressly directs uranium in the present circumstances (a) Quantity of the articles subject to that the Secretary and the President are weakening our internal economy the investigation and other ‘‘shall recognize the close relation of the and threaten to impair the national circumstances related to the importation economic welfare of the Nation to our security as defined in Section 232. of such articles; national security.’’ 24 See 19 U.S.C. Several important factors support this (b) Domestic production capacity 1862(d). conclusion, including the global excess needed for these articles to meet In addition to ‘‘national defense’’ uranium supply due to non-market projected national defense requirements, two of the factors listed in based production by state-owned requirements; the second sentence of Section 232(d) enterprises, the resulting near total (c) The capacity of domestic are particularly relevant in this dependence of U.S. nuclear power industries to meet projected national investigation. Both are directed at how production on uranium imports, and the defense requirements; ‘‘such quantities’’ of imports threaten to impact that the loss of a domestic U.S. (d) Existing and anticipated impair national security See 19 U.S.C. uranium production capacity and availability of human resources, 1862(b)(3)(A). In administering Section workforce would have on the nation’s products, raw materials, production 232, the Secretary and the President are ability to respond to potential national equipment, facilities, and other supplies required to ‘‘take into consideration the emergencies. and services essential to the national impact of foreign competition on the defense; economic welfare of individual III. Investigation Process (e) Growth requirements of domestic domestic industries’’ and any ‘‘serious A. Initiation of Investigation industries needed to meet national effects resulting from the displacement defense requirements and the supplies of any domestic products by excessive On January 16, 2018, Energy Fuel and services including the investment, imports’’ in ‘‘determining whether such Resources (US) Inc. and UR-Energy USA exploration and development necessary weakening of our internal economy may Inc. (hereafter ‘‘Petitioners’’) petitioned to assure such growth; impair the national security.’’ See 19 the Secretary to conduct an (f) The impact of foreign competition U.S.C. 1862(d). investigation under Section 232 of the on the economic welfare of any Another factor, not on the list, that the Trade Expansion Act of 1962, as domestic industry essential to our Secretary found to be relevant is the amended (19 U.S.C. 1862), to determine national security; presence of global excess supply of the effect of imports of uranium on the (g) The displacement of any domestic uranium. This excess supply results in national security. products causing substantial uranium imports occurring ‘‘under such Upon receipt of the petition, the unemployment, decrease in the circumstances’’ that they threaten to Department carefully reviewed the revenues of government, loss of impair the national security. See 19 material facts outlined in the petition. investment or specialized skills and U.S.C. 1862(b)(3)(A). The Secretary Initial discussions were held with other productive capacity, or other serious considers excess global uranium supply bureaus within the Department of effects; as a relevant circumstance because Commerce as well as with other (h) Relevant factors that are causing or state-owned enterprises have interested parties at the Departments of will cause a weakening of our national maintained or increased uranium Defense and Energy. Legal counsel at economy; and production, and reduced prices, the Department also carefully reviewed (i) Any other relevant factors. notwithstanding declining market the petition to ensure it met the The public comment period was conditions. At the same time, market requirements of the Section 232 statute originally scheduled to end on producers, including U.S. producers, and the implementing regulations. September 10, 2018. Following requests have decreased production under these Subsequently, on July 18, 2018, the from the general public, the Department market conditions. This excess supply Department accepted the petition and extended the deadline from September means that U.S. uranium producers, for initiated the investigation. Pursuant to 10 to September 25 (see Appendix B— Section 232(b)(1)(b), the Department Federal Register Vol. 83, No. 175, government requires—(C) the development of notified the U.S. Department of Defense 45,595–45,596). The Department domestic productive capacity to meet—(ii) unique with a July 18, 2018 letter from received 1,019 written submissions technological requirements . . . (7) much of the concerning this investigation. industrial capacity that is relied upon by the United Secretary Ross to the Secretary of States Government for military production and Defense, James Mattis (see Appendix A). Representative samples were grouped other national defense purposes is deeply and On July 25, 2018, the Department together then 837 comments were directly influenced by—(A) the overall published a Federal Register Notice (see posted on Regulations.gov for public competitiveness of the industrial economy of the review. Parties who submitted United States; and (B) the ability of industries in the Appendix B—Federal Register, Vol. 83, United States, in general, to produce internationally No. 143, 35,204–35,205) announcing the comments included firms representing competitive products and operate profitably while initiation of an investigation to all parts of the nuclear fuel cycle, maintaining adequate research and development to determine the effect of imports of representatives of U.S. federal, state and preserve competitiveness with respect to military and civilian production; and (8) the inability of uranium on the national security. The local governments, foreign governments, industries in the United States, especially smaller notice also announced the opening of as well as other concerned subcontractors and suppliers, to provide vital parts the public comment period. organizations. All public comments and components and other materials would impair were carefully reviewed and factored the ability to sustain the Armed Forces of the B. Public Comments United States in combat for longer than a short into the investigative process. The period.’’). On July 25, 2018, the Department public comments of key stakeholders 24 Accord 50 U.S.C. 4502(a). invited interested parties to submit are summarized in Appendix C, along

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with a link to the docket (BIS–2018– not be shared with any non-government the Effect of Uranium Imports on 0011) where all public comments can be entity other than in aggregate form. National Security from September 1989. viewed in full on Regulations.gov. This investigation, requested by the C. Site Visits and Information Gathering Due to the limited number of firms Activities Secretary of Energy, determined that engaged in the U.S. uranium industry U.S. utilities imported a significant and in nuclear power generation, it was To obtain additional information on share of their uranium requirements. In determined that a public hearing was the U.S. uranium industry and the U.S. 1987, U.S. utilities imported not necessary in order to conduct a nuclear power generation sector, the approximately 51.1 percent of their comprehensive investigation. In lieu of Department conducted site visits to requirements, and the investigation holding a public hearing on this several uranium and nuclear power projected that this level would reach investigation, the Department issued generation facilities: 70.8 percent by 1993.25 The 1989 two separate mandatory surveys (see 1) Calvert Cliffs Nuclear Power Plant investigation also found that U.S. Appendix D and Appendix E) to in Lusby, Maryland. This is a double uranium producers faced strong foreign participants in the U.S. front-end reactor facility. competition, particularly from the uranium industry and the U.S. nuclear 2) Three uranium mines: La Sal Soviet Union. It further reported that (Utah—Conventional Mine), Nichols power generation sector, which employment in the domestic industry Ranch (Wyoming—In Situ facility), and collected both qualitative and was steadily decreasing.26 quantitative information. The front-end Lost Creek (Wyoming—In Situ facility). [TEXT REDACTED]27 Consequently, survey was sent to 34 companies (3) White Mesa Mill in Blanding, the Secretary concluded that uranium engaged in uranium mining and milling, Utah. This facility is the only fully- licensed and operating conventional was not being imported into the United uranium concentrate production, uranium mill in the U.S. States under such quantities or uranium enrichment, and nuclear fuel In order to gain insights into the U.S. circumstances that threatened to impair fabrication. The nuclear power uranium industry’s challenges, the national security. generation survey was sent to all 24 information gathering activities and operators of U.S. nuclear power plants The Department took note of the meetings were held with representatives and covered 98 reactors. methodologies and analytic approaches of domestic and international uranium used to conduct the 1989 investigation The surveys provided an opportunity producers, associations, power for organizations to disclose and evaluated its findings and generators, foreign governments, and conclusion in light of the current state confidential and non-public information others interested parties. needed by the Department to conduct a of the U.S. uranium industry. Further thorough investigation. These D. Interagency Consultation discussion of the September 1989 mandatory surveys were conducted The Department consulted with the Section 232 Investigation is in using statutory authority pursuant to Department of Defense including the Appendix G. Section 705 of the Defense Production Office of Industrial Base, Defense IV. Product Scope of the Investigation Act of 1950, as amended (50 U.S.C. Logistics Agency, and the Department of 4555), and collected detailed the Navy regarding methodological and The scope of this investigation information concerning factors such as policy questions that arose during the defined uranium products at the imports/exports, production, capacity investigation. Harmonized Tariff Schedule of the utilization, employment, operating The Department also consulted with United States (HTS) 10-digit level. The status, global competition, and financial other U.S. Government agencies with eight product categories and related information. The resulting aggregate expertise and information regarding the HTS codes covered by this report (see data provided the Department with uranium industry including the Figure 1B) are produced by U.S. detailed industry information that was Department of Energy, the Energy uranium companies engaged in the otherwise not publicly available and Information Administration, the nuclear fuel cycle, and are imported for was needed to effectively conduct National Nuclear Security use by U.S. nuclear power operators. analysis for this investigation. Administration, the International Trade Detailed information was collected in Responses to the Department’s Administration, the Department of the Department’s survey responses from surveys were required by law (50 U.S.C. State, the Office of the United States U.S. uranium producers and U.S. 4555). Information furnished in the Trade Representative, the Nuclear nuclear power operators regarding survey responses is deemed confidential Regulatory Commission, the U.S. products covered by the HTS codes. and will not be published or disclosed Geological Survey, and the Federal These products are used in, or otherwise except in accordance with Section 705 Energy Regulatory Commission. support, various national defense and of the DPA. Section 705 of the DPA critical infrastructure applications. prohibits the publication or disclosure E. Review of the Department of of this information unless the President Commerce 1989 Section 232 Investigation on Uranium Imports 25 1989 Report, Letter Requesting 232 determines that the withholding of such Investigation, also III–21. information is contrary to the interest of The Department reviewed the 26 1989 Report, III–2, III–25. the national defense. Information will previous Section 232 Investigation on 27 Ibid., V–4 to V–5.

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FIGURE 1B: URANIUM PRODUCT SCOPE OF THE INVESTIGATION

Heading/subheading/product 10 Digit HTS code

Imports of uranium ores and concentrates, natural uranium compounds, and all forms of en- riched uranium: • Uranium Ore and Concentrates ...... 2612.10.00.00 • Uranium Compounds (Oxide, Hexafluoride, and Other) ...... Oxide 2844.10.20.10 Hexafluoride 2844.10.20.25 Other 2844.10.20.55 • Uranium enriched in U235 and its compounds; alloys, dispersions (including cermets), Oxide 2844.20.00.10 ceramic products and mixtures containing uranium enriched in U235. Hexafluoride 2844.20.00.20 Other 2844.20.00.30 Imports of natural uranium metal and forms of natural uranium other than compounds: • Uranium Metal ...... 2844.10.10.00 • Other ...... 2844.10.50.00 Uranium depleted in U235 and its compounds; thorium and its compounds; alloys, dispersions (including cermets), ceramic products and mixtures containing uranium depleted in U235, thorium, or compounds of these products: • Uranium Compounds (Depleted) ...... Oxide 2844.30.20.10 Fluorides 2844.30.20.20 Other 2844.30.20.50 • Other (Depleted) ...... Uranium Metal 2844.30.50.10 Nuclear reactors; fuel elements (cartridges), non-irradiated, for nuclear reactors; machinery and apparatus for isotopic separation; parts thereof: • Fuel elements (cartridges), non-irradiated, and parts thereof ...... 8401.30.00.00 Source: United States International Trade Commission and U.S. Department of Commerce, Bureau of Industry and Security.

In addition to the uranium products products for UF6, EUP, and finished principal customers of uranium are identified in Figure 1, this report fuel assemblies. nuclear power reactor operators, thus examines the provision of three services A U.S. utility, for example, may opt examination of the U.S. nuclear power in the nuclear fuel cycle: Conversion,28 to buy a specified amount of UF6, EUP, generation industry through a enrichment,29 and fuel fabrication.30 or finished fuel assemblies directly from comprehensive Department survey was Transactions for these services are a producer. Alternatively, it may necessary to ensure a complete analysis examined separately from transactions directly contract for conversion, of the effect of uranium imports on the involving uranium hexafluoride (UF6), enrichment, or fuel fabrication services national security. The Secretary’s enriched uranium product (EUP) and using material owned by the utility. recommendations consider the finished fuel assemblies (fuel for These services are regularly procured interdependence of the U.S. uranium nuclear power plants). The Department both inside and outside the United industry and the U.S. nuclear power made this distinction because U.S. States. generation sector. nuclear power operators, the end- The Department determined that V. Background on the U.S. Nuclear consumer of most uranium products in assessing U.S. utilities’ procurement of Industry the U.S., purchase services and finished UF6 or EUP through conversion, enrichment, and fuel fabrication A. Summary of the U.S. Uranium Fuel Cycle 28 Conversion is defined as the conversion of services was critical to understanding uranium concentrate (U3O8) to uranium the effects of imports of uranium The processes that prepare uranium hexafluoride (UF6). products on U.S. national security. for use in nuclear power generation 29 Enrichment is defined as the process that Information regarding conversion, constitute the front-end of the nuclear increases the concentration of Uranium-235 enrichment, and fuel fabrication fuel cycle. In the United States, these isotopes within a quantity of natural uranium. services was collected and incorporated front-end processes consist of uranium 30 Fuel fabrication is defined as the process by into the investigation via the front-end mining, milling, conversion, which enriched uranium is converted to uranium uranium industry survey. dioxide powder that is then pressed into pellets and enrichment, and nuclear fuel placed in fuel rods. Bundles of these fuel rods This report also examines the state of fabrication. The nuclear fuel cycle and become fuel assemblies that are placed in nuclear the U.S. nuclear power generation its products at each stage are shown in reactors. sector. The Department is aware that the Figure 2.

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Figure 2: Nuclear Fuel Cycle .....

J t . 1& I . I I Ba&Ewlq/'Cyde

Source: U.S. Department of Commerce, Bureau of Industry and Security

Uranium mining is the first step of the to a facility for processing into tri- located in Utah.33 These facilities were cycle. Several techniques are used for uranium octoxide concentrate (U3O8), the only operating uranium mines and uranium mining including open pit, commonly referred to as uranium mill in the U.S. in 2018, thus no underground, and in-situ recovery (ISR). concentrate. For open pit and uranium concentrate was produced by The ISR technique, used by all active underground mines, uranium milling conventional underground or open-pit U.S. uranium mining operations today, involves crushing ore and treating it mines during the same year. Another involves pumping a slightly acidic with chemicals in order to produce five mines are currently licensed, but 32 solution into ore bodies to dissolve U3O8. idled (see Figures 3 and 4).34 uranium ore in preparation for In 2018, all domestic uranium extraction.31 concentrate was produced by five ISR The ore-bearing solution recovered facilities located in Nebraska and from uranium mining is then transferred Wyoming, and one milling operation

FIGURE 3: U.S. FUEL CYCLE FACILITIES—MINES [In Situ Recovery]

Project name Company name Location [TEXT REDACTED]

Crow Butte Operation ...... Cameco ...... Nebraska ...... [TEXT REDACTED]. Lost Creek Project ...... Ur-Energy (Lost Creek ISR LLC) ...... Wyoming ...... [TEXT REDACTED]. Smith Ranch-Highland Operation ...... Power Resource Inc., dba Cameco Resources .... Wyoming ...... [TEXT REDACTED]. Ross CPP ...... Strata Energy Inc ...... Wyoming ...... [TEXT REDACTED]. Nichols Ranch ISR Project ...... Energy Fuels Resources Corp. (Uranerz Energy Wyoming ...... [TEXT REDACTED]. Corporation). Willow Creek Project (Christenson Ranch & Uranium One USA, Inc ...... Wyoming ...... [TEXT REDACTED]. Irigaray). Alta Mesa Project ...... Energy Fuels Resources Corp (Mestena Uranium Texas ...... [TEXT REDACTED]. LLC). Hobson ISR Plant ...... South Texas Mining Venture ...... Texas ...... [TEXT REDACTED]. La Palangana ...... South Texas Mining Venture ...... Texas ...... [TEXT REDACTED].

31 ‘‘Nuclear Explained: The Nuclear Fuel Cycle.’’ www.nrc.gov/materials/uranium-recovery/ 34 ‘‘Locations of Uranium Recovery Facilities.’’ U.S. Energy Information Administration. https:// extraction-methods/conventional-mills.html. United States Nuclear Regulatory Commission. www.eia.gov/energyexplained/ 33 U.S. Energy Information Administration. 2017 https://www.nrc.gov/info-finder/materials/ _ _ index.php?page=nuclear fuel cycle. Domestic Uranium Production Report. uranium/. 32 ‘‘Conventional Uranium Mills.’’ United States (Washington, DC: 2017) https://www.eia.gov/ Nuclear Regulatory Commission. https:// uranium/production/annual/pdf/dupr.pdf.

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FIGURE 3: U.S. FUEL CYCLE FACILITIES—MINES—Continued [In Situ Recovery]

Project name Company name Location [TEXT REDACTED]

Goliad ISR Uranium Project ...... Uranium Energy Corp ...... Texas ...... [TEXT REDACTED]. Source: [TEXT REDACTED]; U.S. Energy Information Administration—Annual Domestic Uranium Production Report (2018). [TEXT REDACTED].

FIGURE 4: U.S. FUEL CYCLE FACILITIES—MILLS, 2018

Project name Company name Location [TEXT REDACTED]

White Mesa Mill ...... EFR White Mesa LLC ...... Utah ...... [TEXT REDACTED]. Shootaring Canyon Uranium Mill ...... Anfield Resources ...... Utah ...... [TEXT REDACTED]. Sweetwater Uranium Project ...... Kennecott Uranium Company ...... Wyoming ...... [TEXT REDACTED]. Pinon Ridge Mill ...... Western Uranium/Pinon Ridge Resources Cor- Colorado ...... [TEXT REDACTED]. poration. Sheep Mountain ...... Energy Fuels Wyoming Inc ...... Wyoming ...... [TEXT REDACTED]. Source: [TEXT REDACTED] U.S. Energy Information Administration—Annual Domestic Uranium Production Report (2018). [TEXT REDACTED].

U.S.-based mining and milling and delays associated with the U.S. 11.8 million pounds of uranium facilities have dramatically declined permitting process. concentrate, respectively.36 over recent years, falling from eighteen Similarly, production of uranium The third step in the fuel cycle is mines and four mills in 2009 to five concentrate (U308) in the United States conversion, where a gas is used to operating mines and one operating mill has declined, dropping 95 percent from facilitate enrichment of the U–235 isotope in uranium concentrate into in 2018. These facilities have shut down 43.7 million pounds in 1980 35 to 1.97 natural uranium (UF6). ConverDyn, the or idled for several reasons, including million in 2018. Kazakhstan, Canada, sole U.S. uranium conversion facility, is competition from subsidized foreign and Australia were the top suppliers in imports, low spot prices, as well as costs currently in standby/idled (see Figure 2017, producing roughly 46.8, 26.2, and 5).

FIGURE 5: U.S. FUEL CYCLE FACILITIES—CONVERSION, 2018

Project name Company name Location Operating status

ConverDyn Metropolis Works ...... Honeywell Energy/ConverDyn ...... Metropolis, IL ...... Standby/Idle. Source: [TEXT REDACTED] U.S. Nuclear Regulatory Commission.

ConverDyn began producing UF6 for part of their nuclear fuel sales. [TEXT of the U–235 atoms, can occur to commercial use in the 1960s and REDACTED] 39 produce energy.40 41 Gaseous centrifuges supplied commercial conversion Uranium enrichment, the fourth stage are the industry standard for uranium services to the U.S. and global uranium in the fuel cycle, produces material to enrichment into low-enriched uranium market, competing against suppliers in be used in the operation of nuclear (LEU) or high-enriched uranium (HEU). Canada, Russia, France, and China.37 reactors. Natural uranium (UF6) consists LEU is used by commercial power However, it announced a suspension of of three distinct isotopes: U–234, U– reactors as fuel where the U–235 is operations in late 2017 related to 235, and U–238. The enrichment enriched to between three and five ongoing challenges facing the nuclear process alters the isotopic makeup in percent. HEU is used in naval ships, fuel industry.38 [TEXT REDACTED] order to increase the prevalence of the submarines, nuclear weapons, and some Furthermore, the Russians, Chinese, and U–235 isotope. The U–235 isotope must research reactors,42 43 with enrichment French bundle conversion services as be enriched so that fission, or splitting at 20 percent.

35 ‘‘Annual Energy Review 2011.’’ U.S. Energy enrichment-and-fabrication/conversion-and- 41 ‘‘Uranium Enrichment.’’ World Nuclear Information Administration (Washington, DC: deconversion.aspx. Association. http://www.world-nuclear.org/ 2012). https://www.eia.gov/totalenergy/data/ 38 U.S. Energy Information Administration. 2017 information-library/nuclear-fuel-cycle/conversion- annual/showtext.php?t=ptb0903. Domestic Uranium Production Report. enrichment-and-fabrication/uranium- 36 enrichment.aspx. ‘‘Uranium Production Figures, 2008–2017.’’ (Washington, DC: 2017) https://www.eia.gov/ World Nuclear Association. http://www.world- 42 ‘‘Uranium Downblending.’’ WISE Uranium uranium/production/annual/pdf/dupr.pdf. nuclear.org/information-library/facts-and-figures/ Project. http://www.wise-uranium.org/eudb.html. 39 [TEXT REDACTED]. uranium-production-figures.aspx. 43 Highly Enriched Uranium (HEU) is uranium 37 ‘‘Conversion and Deconversion.’’ World 40 ‘‘Uranium Enrichment.’’ United States Nuclear with U–235 content of at least 20 percent. Naval Nuclear Association. http://www.world-nuclear.org/ Regulatory Commission. https://www.nrc.gov/ reactors and weapons applications utilize HEU information-library/nuclear-fuel-cycle/conversion- materials/fuel-cycle-fac/ur-enrichment.html. enriched to more than 90 percent U–235.

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The United States first used gaseous serving the commercial power reactor Agreement governing the LES facility’s diffusion uranium enrichment plants in market. UUSA is a subsidiary of construction and operation, the plant the 1940s during the Second World URENCO Group, a consortium owned cannot be used to produce enriched War. Additional plants were built in the by the governments of the United uranium for U.S. defense purposes. 1950s for defense needs and later Kingdom and the Netherlands, as well However, in January 2019, DOE opened for commercial enrichment use. as two German utilities (see Figure 6). announced plans to reopen the Piketon These plants are located in Paducah, UUSA employs gas centrifuge facility to demonstrate a U.S.-origin Kentucky and Piketon, Ohio, but both enrichment at its Louisiana Energy centrifuge technology for production of closed by 2013.44 Today, URENCO USA Services (LES) plant in Eunice, New High-Assay Low Enriched Uranium (UUSA) is the only uranium enrichment Mexico to produce LEU for nuclear (HALEU) in support of advanced reactor company operating in the United States, reactor fuel.45 Per the 1992 Washington development efforts.46

FIGURE 6: U.S. FUEL CYCLE FACILITIES—ENRICHMENT

Project name Company name Ownership Enrichment type Location Operating status

Louisiana Energy Services URENCO USA ...... United Kingdom, the Gas Centrifuge ... New Mexico ...... Operating. (LES). Netherlands, Germany. Source: U.S. Nuclear Regulatory Commission.

The fifth and final step in the front- Westinghouse, GE, and Framatome (see The naval fuel is manufactured by BWX end nuclear fuel cycle is fuel Figure 7). Technologies (BWXT) at its Nuclear fabrication, where enriched uranium is Naval reactors require HEU fuel and Fuel Services (NFS) facility in formed into pellets and then fabricated their fuel assemblies come from a Tennessee. Additionally, BWXT into fuel rods for fuel assemblies. Three different supply base. All uranium used downblends high-enriched uranium active fuel fabrication plants in the U.S. in the manufacture of naval fuel (HEU) to produce low-enriched uranium are licensed to transform low-enriched assemblies is from the Department of (LEU), which is needed to produce the uranium into fuel assemblies for Energy’s stockpile and is not currently tritium required for nuclear weapons.47 commercial power reactors: purchased on the commercial market.

FIGURE 7: U.S. FUEL CYCLE FACILITIES—FUEL FABRICATION, 2018

Company name Ownership NRC category Location Operating status

BWXT Nuclear Operations United States ...... Category 1 ...... Virginia ...... Operating. Group. Nuclear Fuel Services, Inc United States ...... Category 1 ...... Tennessee ...... Operating. Framatome, Inc ...... France ...... Category 3 ...... Washington ...... Operating. Global Nuclear Fuel— United States ...... Category 3 ...... North Carolina ...... Operating. Americas LLC (General Electric). Westinghouse ...... United States ...... Category 3 ...... South Carolina ...... Operating. Category 1: High Strategic Significance. Category 3: Low Strategic Significance (commercial services). Source: U.S. Nuclear Regulatory Commission.

B. Summary of U.S. Nuclear Power certifications followed assessments and 33 operating in the U.S., Generation Industry confirming that they were safe to respectively. These reactors have continue operating well after the end of The first U.S. commercial nuclear varying designs, dimensions, and their original design life. reactor came online in 1958, and most numbers of fuel rods in each fuel active U.S. reactors were built between As of October 2018, 98 reactors were assembly based on the six commercial 1967 and 1990. Originally certified for located at 58 different facilities in 28 power reactor manufacturers in the 48 40 years of operation, the lifespans of 85 states across the country (see Figure United States: Allis-Chalmers, Babcock reactors have been extended by the 8). The two main commercial reactor & Wilcox, Combustion Engineering, Nuclear Regulatory Commission (NRC) designs used for power generation are General Atomics, General Electric, and 49 for an additional 20 years. These pressurized-water reactors (PWR) and Westinghouse. boiling-water reactors (BWR), with 65

44 ‘‘Nuclear Power in the USA.’’ World Nuclear 46 ‘‘DOE Plans $115M Investment in Uranium 48 ‘‘Monthly Energy Review March 2019.’’ U.S. Association. http://www.world-nuclear.org/ Enrichment Project.’’ U.S. News & World Report, Energy Information Administration. https:// information-library/country-profiles/countries-t-z/ January 8, 2019. https://www.usnews.com/news/ www.eia.gov/totalenergy/data/monthly/pdf/sec7_ usa-nuclear-power.aspx. best-states/ohio/articles/2019-01-08/doe-plans- 5.pdf. 45 ‘‘Uranium Enrichment.’’ United States Nuclear 115m-investment-in-uranium-enrichment-project. 49 ‘‘Fuel Fabrication.’’ United States Nuclear Regulatory Commission. https://www.nrc.gov/ 47 ‘‘Nuclear Fuel Fabrication—Current Issues Regulatory Commission. https://www.nrc.gov/ materials/fuel-cycle-fac/ur-enrichment.html. (USA).’’ WISE Uranium Project. materials/fuel-cycle-fac/fuel-fab.html.

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Figure 8: U.S. Operating Commercial Power Reactors, 2018

&•lid &-2!dl!I &=aid&

Source: U.S. Nuclear Regulatory Commission

These reactors are important to significant portion of the nation’s slated to be retired between 2019 and produce steady-state baseload power to electricity (more than 19 percent), a 2025.52 However, two new reactors are the U.S., in contrast to hydro, solar, and number of U.S. utilities have scheduled to come online by 2022. The wind, which have fluctuating generating prematurely retired their nuclear power domestic uranium industry is capabilities.50 51 Despite providing a reactors due to cost pressures resulting challenged by this shrinking customer from distortions in wholesale electricity demand for their product in the United 50 ‘‘Frequently Asked Questions.’’ U.S. Energy market pricing mechanisms, subsidized States (see Figures 9 and 10). Information Administration. https://www.eia.gov/ tools/faqs/faq.php?id=207&t=3. renewable energy, and lower natural gas 51 ‘‘Nuclear Power in the USA.’’ World Nuclear prices. Since 2013, U.S. electric utilities 52 U.S. Energy Information Administration. Association. http://www.world-nuclear.org/ have permanently closed six nuclear ‘‘America’s oldest operating nuclear power plant to information-library/country-profiles/countries-t-z/ retire on Monday’’ (September 14, 2018), https:// usa-nuclear-power.aspx. power plants. Another eight reactors are www.eia.gov/todayinenergy/detail.php?id=37055.

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Figure 9: U.S. Operating Nuclear Power Reactors, 2009-2018

105 vi 104 104 104 104 :::> 104 .5 ~ 103 j 102

:;:::!' 101 e & 100 0 0 ] 99 e z:::s 97 2009 .2010 2011 2012 2013 2014 2015 2016 2017 2018

source: U.S. Energy Information Administration-Monthly Energy Review, January 2019

[TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED]

[TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] Source: [TEXT REDACTED]. [TEXT REDACTED].

The majority of the plants shut down nuclear power industry is declining, commodity supplied primarily through due to cost-driven factors, including global demand for nuclear power plants privately negotiated contracts with competition from alternative generation is rising with no less than 50 new varying durations. Short-term contracts sources such as natural gas, solar, and reactors under construction in 15 usually span less than two years, mid- wind, as well as additional capital countries. A majority of the new builds term contracts run between two to five expenditures needed to meet NRC are in Russia, China, India, the United years, and long-term contracts can be in 55 regulatory requirements. [TEXT Arab Emirates, and South Korea. force for five years or more. REDACTED] VI. Global Uranium Market Conditions Additionally, uranium can be bought on Only one new reactor has been ‘‘spot,’’ which are contracts with a one- A. Summary of the Global Uranium time uranium delivery (usually) for the completed in the United States since Market 1996—Tennessee Valley Authority’s entire contract, where the delivery Watts Bar 2 plant, which began Uranium, in various forms occurs within one year of contract operating in 2016. Construction started (‘‘uranium’’), is a globally-traded execution. The spot market can be lower on two commercial PWR reactors in or higher than the contract market. information-library/country-profiles/countries-t-z/ Georgia in 2013 and those are scheduled usa-nuclear-power.aspx. Since 2011, the number of spot, mid- to begin operation in 2021. In South 54 Stelloh, Tim. ‘‘Construction Halted at South term, and long-term contracts for all Carolina, construction of two Carolina Nuclear Power Plant.’’ NBC News, July 31, front-end industry participants has commercial reactors began in 2013, but 2017. https://www.nbcnews.com/news/us-news/ varied (see Figure 11). Of note, long- construction-halted-south-carolina-nuclear-power- cost overruns caused the projects to be reactors-n788331. term contracts have declined from 35 to 53 54 abandoned in 2017. While the U.S. 55 ‘‘Plans for New Reactors Worldwide.’’ World just 19, and no short-term contracts Nuclear. http://www.world-nuclear.org/ were reported. 53 ‘‘Nuclear Power in the USA.’’ World Nuclear information-library/current-and-future-generation/ Association. http://www.world-nuclear.org/ plans-for-new-reactors-worldwide.aspx.

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Figure 11: Total Active Front-End Uranium Contracts by Contract Term

... 50 Total contracts peaked in 2010 and declined 44.4% by 2018 m4s ► t 40 C. ~ 35 J:; 30 C: 0 u 25 ~ ~ 20 15... 15 Ji 10 E z;:I 5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

■ long Term Contracts ■ Medium Term Contracts s Short Term Contracts II Spot Contracts

Source: U.S. Department of Commerce, Bureau of lndll'itry and Security, Front-End Survey, Tab9a 12 respondents

The spot market price of a pound of continued production of uranium from Additionally, the U.S. has uranium averaged only $28.27 in the state-owned enterprises in the aftermath approximately 1.28 million metric tons last three months of 2018, and dropped of the Fukushima incident. Low spot of uranium in prognosticated uranium even further to $25.75 in April 2019. prices have significantly impacted the resources (the largest reserves in the This is a 74 percent reduction since the viability of U.S. uranium producers. world 56), much of which has not been recent price high of $99.24 per pound in Mining companies operating in the U.S. developed specifically due to low spot 2007. have been forced to idle operations due prices (see Figure 12). According to Department survey to low spot prices, and since 2009, four BILLING CODE 3510–33–P respondents, the main factor causing the companies have closed 10 mines with current low spot market price of the intention to permanently halt 56 Susan Hall and Margaret Coleman, U.S. uranium is global excess uranium operations. Geological Survey, Critical Analysis of World supply, much of which is attributed to Uranium Resources, (2013) pp. 26–27.

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Figure 12: Prognosticated Uranium Resources

1,400 -~ ,·--·--·---· -- 1,273

1,200 The United States has the largest amount 1,000 of prognosticated uranium resources. It has more uranium than the next two­ Kazakhstan and Brazil- combined. 5'.... 800 C -~ ~ 600

400

200

0 United States Kazakhstan Brazil

11

Source: U.S. Geologica I SUTvey Critical Analysis of World Uranium Resources (2013)

Nuclear fuel prices are, however, uranium prices are affected by mine price is impacted by new reactor impacted by more than just the uranium closures and the release of existing startups and reactor closures (see Figure spot market price. On the supply side, inventory for sale. On the demand side, 13).

Figure 13: Global Commercial Operating Reactors, 2009-2018

455 ------·-·------···••·········•··453 "'...... ,0 450 '-'m Qi 0::: (I} ::0 445 m.... Q) Q. 0 440 iij .a .2 (.!) 435

430 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: lnremational Atomic Energy Agency- Unit Capability Trend Report January 2019 and "Current Status" Page.

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Additionally, converters, enrichers, fuel acquisition accounts for 25 percent end nuclear fuel cycle is relatively and fuel fabricators experience specific of total facility operating costs. When small: Mining/milling and uranium market pressures, resulting in uranium looking at fuel acquisition as a concentrate acquisition (10 percent), products that have slightly different percentage of a nuclear power utilities’ enrichment (8 percent), fuel fabrication price considerations. Department survey total facility operating costs, the (5 percent), and conversion (2 percent) data indicates that, on average, aggregate contribution of each stage of the front- (see Figure 14).

Figure 14: Fuel Acquisition as a Percentage of Total Facility Operating Costs

ranium Concentrate Acquisition 10%

Conversion 2%

Enrichment 8%

Fuel Fabrication 5%

Source: U.S. Department of Commerce, Bureau oflndustry and Security, Nuclear Power Operator Survey, Q3C 22 Respondents

B. Uranium Transactions: Book Book Transfer transfers are used to exchange material Transfers and Flag Swaps For the purposes of this investigation, between two customers at a third-party producer without having to physically Unlike many commodities, exchanges a book transfer is defined as a ‘‘change of ownership of two quantities of ship or otherwise move material (see of uranium between suppliers and material with all other characteristics of Figure 15). customers often take place without the material being unchanged.’’ 57 Book physical movement of material. This occurs through book transfers and flag 57 Swaps in the International Fuel Market, 7. nuclear.org/uploadedFiles/org/WNA/Publications/ swaps. World Nuclear Association. http://www.world- Working_Group_Reports/swaps-report-2015.pdf, 7.

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Figure 15: Example of Book Transfer

Utility A Mine B

Before Where (Account Location): Converter C, Where (Account Location): Converter C, USA USA What (Contract): Provide 100,000 pounds of What (Contract): Buy 100,000 pounds U3O8 to Utility A. of U3O8 from Mine B. Where (U3O8 Origin): Country D Where (U3O8 Origin): Not yet purchased

What Happens: Mine B already has 100,000 pounds of U3O8 in Converter C's Account

Mine B Transfers U3O8 at Converter C to Utility A ~

After Account Location: Converter C, USA Account Location: Converter C, USA Contract: Buy 100,000 pounds of U3O8 Contract: Transfer 100,000 pounds of U308 at from Mine B. Converter C to Utility A's account U3O8 Origin: Country D U3O8 Origin: Country D NOTE: In this example, 100,000 pounds of U308 has changed ownership from Mine B to Utility A, but retains its origin from Country D. Source: U.S. Department of Commerce, Bureau of Industry and Security

Book transfers also can be used to convey payment for conversion or enrichment services (see Figure 16).58

Figure 16: Payment for Conversion Services via Book Transfer 100,000 kgs Utility A J Converter B I I ,..... ofUF6 .... 50,000 lbs Converters Utility A I I ... ofU308 ..., I

Source: U.S. Department of Commerce, Bureau of Industry and Security

Flag Swap particular country’s government to a established by the United States 60 In certain cases, utilities and uranium specific set of nuclear material. These government. industry producers may find it conditions control the use of nuclear Depending on the parties involved in necessary to conduct ‘‘obligation material, including uranium, and may the uranium exchange, it is possible for swaps’’ of material, a practice restrict where it is shipped. For a given quantity and type of uranium to commonly known as ‘‘flag swapping.’’ 59 example, if such material has a United acquire multiple obligations. If material In the uranium industry, obligations are States obligation, the material can only is mined in Canada, converted in the defined as conditions assigned by a be used in accordance with conditions United States, enriched in Germany,

58 Ibid. 60 In this example, the United States obligations nuclear material or equipment. As of 2019, the 59 ‘‘Swaps in the International Fuel Market.’’ associated with material are established in U.S. United States has in force approximately 23 of these World Nuclear Association. (2015). http:// peaceful nuclear cooperation agreements, also agreements with foreign partners. Congressional www.world-nuclear.org/uploadedFiles/org/WNA/ known as 123 agreements. Section 123 of the Research Service. Nuclear Cooperation with Other Atomic Energy Act of 1954 generally requires the Countries: A Primer, 1. (Washington, DC: 2019). Publications/Working_Group_Reports/swaps- entry into force of a peaceful nuclear cooperation https://crsreports.congress.gov/product/pdf/RS/ report-2015.pdf agreement prior to significant exports of U.S. RS22937

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and fabricated into nuclear fuel in burdens on the maintenance of material. by regulatory authorities, it is possible Japan, then the uranium would then By exchanging in obligation swaps, to de facto origin swap through a change acquire obligations from Canada, the customers and producers can minimize of obligation and ownership. These United States, the European Atomic the number of obligations that must be combination obligation/ownership Energy Community (EURATOM), and adhered to for the tracking and ultimate swaps have in the past been used to Japan. The uranium can only be used in use of uranium materials (see Figures 17 circumvent uranium import restrictions, accordance with regulations imposed by and 18). as previously encountered with South the above countries and EURATOM. Note that the exchange of obligations African and Soviet-origin uranium in Customers and producers engage in does not change the origin. Although the late 1980s.61 obligation swaps to ease administrative origin swaps are usually not permitted

Figure 17: Obligation Swap, Example 1

NOTE; Company A has 50,000 pounds of UR:i with Obligation X. Company B has 50,000 pounds of UF6 with Obligation Y. Both quantities of UR:i have Origin P. Source: U.S. Department of Commerce, Bureau of Industry and Security

Figure 18: Obligation Swap, Example 2

50,000lbs of UF6 with Company A , .... 50,000 lbs of UF6 with I ConditionX Exchanges for ConditlonY ~I CompanyB ------..J ~ ------Source: U.S. Department of Commerce, Bureau of Industry and Security

Book transfers and flag swaps are also United States, Canada, China, France, swaps ensure that converters and advantageous because of the specialized and Russia) and eight enrichment enrichers can quickly process customer nature of the nuclear fuel cycle. Nuclear facilities 62 (the aforementioned orders. fuel facilities are concentrated in only a countries as well as Germany, the Furthermore, the nature of the few countries: five nations have United Kingdom, and the Netherlands). uranium industry’s manufacturing uranium conversion facilities (the Consequently, book transfer and flag processes mean that an individual

61 In these cases, South African and Soviet also, Written Question by Mr. Paul Saes (V) to the resource/cellar/a6838643-4b6d-4f39-aebb- producers used third-party brokers to facilitate Commission of the European Communities, 26 d538ff795091.0004.01/DOC_1. origin swaps that would circumvent restrictions on February 1990, http://publications.europa.eu/ 62 Ibid. imports of these materials. DOC 1989 investigation,

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company’s inventories of material are proportional to the amount specified in deposited at an earlier point. Similarly, not kept separately at their facilities. their contract. In this sense, uranium a utility customer does not receive an Instead, materials are stored at industry transactions function in the end product—whether UF6, SWU, or converters, enrichers, and fuel same way as banking transactions. An fabricated fuel assemblies—to be the fabricators (see Figures 19 and 20).63 At individual bank customer withdrawing source material that the utility supplied these facilities, customers are assigned a $100 from an ATM does not receive the to the producer. particular share of the facility’s product same physical $100 that he or she

Figure 19: Reconciliation of Book Transfer Accounts, Example 1

Utifity A wants to buy Utility A pays for lhe SWUs Enricher B manufactures 10,000 SWUsfrom ... by paying Enricher B 10,000 SWUs for Utility A from Enricher B 10,000 KgU UF6- their working stock of UF6

source: u .s. Oe-partment of Commerce, Bureau of Industry and Security

Figure 20: Reconciliation of Book Transfer Accounts, Example 2

The working stock used to make Utility Ns order included 5,000 Enricher Buses the 10,000 KgU KgU of UF6 from Utility C's UF6 received from Utility A to account. and 5,000 from Utility make Utility C & D accounts O's account. whole.

Source: U.S. Department of Commerce, Bureau of Industry and Security

BILLING CODE 3510–33–C the overall impact of imported uranium closing existing reactors and cancelling The Department incorporated its on the national security. plans for new construction. Japan understanding of book transfers and flag cancelled plans for 14 new reactors and C. The Effect of the Fukushima Daiichi swaps to its survey instrument and shut down all 50 operable reactors by Incident on U.S. and Global Uranium interpretation of responses. The 2012 to reassess safety standards. Since Demand Department is particularly cognizant of then, only nine have restarted.64 the reality that many imports of Reduction in global uranium demand Germany decided to shut down all 17 of uranium into the United States do not in recent years can be traced to several its reactors by 2022 65 and France necessarily occur through physical factors including the impacts of Japan’s announced plans to shut down 14 transportation of materials into the To¯hoku earthquake and the subsequent reactors by 2035.66 As of 2019, Germany country. As described above, U.S. meltdown at the Fukushima Daiichi has closed 10 reactors, while France has uranium producers and U.S. utilities Nuclear Power Plant. This event not yet closed any.67 Consequently, the can acquire and exchange materials profoundly affected the economics of global uranium market was flooded with without them ever entering the country. the nuclear industry by reducing global uranium products after a significant Consequently, the Department accounts demand for uranium. Some reduction in nuclear power plants for these types of transfers in assessing governments in the developed world operating worldwide. reacted to the Fukushima incident by

63 Ibid. 65 Annika Breidthart, ‘‘German government wants information-library/country-profiles/countries-a-f/ 64 ‘‘Nuclear Power in Japan.’’ World Nuclear nuclear exit by 2022 at latest’’, Reuters (May 30, france.aspx. Association. http://www.world-nuclear.org/ 2011), https://uk.reuters.com/article/idINIndia- 67 ‘‘Nuclear Power in Germany.’’ World Nuclear information-library/country-profiles/countries-g-n/ 57371820110530. Association. http://www.world-nuclear.org/ 66 japan-nuclear-power.aspx. ‘‘Nuclear Power in France.’’ World Nuclear information-library/country-profiles/countries-g-n/ Association. http://www.world-nuclear.org/ germany.aspx.

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Twelve projects primed for resurgence in public opposition to reached a low in 2014 of 435 operating construction in the United States, nuclear power, have been deterrents to reactors. Although the number of encompassing seventeen new nuclear future construction. Intense competition reactors has since increased to 453 in reactors, were canceled/postponed from other energy generation methods, 2018, the oversupply of uranium that following the post-Fukushima upgrades paired difficulties in securing financing, remains in the market has continued to mandated by the Nuclear Regulatory also increased costs of new construction depress global prices. Commission. The new NRC (see Figure 21). The number of active requirements, coupled with the nuclear power plants worldwide

FIGURE 21: CANCELLED NUCLEAR PROJECTS SINCE 2009

Projected generation Date of Facility name Location capacity cancellation Reason for cancellation (MW)

Bellefonte 2–4 ...... Hollywood, AL ...... 3,435 August 2009 .. Unfavorable market conditions. Victoria County Station ...... Victoria, TX ...... 3,070 August 2012 .. Unfavorable market conditions, competition from natural gas. Shearon Harris 2–3 ...... New Hill, NC ...... 2,017 May 2013 ...... Regulatory concerns, unfavorable market conditions. Comanche Peak 3–4 ...... Glen Rose, TX ...... 3,400 November Delay in reactor design review. 2013. Nine Mile Point 3 ...... Scriba, NY ...... 1,600 November Unfavorable market conditions. 2013. Calvert Cliffs 3 ...... Lusby, MD ...... 1,600 July 2015 ...... Unfavorable market conditions, inability to secure fi- nancing. Callaway 2 ...... Steedman, MO ...... 1,600 August 2015 .. Regulatory concerns, unfavorable market conditions. Grand Gulf 3 ...... Port Gibson, MS .... 1,520 September Unfavorable market conditions. 2015. River Bend 3 ...... St. Francisville, LA 1,520 December Unfavorable market conditions. 2015. Bell Bend 1 ...... Salem Twp., PA ..... 1,600 August 2016 .. Suspension of reactor design certification. Bellefonte 1 ...... Hollywood, AL ...... 1,100 May 2016 ...... Unfavorable market conditions. V.C. Sumner 2–3 ...... Jenkinsville, SC ..... 2,500 July 2017 ...... Unfavorable market conditions, cost overruns. Levy County Nuclear Power Plant Levy County, FL .... 2,234 August 2017 .. Unfavorable market conditions, public opposition. Source: U.S. Nuclear Regulatory Commission.

D. The Effect of State-Owned spot market prices can adversely affect increased by seven percent over the Enterprises on Global Uranium Supply miners’ ability to cover their operating same time period.68 In Kazakhstan’s The business practices of state-owned costs. In contrast, SOEs often produce case, state support includes state- enterprises (SOEs) cause significant uranium regardless of price because financed exploration services 69 and challenges for U.S. uranium producers. state support enables SOEs to make employee training, as well as currency SOEs are insulated from market business decisions insensitive to market devaluation to artificially depress prices pressures in which the U.S. and other conditions. For example, although of all exports, including uranium.70 market producers, namely those in global uranium production declined by State-owned suppliers dominate the list Australia and Canada, must contend. six percent between 2012 and 2014, of leading global uranium producers Specifically, a steep drop in uranium Kazakhstan’s production of uranium (see Figure 22).

FIGURE 22: LEADING GLOBAL URANIUM PRODUCERS

Global Uranium market Company Ownership production share (in tons of MT) (%)

KazAtomProm ...... Kazakhstan ...... 12,093 20 Cameco ...... Private ...... 9,155 15 Orano ...... France ...... 8,031 13 Uranium One ...... Russia ...... 5,102 9 CNNC & CGN ...... China ...... 3,897 7 ARMZ ...... Russia ...... 2,917 5 Rio Tinto ...... Private ...... 2,558 4 Navoi ...... Uzbekistan ...... 2,404 4 BHP Billiton ...... Private ...... 2,381 4

68 IAEA Red Book, 102, 2016. tenge—to float freely. Immediately, the tenge fell in rate was motivated in part to an effort to prop-up 69 Global Business Reports, ‘‘Kazakhstan’s mining value. Before the transition, the tenge had limited Kazak oil and resource sectors. The transition has industry: Steppe by Steppe’’, Engineering and ability to move within a range determined by the successfully boosted growth in mining and resource Mining Journal (September 2015), p. 83, https:// national bank, resting at 185.7 KZT per USD. With markets. For more, consult Andrew E. Kramer, www.gbreports.com/wp-content/uploads/2015/09/ the introduction of a free floating exchange rate, the ‘‘Kazakhstan’s Currency Plunges’’, New York Times Kazakhstan_Mining2015.pdf. currency has been consistently devaluing and (August 20, 2015) https://www.nytimes.com/2015/ 70 In August 20, 2015 the National Bank of resides at 380.1 KZT per USD (Department of 08/21/business/international/kazakhstans- Kazakhstan allowed the national currency—the Treasury). The switch to a free floating exchange currency-plunges.html.

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FIGURE 22: LEADING GLOBAL URANIUM PRODUCERS—Continued

Global Uranium market Company Ownership production share (in tons of MT) (%)

Energy Asia ...... Private ...... 2,218 4 General Atomics/Quasar ...... Private ...... 1,556 3 Sopamin ...... Niger ...... 1,118 2 Paladin ...... Private ...... 970 2 Italicized = State Ownership. Not Italicized = Private Ownership. Source: World Nuclear Association—World Uranium Mining Production, 2017.

The leading global uranium producers include peaceful use restrictions and would purchase more Russian account for about 92 percent of current other nonproliferation requirements, material.75 world uranium production. Of these, ensure that the U.S. nuclear industry SOEs in the former Soviet Union and can play a role in the global nuclear France China control about 45 percent of the fuels trade without contributing to Respondents have also raised global market. These companies are nuclear weapons development. concerns about the activities of French insulated from market and regulatory However, if the U.S. uranium industry state-owned enterprises. There are two pressures experienced by market cannot compete with SOEs, particularly principal French companies producers, placing U.S. uranium mines Russia and China, the U.S. contribution participating in the nuclear fuel cycle: at a distinct disadvantage. to global nuclear nonproliferation Orano and Framatome. Orano, Uranium-related SOEs, however, have regimes will substantially diminish. As broader roles than sales of uranium former Secretary of Energy Enest Moniz previously a part of Areva SA, is products. Many countries leverage their remarked in July 2017: minority-owned by the French state and SOEs’ integration of the nuclear fuel has direct ownership of uranium mines ‘‘A world in which Russia and China come in Niger, Kazakhstan, and Canada. It cycle and nuclear power generation to to have dominant positions in the global further geopolitical ambitions. Rosatom, nuclear supply chain will almost certainly also owns and operates all uranium a Russian state-owned enterprise that see a weakening of requirements, just as enrichment and conversion facilities in participates in every step of the nuclear nuclear technology and materials spread to France. Framatome, which is majority fuel cycle, including power generation, many countries.’’ 73 owned by the French government’s uses this leverage. With virtually U.S. utilities contract with uranium- electric utility E´ lectricite´ de France, complete control over the Russian related SOEs in Russia, Kazakhstan, operates fuel fabrication and reactor nuclear industry, Rosatom can offer Uzbekistan, and China primarily construction businesses. prices for nuclear plant construction because of concerns with price and and fuel services that are significantly U.S. producers acknowledge that state diversity of supply. These utilities support gives Orano and Framatome a below that of market-based suppliers. believe that with the limited number of Generous financing packages, usually competitive edge over U.S. and other worldwide uranium producers, European firms. [TEXT REDACTED] consisting of low-cost loans particularly in the conversion and underwritten by the Russian expressed concerns that, if U.S. anti- enrichment stages, any additional dumping duties on French enriched government, also incentivize deals with competition is welcome. Most of the 24 71 uranium were lifted, Orano’s state Rosatom. China emulates Rosatom’s utility respondents indicated that price backing would allow it to sell to utilities model of pairing subsidized nuclear and reliability of delivery below-market cost. construction with state-supported considerations were the chief drivers of financing, as seen with its construction their fuel procurement policies; only The U.S. International Trade of reactors in Pakistan and Romania. [TEXT REDACTED] alluded to Commission has previously concluded Summaries of individual countries’ non- geopolitical considerations as a that French state-owned enterprises market economy nuclear activities are significant factor. Domestic utilities’ have undersold U.S. producers of discussed more in Appendix I. desire to cut costs includes support for Uranium-related SOEs also have a enriched uranium (see Chapter VII). increased market penetration by China. deleterious impact on U.S. Unlike SOEs in Russia, Kazakhstan, [TEXT REDACTED] Uzbekistan, and China, French nuclear nonproliferation objectives. U.S. exports Utilities’ emphasis on diversity of of nuclear technologies and supplies, entities are partially owned by private supply also underpins their rationale for companies and are somewhat subject to including uranium products, are purchasing Russian uranium. [TEXT generally governed by Section 123 market pressures. Furthermore, the REDACTED] 74 Several utilities agreements.72 These agreements, which French nuclear market is not closed off suggested that if current restrictions on to the U.S. or other uranium producers, Russian imports were eliminated, they 71 Russia has recently finished construction of and U.S. companies reported sales to Iran’s only operating nuclear reactor at Bushehr, France between 2014 and 2018. In and Rosatom is the sole fuel supplier for the plant. 15, 2019). https://fas.org/sgp/crs/nuke/ Rosatom is also actively constructing the Akkuyu RS22937.pdf. contrast, U.S. uranium producers cannot nuclear plant in Turkey, and is pursuing projects in 73 Ernest J. Moniz, ‘‘The National Security sell into the Russian or Chinese markets, Finland, Hungary, Bangladesh, Egypt and Belarus. Imperative for U.S. Civilian Nuclear Energy Policy’’, as these countries are served only by http://www.world-nuclear.org/information-library/ Energy Futures Initiative (July 12, 2017), https:// their state-owned enterprises. current-and-future-generation/plans-for-new- energyfuturesinitiative.org/news/2017/7/12/moniz- reactors-worldwide.aspx. the-national-security-imperative-for-us-civilian- 72 ‘‘Nuclear Cooperation with Other Countries: A nuclear-energy-policy. 75 Commerce Department Survey of U.S. Nuclear Primer.’’ Congressional Research Service. (January 74 [TEXT REDACTED]. Power Generation Sector, 2019.

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E. Market Uranium Producers: Canada provided by Australian and Canadian foreign obligations that restrict the uses and Australia companies to U.S. nuclear power of such nuclear material.83 At this time, Market uranium producers in Canada generators came from Kazakhstan and there is only one functional enrichment 82 and Australia have historically Uzbekistan. facility in the United States. Located in performed better than their U.S. Like their U.S. counterparts, Canadian Eunice, New Mexico and operated by counterparts. Between 2014 and 2016, and Australian producers cannot the British-German-Dutch consortium Canada and Australia increased their produce without regard for spot market URENCO, this enrichment facility may production of uranium by 59 percent price. SOEs’ continued price-insensitive only enrich uranium for civil purposes; and 26 percent, respectively.76 In 2014, production therefore threatens all the material it produces may not be Canada opened the Cigar Lake mine and market uranium producers, including used for U.S. nuclear weapons or naval Australia opened the Four Mile mine,77 the U.S., Canada, and Australia. reactors.84 both increasing overall production VII. Findings However, the U.S. has three defense numbers. systems that require highly-enriched These mines also exhibit positive A. Uranium Is Important to U.S. National Security uranium (HEU) (see Figure 23). The geologic factors. Cigar Lake has an Department of Energy currently meets average ore grade of 14.5 percent As discussed in Part II, ‘‘national requirements for HEU by drawing on its uranium, one of the highest in the security’’ under Section 232 includes stockpile. DOE also satisfies its ongoing world. Higher ore grades require less both (1) national defense and (2) critical need for HEU by recycling components processing to recover uranium from the infrastructure needs. from retired nuclear weapons. DOE is ore, reducing overall production costs. 1. Uranium Is Needed for National estimated to have approximately 575 Australia’s largest mine, Olympic Dam, Defense Systems tons of HEU and 80.8 tons of plutonium. is also a significant producer of copper, Russia, in contrast, has an estimated 679 gold, and silver.78 Production of these An assured supply of U.S.-origin tons of HEU and 128 tons of commodities can therefore support uranium is critical to national defense plutonium.85 continued uranium extraction even in for the purpose of nuclear weapons and the face of lower global spot prices. the naval fleet. Nuclear reactors provide Furthermore, U.S.-origin uranium Despite these geologic advantages, propulsion and electricity for key with no foreign obligation is required Canadian and Australian producers are elements of the nation’s naval fleet: 11 for the manufacture of tritium for also subject to the same market aircraft carriers and 70 submarines. defense purposes (see Figure 24). pressures caused by SOEs’ Uranium is also vital for producing Tritium, a hydrogen isotope, is used in overproduction. For example, McArthur tritium, a radioactive gas used in U.S. nuclear warheads to boost explosive River, estimated to have the world’s nuclear weapons. yield. Tritium must be continually largest deposit of high-grade uranium,79 Many international nuclear replenished in warheads because it has was idled in November 2017 by Cameco cooperation agreements to which the a short half-life of 12.3 years, decaying Resources due to poor economic United States is a party, including at a rate of 5.5 percent per year. The conditions.80 Australian mines have Section 123 agreements on civil nuclear Department of Energy has an also cut production in response to poor cooperation, restrict the use of nuclear Interagency Agreement with the market conditions between 2016 and material imported under those Tennessee Valley Authority (TVA) for 2018, most notably Olympic Dam cut agreements to peaceful uses. The United production of tritium using the TVA’s production by eight percent and the States requires U.S.-origin uranium and Watts Bar 1 commercial power reactor. Ranger mine by 10 percent.81 As a nuclear technologies for use in the TVA’s Watts Bar 2 commercial power result, between 2014 and 2018, 24.2 production of uranium-based products reactor will soon be used for tritium percent of uranium concentrate for U.S. defense systems, with no production as well.86

FIGURE 23: DEFENSE REQUIREMENTS FOR U.S.-ORIGIN URANIUM-BASED PRODUCTS

Submarines (70)—HEU Nuclear-Powered Aircraft Carriers (11)—HEU Fuel ...... Tritium Nuclear Weapons 3,800 +/¥ *. Fuel. * Includes 1,700 warheads on missiles and strategic bombers; 2,100 warheads in reserve; 150 warheads in Europe. An additional 2,500 war- heads are slated for dismantlement. Sources: U.S. Navy, International Panel on Fissile Materials (www.fissilematerials.org). See Appendix J for entire chart.

76 Nuclear Energy Agency & International Atomic 81 ‘‘Australia’s Uranium Mines.’’ World Nuclear the United States of America Regarding the Energy Agency. Uranium 2018—Resources, Association. http://www.world-nuclear.org/ Establishment, Construction and Operation of an Production and Demand, 55. 2018. http:// information-library/country-profiles/countries-a-f/ Uranium Enrichment Installation in the United www.oecd-nea.org/ndd/pubs/2018/7413-uranium- appendices/australia-s-uranium-mines.aspx. States, Washington, 24 July 1992, Treaty Series No 82 2018.pdf. U.S. Department of Commerce, Bureau of 133 (2000). Industry and Security, Nuclear Power Generator 77 85 U.S. Department of Energy. Tritium And Ibid. Survey, Question 9. Enriched Uranium Management Plan Through 78 Ibid., 134. 83 U.S. Department of Energy. Tritium And 2060. Report to Congress. (Washington DC: 2015) 79 Ibid., 159. Enriched Uranium Management Plan Through http://fissilematrials.org/library/doe15b.pdf. 80 ‘‘Cameco: uranium prices too low to restart 2060, iv. Report to Congress. (Washington DC: 2015) 86 February 2019 discussion between U.S. McArthur River mine operation.’’ MRO Magazine, http://fissilematrials.org/library/doe15b.pdf. 84 Department of Energy, National Nuclear Security August 3, 2019. https://www.mromagazine.com/ Agreement Between the Three Governments of the United Kingdom of Great Britain and Northern Administration, Office of Major Modernization 2018/08/03/cameco-uranium-prices-too-low-to- Ireland, the Federal Republic of Germany and the Programs and the U.S. Department of Commerce, restart-mcarthur-river-mine-operation/. Kingdom of the Netherlands and the Government of Bureau of Industry and Security.

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FIGURE 24: URANIUM REQUIREMENTS FOR U.S. NATIONAL DEFENSE

Material Defense application Other application

Natural Uranium (NU) ..... Enrichment ...... Materials Research Reactors. Low Enriched Uranium Tritium Production for Nuclear Weapons ...... Medical Isotope Production. (LEU). Highly Enriched Uranium Reactor Fuel for Aircraft Carriers and Submarines ...... U.S. High Performance Research Reactors. Depleted Uranium U–235 Munitions—Kinetic Energy Penetrators ...... Mixed-Oxide Reactor Fuel. Munitions—Armor ...... Triuranium Octoxide (U3O8). Radiation Shielding ...... Uranium Hexafluoride (UF6). Targets for Pu–239 Production ...... Aircraft Parts. Source: U.S. Department of Commerce, Bureau of Industry and Security; U.S. Department of Energy, February 2019.

Low-enriched uranium (LEU) 87 is Department anticipates that its HEU not enough to financially sustain the used to produce tritium and to supply stockpile, at current projected rates of U.S. front-end uranium industry. fuel to U.S. research reactors. DOE consumption for naval reactor Future Defense Needs: Microreactors meets some of its internal demands for operations, will be depleted between LEU by downblending HEU into LEU.88 2050 and 2059.92 DoD is pursuing the deployment of DOE uses a bartering program of The National Nuclear Security small modular reactors and uranium derived from HEU as payment Administration maintains the American microreactors that will require HALEU for services to defray cleanup costs at Assured Fuel Supply (AFS), which is a fuel as early as 2027. DoD microreactors the Portsmouth Gaseous Diffusion Plant stock of low-enriched uranium for use may require fuel that is free from in Piketon, Ohio.89 The downblending by U.S. and foreign utilities during a peaceful use restrictions, including the practice also provides high assay low- serious fuel supply disruption.93 The peaceful use restrictions that are enriched uranium (HALEU),90 which is AFS contains 230 tons of LEU that was generally applied by foreign suppliers of used in research reactors and medical downblended from DOE’s HEU nuclear material to the United States. isotope production reactors. stockpile.94 This stock is not available The 2019 National Defense Lastly, DOE’s downblending program for use by DOE/NNSA. Only civilian Authorization Act requires the Secretary for production of LEU fuel used in TVA nuclear power plant operators may use of Defense to issue requirements for a reactors requires a supply of natural the AFS. pilot program to design, test, and uranium trioxide (UO3) to be used as a U.S. national security relies on operate micro-reactors by December 31, diluent in the downblending process. credible nuclear deterrence. A shortage 2027.96 As of 2019, there is no U.S. production of HEU to fuel aircraft carriers and DoD’s need for microreactors stems of UO3; consequently, TVA has to submarines and LEU to support tritium from its facilities’ reliance on import it from Canada and swaps production would undermine U.S. commercial electric power. At present, unobligated flags from DOE stocks of defense operations and readiness. DoD installations consume 21 percent of natural uranium in other physical Likewise, an inability to supply HALEU total federal energy consumption in the forms. DOE does not maintain a to research reactors and medical isotope United States, at a cost of approximately stockpile of unprocessed uranium of manufacturers would be detrimental to $3.7 billion per year. Fifty-three percent 95 any type. Furthermore, the stockpile of several critical infrastructure sectors. of all energy consumed by DoD is HEU allocated to production of HALEU The supply of U.S.-mined uranium will delivered as electricity, 99 percent of is expected to be depleted by 2060 91 be critical as a feedstock for producing which is provided via the commercial and DOE’s supply of LEU will be LEU and HEU in an enrichment facility grid.97 exhausted around 2041. The that is planned to serve national defense In the event of a power outage, many needs. Without economically viable DoD installations have only diesel 87 Low-enriched uranium (LEU) is uranium uranium mining operations in the generators and a limited supply of on- enriched to less than 20% U–235. (Uranium used United States, the enrichment of nuclear in power reactors is usually 3.5–5.0% U–235). site diesel fuel. An extended grid failure High-enriched uranium (HEU) is uranium enriched materials for DOE defense missions will could severely limit DoD’s ability to to 20% U–235 or more. (Uranium used in weapons not be possible under present law and carry out domestic and foreign is about 90% enriched U–235.) policies. Defense needs for uranium are 98 88 For the purposes of this 232 investigation, operations. Microreactors would be downblending is the reduction of uranium expected to operate 24 hours per day 92 ‘‘Estimate of Global HEU Inventories as of enrichment levels to less than 20 percent, a low January 2017.’’ International Panel on Fissile without disruption and do not require enriched uranium (LEU), which cannot be used in frequent refueling. DoD installations weapons, but is suitable for use as fuel in nuclear Materials. http://fissilematerials.org. power plants and naval nuclear reactors. 93 In 2005, the U.S. Department of Energy set up could therefore continue normal 89 U.S. Government Accountability Office. the American Assured Fuel Supply (formerly operations in the event of an extended Nuclear Weapons: NNSA Should Clarify Long-Term Reliable Fuel Supply) with $49.5 million in funding commercial grid disruption. Uranium Enrichment Mission needs and Improve from Congress. This entity supports the Technology Cost Estimates, Report to Congressional International Atomic Energy Agency’s International Committees. 14. [GAO–18–126], February 2018. Fuel Bank initiative—a back-up source of uranium 96 For this report, micro-reactors are defined as https://www.gao.gov/products/GAO-18-126. for global supply disruptions. reactors generating no more than 50 megawatts 90 High assay low-enriched uranium (HALEU)— 94 U.S. Department of Energy. Notice of (MWe) Section 327, John S. McCain National Low-enriched U–235 uranium product that has Availability: American Assured Fuel Supply, Defense Authorization Act 2019 (Pub. L. 115–233), enrichment levels higher than the 3.5–5%. HALEU Federal Register 76 no. 160, August 18, 2011, https://www.congress.gov/bill/115th-congress/ U–235 uranium product can have enrichment levels 51358. house-bill/5515/text?format=txt. approaching 20%, depending on the application. 95 U.S. Department of Energy. National Nuclear 97 Defense Science Board. Department of Defense. 91 U.S. Department of Energy, National Nuclear Security Administration. Report to Congress: Fiscal ‘‘Report of the Defense Science Board Task Force Security Administration, Office of Major Year 2019 Stockpile Stewardship and Management on DoD Energy Strategy, More Fight—Less Fuel,’’ 2. Modernization Programs, February 2019 discussion Plan—Biennial Plan Summary. (Washington, DC: (Washington, DC: 2008). https://www.acq.osd.mil/ with the U.S. Department of Commerce, Bureau of 2018). https://www.energy.gov/sites/prod/files/ dsb/reports/2000s/ADA477619.pdf. Industry and Security. 2018/10/f57/FY2019%20SSMP.pdf. 98 Ibid.

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DoD aims to deploy microreactors in availability for defense requirements in The Role of National Security in 2027, or shortly thereafter. This timeline the future. Nuclear Regulation assumes that there are no major technical hurdles to overcome. In Future Defense Needs: Proposed Since Congress passed the Atomic addition, there are environmental and Nuclear Submarine Production Energy Act in 1946, all legislation governing the nation’s uranium and reactor siting reviews to address. Should The Department of the Navy recently microreactors become viable on a nuclear power generation industries has submitted its Fiscal Year 2020 been written with an emphasis on commercial scale, large-scale adoption President’s Budget, recommending the of microreactors will require significant national security functions. As construction of 55 new battle force ships envisioned by Congress, regulation of amounts of HALEU. DoD currently can over the next five years.100 Fourteen of only supply its HALEU needs through the U.S. uranium and nuclear power these are nuclear-powered: Eleven generation industries is to be conducted DOE’s downblending of highly-enriched Virginia-class submarines, two uranium, the supply of which is in support of national security 99 Columbia-class submarines, and one objectives. Consequently, Congress has limited. Future deployment of micro- Gerald R. Ford-class aircraft carrier. reactors for defense purposes will empowered federal agencies to increase national defense requirements The Virginia-class and Columbia-class intervene in support of continued for uranium and emphasizes the need submarines both house reactors which domestic U.S. uranium production for a viable U.S. commercial uranium contain enough fuel to last the life of the capacity on several occasions. A brief industry. ship, roughly 33 and 40 years history of this legislation can be found A healthy U.S. commercial uranium respectively, unlike previous models in Appendix H. industry is essential for defense needs. which required refueling and 101 2. Uranium Is Required for Critical As DoD does not anticipate requiring overhaul. The Ford-class aircraft Infrastructure newly-mined uranium for some years, it carrier requires refueling, but at a is impractical to suggest that a privately- significantly lower rate than the Nimitz- Uranium is also required to satisfy owned mine could afford to operate on class aircraft carriers it will replace. requirements associated with the 16 standby awaiting future DoD purchases. DOE’s current projection of HEU critical infrastructure sectors identified DoD analysts have noted that it ‘‘can be stockpile consumption for naval by the U.S. Government in the 2013 difficult to reconstitute a material reactors does not take into account the Presidential Policy Directive 21 (PPD– capability if all expertise and market addition of these 14 new nuclear- 21) 102 (see Figure 25). Critical share is lost,’’ as most recently seen powered vessels. If these vessels are infrastructure, as defined by PPD–21, with U.S. rare earth mineral producers. built, the total naval demand for HEU provides the ‘‘essential services that U.S. uranium producers must be able to fuel will increase beyond what NNSA underpin American society’’ and ‘‘are attract sufficient commercial (i.e. has anticipated, thus accelerating the vital to public confidence and the nuclear power generator) business in the date by which the HEU stockpile will be Nation’s safety, prosperity, and well- present market to ensure their depleted. being.’’ 103

FIGURE 25: CRITICAL INFRASTRUCTURE SECTORS

Chemical Commercial facilities Communications

Critical Manufacturing ...... Dams ...... Defense Industrial Base. Emergency Services ...... Energy (Including Electric Power Grid) ...... Financial Services. Food and Agriculture ...... Government Facilities ...... Healthcare and Public Health. Information Technology ...... Nuclear Reactors, Materials, and Waste ...... Transportation Systems. Water and Wastewater Systems ...... Source: PPD–21; Department of Homeland Security.

U.S. nuclear power generators are provided by the nation’s 98 nuclear of its business. Consequently, the specifically included in the Nuclear reactors. Thus, uranium is needed to uranium industry cannot survive Reactors, Materials, and Waste sector. support all U.S. critical infrastructure without a healthy U.S. nuclear power Additionally, as U.S. nuclear power sectors. generation sector. Between January 2013 generators are integral to the nation’s Changing Electricity Generation Markets and September 2018, U.S. utilities commercial electric grid, they are also Affect U.S. Nuclear Generators retired seven reactors at six nuclear part of the Energy sector. PPD–21 power facilities—a loss of more than specifically notes that the Energy sector One of the primary challenges to the 5,000 megawatts (MW) of generation supports all other sectors because of its viability of the U.S. uranium industry is capacity. Another 12 reactors with a 104 ‘‘enabling function.’’ Consequently, the closure of U.S. nuclear power combined generation capacity of 11.7 as all critical infrastructure sectors are plants. The front-end U.S. uranium dependent on reliable supplies of industry relies on nuclear power plant electricity, 19 percent of which is operators for approximately 98 percent

99 Roadmap for the Deployment of Micro-Reactors Operations. March 2019. https:// Resilience. Presidential Policy Directive 21. for U.S. Department of Defense Domestic www.secnav.navy.mil/fmc/fmb/Documents/20pres/ (Washington, DC: 2013) https:// Installations.’’ Nuclear Energy Institute. October 4, PB20%2030-year%20Shipbuilding obamawhitehouse.archives.gov/the-press-office/ 2018. https://www.nei.org/CorporateSite/media/ %20Plan%20Final.pdf. 2013/02/12/presidential-policy-directive-critical- filefolder/resources/reports-and-briefs/Road-map- 101 S9G Nuclear Reactors: http://www.world- infrastructure-security-and-resil. micro-reactors-department-defense-201810.pdf. nuclear.org/information-library/non-power-nuclear- 103 100 ‘‘Report to Congress on the Annual Long- applications/transport/nuclear-powered-ships.aspx. Ibid. Range Plan for Construction of Naval Vessels for 102 U.S. White House. Office of the Press 104 Ibid. Fiscal Year 2020.’’ Office of the Chief of Naval Secretary. Critical Infrastructure Security and

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gigawatts (GW) are scheduled to close large scale plants were well equipped to resulting in increased cost sensitivity within the next seven years.105 provide baseload generation capacity.107 within the nuclear power industry and A majority of the current nuclear fleet However, lower-than-projected premature retirements of nuclear power was constructed in the 1970s and 1980s electrical consumption growth rates, generation units.108 when large-scale bulk power generators, combined with aggressive energy including nuclear plants, were conservation efforts, prevented many [TEXT REDACTED] In this decreased considered the most cost-effective utilities from operating the baseload demand environment, wind generators means of providing reliable electricity. nuclear power plants at optimal levels. were able to compete through the Although these plants required Distorted electricity markets caused by Production Tax Credit (PTC) that allows significant capital expenditures for current FERC-approved market rules them to produce at negative cost. construction, low fuel and operating and increased adoption of renewable Nuclear generators, in contrast, costs made them practical to operate on energy resources, such as solar and generally do not receive similar a near-constant basis.106 Energy wind, which are subsidized through subsidies. planners particularly recognized that Federal and state tax incentives, are

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In addition to renewables, the can be sold at a lower cost than the markets that threaten the resilience introduction of highly efficient turbine constantly-running nuclear generators. of the Nation’s electricity system. gas generators and the wide availability These factors create a situation that Increased state energy efficiency of low cost natural gas, has changed the substantially disadvantages nuclear standards and the predominance of the competitive landscape. Ten survey power generators. A 2017 IHS Markit service sector in the economy, which respondents indicated that their nuclear study observed that, ‘‘generating does not consume as much energy as other sectors such as manufacturing, facilities faced significant challenges to resources providing security of supply have slowed electricity demand growth. their viability from natural gas-fired receive negative market-clearing prices generators. Under current wholesale In 2017, the North American Electric because distorted market conditions Reliability Corporation (NERC) reported electricity pricing mechanisms, natural drive rival subsidized suppliers to bid gas-fired generators are able to sell their that the annual growth rate of peak against each other to avoid the loss of demand reached record lows of 0.61 electricity to the grid at lower costs than output-based subsidy payments.’’ 109 nuclear operators. This is partially due percent in summer and 0.59 percent in FERC, recognizing challenges faced by winter.111 Slower growth in electricity to the intermittent nature of natural-gas nuclear and other baseload generators, demand places increased economic fired generation; natural gas-fired opened a proceeding in January 2018 to pressures on large-scale generators, generators can be activated and examine the relationship between grid including nuclear power plants.112 deactivated as needed, whereas nuclear reliability and wholesale market The increased presence of natural gas- power generators have less operational rules.110 The proceeding will examine fired and renewable power plants in the flexibility. Similarly, subsidized grid resilience pricing and consider how nation’s electric generation grid does renewable sources, such as solar and valuation deficiencies lead to premature not obviate the need for nuclear power wind, are intermittent operators (e.g., retirements of fuel-secure generation, baseload generators. In fact, there is a during daytime hours for solar, and including nuclear. FERC, has not yet continued role for nuclear power plants favorable wind conditions for wind) and taken action to address the inequities of because they can provide a constant

105 ‘‘America’s oldest operating nuclear power 108 The Federal Energy Regulatory Commission developed an extensive record on price formation plant to retire on Monday.’’ U.S. Energy Information (FERC or the Commission) has recognized that there in the Commission-approved ISOs and RTOs. FERC Administration. September 14, 2018. https:// are deficiencies in the way the regulated wholesale ‘‘Grid Resilience in Regional Transmission www.eia.gov/todayinenergy/detail.php?id=37055. power markets price power (‘‘price formation,’’ i.e., Organizations and Independent System Operators,’’ 106 energy, capacity, and ancillary services) and has ‘‘Advancing Past ‘‘Baseload’’ to a Flexible Docket No. AD18–7–000 (January 2018) Grid- How Grid Planners and Power Markets Are developed an extensive record on price formation 111 Better Defining System Needs to Achieve a Cost- in the Commission-approved ISOs and RTOs. ‘‘Long Term Reliability Assessment,’’ 12. Effective and Reliable Supply Mix,’’ 1. The Brattle 109 ‘‘Ensuring Resilient and Efficient Electricity North American Reliability Electric Reliability Group. June 26, 2017. http://files.brattle.com/ Generation: The Value of the current diverse US Corporation. December 2018. https:// system/publications/pdfs/000/005/456/original/ power supply portfolio.’’ IHS Markit. April 2018. www.nerc.com/pa/RAPA/ra/ advancing_past_baseload_to_a_flexible_ [hereinafter IHS Ensuring Resilient and Effective Reliability%20Assessments%20DL/NERC_LTRA_ grid.pdf?1498246224. Electricity Generation]. 2018_12202018.pdf. 107 110 Roughly defined, baseload generation capacity FERC acknowledges that that there are 112 In 1990, the compound annual growth rate in refers to generation capacity that can provide deficiencies in the way the regulated wholesale demand for both summer and winter exceeded 2%. ‘‘relatively low-cost electricity production to meet power markets price power (‘‘price formation,’’ i.e., around-the-clock electricity loads’’. Ibid., 5. energy, capacity, and ancillary services) and has Ibid.

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flow of electricity to the grid and do not maintain sufficient inventory of the requested by the Secretary of Energy, require constant deliveries of fuel from above products and have layered determined that U.S. utilities imported external sources. Nuclear power plants contracts with multiple suppliers. Any a significant share of their uranium can produce at near-full capacity when single missed delivery could therefore requirements. At the time, imports of solar and wind generation facilities be addressed with existing inventory. uranium concentrate accounted for cannot produce electricity. Respondents identified missed roughly 51 percent of domestic utility Similarly, natural gas plants are deliveries of fabricated fuel prior to a demand.117 The 1989 investigation also reliant on ‘‘just-in-time’’ deliveries of scheduled refueling as the greatest found that U.S. uranium producers natural gas, and natural gas storage threat to continue operation. [TEXT faced strong foreign competition, capacity in the U.S. is severely limited REDACTED] particularly from the Soviet Union. It in many regions.113 A North American Based on the nature of the nuclear further reported that employment in the Electric Reliability Corporation (NERC) supply chain, nuclear power generators industry was steadily decreasing.118 report noted that only 27 percent of U.S. are comparatively more resilient than [TEXT REDACTED] 119 natural gas-fired generation capacity other power generation sources that Consequently, the Secretary installed since 1997 is capable of dual require constant fuel deliveries. As concluded that uranium was not being fuel usage, which uses alternative fuel presented in Chapter VII, U.S. nuclear imported into the United States under such as diesel to maintain generation.114 power generators can use U.S.-sourced such quantities or circumstances that Natural gas pipelines are also vulnerable uranium to meet their power needs, threatened to impair the national to cyberattack, which can disable potentially avoiding situations where security. For more discussion of the pipeline operations and cut off gas U.S. utilities would be reliant on last- 1989 Section 232 investigation, refer to 115 supply. minute imports of natural gas or other Appendix G. In contrast, nuclear generators are not materials to address shortfalls.116 subject to similar potential disruptions Leveraging the unique operational 2. U.S. Utilities’ Reliance on Imports of or energy storage limitations since they characteristics of nuclear power Uranium Continue To Rise have long refueling cycles between 18 generators and the unused capacity of U.S. utilities’ reliance on foreign and 24 months, and do not require the U.S. uranium industry can ensure suppliers to meet their uranium product constant fuel deliveries. These refueling greater grid reliability. and service requirements have operations are planned well in advance, continued to increase since the 1989 B. Imports of Uranium in Such allowing both plant and transmission uranium 232 investigation. In 2018, U.S. Quantities as Are Presently Found system operators to make arrangements nuclear utility operators relied on Adversely Impact the Economic Welfare for alternative generation capacity. All foreign suppliers for 93.3 percent of of the U.S. Uranium Industry survey respondents indicated that they their uranium concentrate requirements, could maintain normal generation 1. U.S. Utilities’ Reliance on Imports of 85.5 percent of their uranium operations even with a missed delivery Uranium in 1989 hexafluoride requirements, and 97.6 of uranium concentrate, uranium In September 1989, the Secretary percent of their enriched uranium hexafluoride, or enriched uranium. hexafluoride (UF6) requirements. As for Respondents indicated that they completed a Section 232 investigation on the effect of uranium imports on the uranium service requirements, U.S. nuclear utility operators relied on 113 ‘‘Special Reliability Assessment: Potential national security. The investigation, Bulk Power System Impacts Due to Severe foreign suppliers for 42.3 percent of Disruptions on the Natural Gas System,’’ 10. North 116 During extreme cold temperatures in January their conversion service requirements American Electric Reliability Corporation. 2018, Distrigas of Massachusetts had to import and 61.5 percent of their enrichment November 2017. https://www.nerc.com/pa/RAPA/ liquefied natural gas from Russia to address a gas service requirements from 2014 to 2018 _ ra/Reliability%20Assessments%20DL/NERC shortage in the region. (see Figure 27). SPOD_11142017_Final.pdf. Chesto, Jon. ‘‘Russian LNG Is Unloaded in BILLING CODE 3510–33–P 114 Ibid. Everett; the Supplier (but Not Gas) Faces US 115 Blake Sobczak, Hannah Northey, and Peter Sanctions.’’ Boston Globe, January 30, 2018. https:// Behr, ‘‘Cyber raises threat against America’s energy www.bostonglobe.com/business/2018/01/29/tanker- 117 1989 Report, I–2. backbone’’, E&E News (May 23, 2017), https:// unloads-lng-everett-terminal-that-contains-russian- 118 Id. III–10 and III–27. www.eenews.net/stories/1060054924/. gas/rewj1wKjajaKtLp79irzTI/story.html. 119 Ibid., V–4 to V–5.

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Figure 27: Aggregated U.S. Utility Consumption of Uranium Products1 2014-2018

160,000 U.S. utilities rely on foreign suppliers for:

140,000 Uranium Concentrate- 92.7 percent Uranium Hexaflouride - 85.4 percent Enriched uranium Hexaflouride-97.6 percent 120,000 Conversion Services - 57 .7 percent Enrichment Services• 62.1 percent

~ 100,000 ::) ....0 VI ~ 80,000 51 5 fE. 60,000

20,000

0 Uranium Uranium Enriched Uranium conversion services Enrichment Services Concentrate Hexafluoride (lbs Hexafluoride {Kgll) (KgU UF6) {Separative Work {lbsU308) U308 equivalent) Units/SWU)

• us ill Non-US

Sotm:e: U.S. Department of Commerce, Bureau of lndllStry and Serurll:y, Nuclear Power Operator Survey, Tab 9 20 Respondents

In 2018, U.S. imports of uranium total value of $5.3 billion USD.120 2018 (a 52 percent decrease), for a products reached a 10-year low in terms However, the Fukushima incident combined value of $2.2 billion USD (a of both total quantity and aggregate occurred in the same year, and both 58 percent decrease) 121 (see Figures 28 value. Imports peaked in both terms in figures have since declined, reaching a and 29). 2011, when 40 million pounds of total of just over 19 million pounds in BILLING CODE 3510–33–P uranium products were imported, at a 120 USITC Dataweb. 121 USITC Dataweb.

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Figure 28: U.S. Imports of Uranium Products

45.0

15.0

10.0 --..

2009 20!0 201 l 2012 2013 2014 2015 2016 2017 2018

i--(Jua,~tity (Millions LBS) 39.1 34.9 40.0 20.7 29.8 24.0 24;2 31.2 28.4 19.l

Source: US.ITC Dataweb Updated 3.18.2019, HTS Codes: 2612.10.00, 2844.10.20, 2844.20.00, 2844.10.10, 2844.1050, 2844.30.20, 284430.:50

Figure 29: Value of U.S. Imports of Uranium Products

$5,000 --

$4,000 ---

$3,000 ., ..

$2,000 ..

$1,000

r 1 : j -·--;-· -"~-- r i r 1 T YTO ; vro 1 .l~l~l~l~!~l~l~!~1~1~1 ~aji~I-- ! ■ viti(M1l~sofU~~1$5,096t$~~08;~~·303l$4,3~:;-~3:879t~~-1~!$~~1~~19.7l~~22ls2,2~L.:.··"·j ;::--! ;;;J

Source: USITC Dataweb Updated 3.18.2019, HTS Codes: 2612.10.00, 2844.10.20, 2844.20.00, 2844.10.10, 2844.10.50, 2844.30.20, 2844.30.50

BILLING CODE 3510–33–C materials that represent the different assembly. The total composition of 2018 The HTS codes that represent stages of the fuel cycle that uranium ore imports of uranium products was uranium products are broken out by goes through to become a nuclear fuel comprised of a little over half (56.4

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percent) of uranium compounds (oxide, from 2014 to 2018, no fuel assemblies test assemblies or products that were hexafluoride, and other) and about one- imported into the U.S. were for actual being returned to the original third (29.5 percent) of enriched uranium use by U.S. nuclear electric power manufacture.122 (see Figure 30). Fuel assemblies are not operators. During this time period listed in Figure 30 due to the fact that imported fuel assemblies where either

Figure 30: U.S. Imports of Uranium Products, 2018

12,000,000

10,000,000

8,000,000 ------29.S0%of 2018 Imports

6,000,000

14.04%of 2018 Imports O.O~of 0,00% of 0.04% of 0,S1%of 2018 Imports 2018 !mpom 2018 lmp,rts 2018 lqiorn

zooo,ooo -1 ··

0 '. ' -~- ---,-.-----~-·., ' , 1 Uranium I Other Forms i i · ;_;_ Uranium Ore ) Compounds I of Natural l Uranium l Depleted l. · Enriched Uranium ·, · • j and ; (Oxide, M-§to! Uranium i Compounds l Uranlu.m j · Uranium ~ .. · · 1Concentrates I Hexafluoride 1 I Other Than J_ (Depleted) ( (Other) l , and Other) i Compounds ' r■Io1s·i;;;;,m,1.SS>l 2.sa1,a21 i 10,1gai;g J s:sii:001 1 s::sn i · 29 · l 1jsi ; 9,747 .... J > _., ••,_.,., •• ,._,,_,,,___.,.,~>,,,-,_ :,•,, "c•~--~-,•-~~--• c-", -,•~•" •"•,•••••"--•,•••,ww~••••,s,s '"", •','" Y, -,l,,~~,•-•-•••,••, , :•• ,,,,, s,•••v~ , · J, '"'• .-,-.,,,,,_,,,,~,•, ""''"'~J.-,. .,, •" ,","" , • ,~,--.,-.,.:•,, __ _._ •"~•• ."" ."''••"'"""~""• , l~-.••--••-,•,. •, --. •'•~•,,-

Sooo:e: USIK Dataweb Updat.ed 3 ..28.19,HTSCode:s: 2612.10.00, 2844.10.2.Q.2844.20.00, 2844.10.10, 2844.1050, 2844.30.20, 2844..30.50

3. High Import to Export Ratio import levels were 2.2 times the level of exports were made up of ‘‘uranium exports of U.S. uranium products. compounds, uranium metal, and other U.S. imports of uranium products, Uranium production from state owned forms of natural uranium,’’ 1.8 percent which displace demand for domestic enterprises continues to depress world was ‘‘enriched uranium’’, and 0.2 uranium and lower production at U.S. uranium spot prices, making it percent was ‘‘depleted uranium’’ (see mines, reached 2.7 times the level of increasingly difficult for U.S. companies Figure 32). exports of U.S. uranium products in to export their uranium products. In BILLING CODE 3510–33–P 2013 (see Figure 31). In 2018, U.S. 2018, 98 percent of U.S. uranium

122 Department of Energy, Nuclear Security Administration, Nuclear Materials Management and Safeguard System.

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Figure 31: U.S. Imports and Exports of Uranium Products

45,000

35,000

30,000 .; ...~ 25,000 11 -g.. 20,000 ~ ! 15,000

5,000

' 2009 ! 2010 2011 2012 ; 2013 ' 2014 . 2015 . 2016 , . . 2017 .. ' 2018 ! 2 31,171 i _, 28,390 ___ __!, 19,148 ! !-lmpms(lluJUSandsofl.BSJl 39,074 i _·34_,9_10_.,___40_0 '..~~-;-,·---20. _'.~~-----!,.___ 29,, •• ~ 8 ',, :4,~ i . ~•:',!---:,•:. i;;,.;;,.Eliports{Tl1

Source: Global Trade Atlas Update

Figure 32: U.S. Exports of Uranium Products, 2018

6000000 -••·••'•-·-,.s'<"''" ····e····•··· '"""''""''"''""''"""-·

~..so·. 5000000 ... _.... ,,...... _,, ...... 4000000 -•---.• ..... -· '""· ----·.- ·. '"'· ., . --

II ;·········--··--•-... ~-- Uranium Ore and~

Source; USITC 0ataweb Updated 3.28.19, HTS Codes: 2612.10.00, 2844.10.20, 2844.20.00. 2844.10.10, 2844.1050, 2844.30.20

BILLING CODE 3510–33–C material on the global enriched uranium Russia, Kazakhstan, and Uzbekistan 4. Uranium Prices market; and cancellations of proposed continued to influence both the U.S. reactors in the U.S. and other Western and global uranium markets. As detailed The Department’s 1989 uranium 232 nations.123 in the end of this section, the U.S. investigation identified several trends Many of these trends persisted well responsible for the decline in global Government addressed the impact of after 1989, and following the dissolution these sales of subsidized uranium uranium prices, including increased of the Soviet Union, uranium sales from production from lower-cost ore bodies through anti-dumping investigations and the imposition of suspension in Canada, Australia, and South Africa; 123 1989 Report. III–12 to III–14 and III–26 to III– dumping of Russian, Kazakh, and Uzbek 27. agreements.

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At the same time, other imports from nuclear power projects after the Three including a production tax credit and the former Soviet Union continued to Mile Island and Chernobyl incidents, guarantees for construction loans.125 depress uranium prices. Under the 1993 were factors that contributed to low U.S. utilities took advantage of these Megatons to Megawatts program 124 uranium prices during this period. By policy changes and applied for (officially the ‘‘Agreement Between the November 2000, uranium spot market construction and operating licenses for Government of the United States of prices had fallen to $7.13 per pound; a 25 new reactors between 2007 and America and the Government of the 56 percent decrease from the July 1996 2009.126 Russian Federation Concerning the high of $16.50 and a 39 percent decrease Most of these reactors, however, were Disposition of Highly Enriched Uranium from the January 1989 price of $11.60. not built. As discussed earlier, the Purchase Agreement’’), the U.S. and Uranium prices then began to climb March 2011 Fukushima incident Russian governments agreed to the beginning in fall 2001, and by prompted a groundswell of public conversion of 500 metric tons of HEU November 2001, the spot price reached opposition to new nuclear power from dismantled ex-Soviet nuclear $9.43. The price then climbed generation. Additionally, competition weapons into LEU, which was exponentially thereafter, reaching from low-cost gas fired turbine ultimately sold to U.S. utilities. Between $13.18 in November 2003, $33.55 in generators made plans for many nuclear 1993 and 2013, this program resulted in November 2005, and a record $136.22 in plants economically unfeasible. Of the the introduction of 14,000 metric tons of June 2007—a 1,810 percent increase on 25 reactor applications submitted LEU into the U.S. nuclear fuel market, the November 2000 price. The principal between 2007 and 2009, only three will directly competing with U.S. uranium driver of this price increase was a trend be completed by 2022. The remaining production. widely referred to as the ‘‘nuclear reactor plans were cancelled due to a Demand in the United States for renaissance,’’ which anticipated the variety of factors, including public nuclear power also stagnated after 1989. construction of dozens of reactors reaction to the Fukushima incident and The Tennessee Valley Authority’s Watts worldwide. falling electricity prices. Bar 1, which came online in 1996, was Influenced, in part, by increasing oil The Fukushima incident and the only nuclear reactor completed in and natural gas prices, as well as, public subsequent cancellation of proposed the United States between 1989 and concern about carbon emissions, many new reactors created a global uranium 2016. Between 1989 and 2000, nine Western governments adopted policies oversupply. The uranium spot market reactors were decommissioned and no intended to promote the construction of price fell from $63.50 in March 2011 to new reactors were authorized. Lack of new nuclear power generators. In the $42.28 by March 2013. By March 2017, domestic demand, spurred in part by United States, the Energy Policy Act of the price had fallen to $24.55—a 61 competition from other generation 2005 provided financial incentives for percent decline from the March 2011 sources and public opposition to new the construction of new nuclear plants, price (see Figure 33).

Figure 33: Spot Market Price of Uranium, 2007- Present

Hislorie High Uranium Spot Prices Jun2007 140.oo .u~~---

12(t00 ; 100..00 80.00

I::::, 60.00

40.00

20.00

crno 2007 2013 2019

Source: Federal Reserve Bank of St. I.Duis, Economic Research Division and lntt;mational Monetary Fund

124 ‘‘Megatons to Megawatts program will 125 ‘‘Nuclear Power in the USA.’’ World Nuclear 126 Rascoe, Ayesha. ‘‘U.S. Approves First New conclude at the end of 2013.’’ U.S. Energy Association. http://world-nuclear.org/information- Nuclear Plant in a Generation.’’ Reuters, February Information Administration. (Washington, DC: library/country-profiles/countries-t-z/usa-nuclear- 9, 2012. https://www.reuters.com/article/us-usa- 2013). https://www.eia.gov/todayinenergy/ power.aspx. nuclear-nrc/u-s-approves-first-new-nuclear-plant- detail.php?id=13091. in-a-generation-idUSTRE8182J720120209.

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In the years following the Fukushima uranium producers ceased production increases during the 2011 to 2016 incident, U.S. uranium producers closed due to poor market conditions, state- period, even when global spot market or idled 22 facilities, including mining, owned uranium enterprises increased prices were decreasing post-Fukushima milling, conversion, enrichment, fuel output. According to available data, incident (see Figure 34). fabrication, and R&D operations. As U.S. Kazakh and Chinese output had strong

I Figure 34: Foreign Production and Uranium Spot Market Price, 2011- 2016 I

+100% ", .. /

.... 0 N +75% E ...0 -C 0 ~ ::J +$0% 'CJ 0 0.... C GI '11 l'IJ GI +25% ...u .E

+0% 2011 2012 2013 2014 2015 2016

-Kazakh Production -Chinese Production -uranium Spot Price (left axis) (left axis) {right axis)

Source: World Nuclear Association; Federal Reserve Bank of St. Low

Between 2011 and 2016, Kazakhstan’s These increases in production during a employment in 2009 was collected in uranium production increased by 26 61 percent decline in global uranium order to observe the levels of percent.127 Similarly, China increased spot market prices further increased employment pre-Fukushima and post- domestic uranium production by 83 imports into the U.S., and highlights the Fukushima. As anticipated, between percent during the same period.128 ability of state-owned uranium 2009 and 2018, miners, millers, enterprises to distort markets and converters, and enrichers experienced 127 ‘‘Uranium and Nuclear Power in Kazakhstan.’’ disadvantage U.S. producers. drastic decreases in workforce numbers. World Nuclear Association. http://www.world- nuclear.org/information-library/country-profiles/ 5. Declining Employment Trends Overall employment in the front-end countries-g-n/kazakhstan.aspx. uranium industry declined by 45.8 128 ‘‘Uranium Production Figures, 2008–2017.’’ Employment in the U.S. front-end percent over this period (see Figure 35). World Nuclear Association. http://www.world- uranium industry has experienced nuclear.org/information-library/facts-and-figures/ steady declines over the surveyed years uranium-production-figures.aspx. of 2014 to 2018. Data regarding

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Figure 35: U.S. Uranium Industry Employment, Front-End, 2009 and 2014-2018

12,000

!!l 10,000 ...V .e ;),I':,_ 8,000 0 6,424 :?; 5,647 6,000 ,ii..,, {?. 4,000 U.S. uranium industry employment has declined by 45.8% since 2009 2,000

0 2009 2014 2015 2016 2017 2018

NOTE: 2009 included to show realistic levels of employment pre-Fukushima; indm:les miners, millers_, converters, emichers, and fuel fabricators.

Source: U.S. Department of Commerce, Bureau of lndustiy and Security, Front-End Survey, Tab 10 32 respondents

U.S. Front-End Uranium Industry employment was 21,951 workers in the 1989 uranium 232 investigation and Employment 1979, but by 1989, employment had steadily declined by 54.6 percent fallen 91 percent to just 2,002 between 2009 and 2018, with further For uranium miners, the decline in workers.129 Survey data shows that declines projected for 2019 (see Figure employment has been evident since the employment has further decreased since 36). 1989 uranium 232 investigation. Indeed, BILLING CODE 3510–33–P the peak of uranium mining 129 1989 Report. III–10.

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Figure 36: U.S. Uranium Miners and Millers, Industry Employment 1000 876 900 800 VI (II (II 700 ~ e0. 600 ....LI.I 500 ...0 (II 400 .Q E :::, 300 z 200 100 0 2009 2014 2015 2016 2017 2018 2019 (Projected)

-Aggregate Uranium Mining Industry Employment

NOTE: 2009 included to show realistic levels of employment pre-Fukushima Source: U.S. Department of Commerce, Bureau of Industry and Security, FronHnd Survev, Tab 10 20 Respondents

Events in the nuclear electric utility and caused steep declines in mining repercussions of the Fukushima sector over the past 40 years have employment. incident and low spot market prices can adversely affected uranium mining Mining employment is also affected be seen in the U.S. front-end uranium industry employment levels. Notably, by spot market prices. High spot market industry, as companies continue to cut the 1979 Three Mile Island accident and prices correspond with higher workforce numbers and idle production. the 2011 Fukushima incident prompted employment, while lower prices cause [TEXT REDACTED] significant downturns in the industry mines to idle and increased [TEXT REDACTED] unemployment. The combined [TEXT REDACTED] 130

[TEXT REDACTED] [TEXT REDACTED]

fTEXT REDACTEDl [TEXT REDACTED] [TEXT REDACTED]

130 [TEXT REDACTED].

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[TEXT REDACTED] [TEXT REDACTED]

rTEXT REDACTEDl [TEXT REDACTED] [TEXT REDACTED]

Fuel fabricators have seen a 19.8 produced domestically due to the highly cuts were made in response to financial percent decrease in workforce numbers engineered nature of the final products. difficulties and reported bankruptcies since 2009. This moderate decrease is Decreases in domestic demand and poor (see Figure 39). expected, as the vast majority of market conditions have affected fabrication of fuel assemblies is still domestic fuel fabricators, and workforce

' Figure 39: U.S. Uranium Fabricators, Industry Employment

4500 3950 .4000 ...... ·.. • • • •<>>• oc.. . r "·••·•

i 3500 ··• ·· ••~,. • 3041 ·• · ''3018 · · I011" · • 9142· at&~ " ~ 3000 ·"· ·' .,. .., .. ,.,...... __ .,, .. · •·· ... ., ...... , ... " I l -a. s 2soo I.U

'o 2000 ,,, .... c., .. ,:.,. ..._:_• ..... ,; .. : •• ·:::..:.·_···-·'·'-====:::=·;,::, .. ;;;;;...... , ...... ,, .. ,., ..... ,., .., ...... ,...... t r- 1500 A 19.8 percent drop t::, z 1000 from 2009-2019

..SOO

0 2009 2014 2015 2016 2017 2018 2019 (Projected)

NOT£:. 2009 lnduded ft> show reallstfe levels of employment pre-Fukushima Source: u.s. Department of Comme~. Bureau oftndust,vand ~. Front-End SuMv, Tab 10 4Re~ts

The substantial decreases observed in industry can have adverse effects on production in the industry. The entirety the front-end domestic uranium competitiveness and long-term of the front-end uranium industry

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requires a specialized workforce which workforce numbers continue to obtaining skilled employees will take consists of a wide range of expertise and decrease, specialized workers will time and investment. A lack of available education levels. Some skillsets within become increasingly difficult to hire or skilled employees will require training the industry are transferable to other re-hire in the event of a market upswing new hires, thus adding additional costs. applications. However, an aging due to both retirement and competition [TEXT REDACTED] workforce can mean the loss of from other industries. Department Efforts to recruit personnel are also knowledge and skillsets specific to the survey data indicates various difficulties complicated by the remote location of uranium industry as workers continue in hiring and retaining workers in the many uranium mines. Over half of the to transfer industries and retire. front-end uranium industry (see Figure mining/milling respondents indicated According to the Department’s 2019 40). that their facilities’ rural location survey data, the average age of Front-end uranium companies may be imposed a significant barrier to specialized workers in the front-end able to fill vacancies should production recruitment and retention. [TEXT industry is roughly 50 years old. Should resume or increase, but difficulties in REDACTED]

Figure 40: Difficulties Hiring and Retaining Workers in the Uranium Industry

Hiring into a Finding Workers Supressed Industry with Uranium Competition from 13% Experience Other Industries 23%

------~~dingWorkers with Mettalurgy Experience 7%

Source: US. Department of Commen:e, Bureau of mdustfv and Serum.y, Front-End SuNey, Tab 10 32 Respondents

In the event of a major production end uranium industry indicate that additional hiring would be required (see increase, current employment levels and production needs would not be met by Figure 41). the trending decline in employment in the current workforce, and significant all industries associated with the front-

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[TEXT RED t\CTED] [TEXT REDACTED]

[TEXT REDACTED] fTEXT REDACTEDl

6. Loss of Domestic Long Term a decline in new or renewed contracts companies, including miners, millers, Contracts Due to Imported Uranium over the last decade. From 2010 to 2018, converters, enrichers, and fuel Front-end uranium industry the number of active contracts for fabricators, declined by 46.7 percent companies in the U.S. have experienced domestic front-end uranium industry (see Figure 42).

Figure 42: Number of Active Front-End Contracts 2008-2018

so ····--·-----•-•» Total contracts declined by 44.4% from 2010 to 2018 ~ 45 4.,...5 ____~----~...... ------~------~~- ~ _, 40 8. ti111 35 ca J:; 30 C 0 u 25 ~ '£ 20

Source: U.S. Department of Commerce, Bureau of Industry and Security, Front-End Survey; Tab 9a 12 Respondents

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These expiring contracts are not being have fallen by 92.3 percent since 2010 number of contracts that front-end offset by new contracts. From 2010 to and only one contract was signed in companies retain is likely to fall further, 2018, the total number of new contracts 2018. as long-term contracts from previous extended to front-end companies fell by In particular, long-term contracts for years are set to expire. [TEXT 76.2 percent. [TEXT REDACTED] This is U.S. miners and millers fell by 71.4 REDACTED] evident by the decline in newly formed percent, with just two active long-term long-term contracts. Long-term contracts contracts in 2018 (see Figure 43). The

Figure 43: Types of Contracts- Millers and Miners, 2008-2018

The number of lon1 term contracts siped each year fell by 76.9% from 2010 to 25 2018 ... i"'...... "' i"' ti 10 I 8 s '3 j E ::> 0 z 2010 2011 2012 2013 2014 2015 2016 2017 201&

■ long Term COfltracts Ill Spot Q:mtrads ■ Medium Term Contracts

Source: U.S. Department of Commerce, Bm-eau of Industry and Security, Front-End Survey, Tab 9a 12Res nil'

7. Financial Distress financial health of the domestic front- increasing debt ratios and critically low end uranium industry. Uranium miners, The 1989 uranium 232 investigation profit margins during the 2014 to 2018 converters, and enrichers have all felt found that the front-end uranium period. An assessment of financial risk the detrimental effects of decreasing industry was not financially viable for all surveyed uranium miners, market shares due to drastically during the period of the converters, enrichers, and fuel increasing levels of imports. According investigation.131 Since these findings, fabricators is shown in Figures 44a and to survey data, key points in the front- 132 increasing volumes of imported 44b. end uranium industry experienced uranium have further crippled the

131 1989 Report. I–2. Low/Neutral Risk provided no information or do financially struggling but indicates in the near term 132 Financial risk is evaluated based on survey not incur many costs due to being idled, shutdown they are unlikely to go out of business. data including balance sheets and income or having undeveloped deposits. Low/Neutral Risk statements. Many of the companies classified as is not necessarily an indication that they are not

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[TEXT REDA.CTED] [TEXT REDACTED]

[TEXT REDACTED] fTEXT REDACTEDl

[TEXT REDA.CTED] [TEXT REDACTED]

[TEXT REDACTED] fTEXT REDACTEDl

[TEXT REDACTED] Uranium Miners from SOEs, and static/declining uranium 232 investigation and the domestic demand. Should current uranium mining industry today. The financial health of uranium market conditions continue, U.S. According to Department survey data, a mining companies has deteriorated to uranium miners will not be able to majority of the 20 companies in today’s even more unsustainable levels than at sustain operations for much longer. domestic uranium mining industry the time of the 1989 uranium 232 The 1989 Uranium 232 Investigation depend exclusively on uranium mining investigation.133 As a result of the found that a, ‘‘characteristic of the for financial viability, and do not have consolidation and homogenization of uranium mining industry is that few the support of diverse business lines the industry in the past 30 years, companies are exclusively dependent that would offset losses in their uranium financial struggles during market on the production and sale of the ore. mining activities. downturns have been magnified. U.S. Uranium production is usually a The trend in industry debt ratios for uranium mining companies continue to relatively small part or byproduct of the 2014 to 2018 period is worsening struggle to compete in a market with other major activities of the firm.’’ 134 (see Figure 45). The increasing average low spot market prices that do not cover This is a material difference between the and stable median for approximately production costs, increasing imports state of uranium mining during the 1989 half of the companies surveyed implies poor performance in managing debt. 133 1989 Report III–1 to III–2. 134 1989 Report. III–2. [TEXT REDACTED] The increase in debt

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ratios one observes can reasonably be engaged in unprofitable uranium mining attributed to companies actively operations.

Figure 45: U.S. Miners Debt Ratio

f1------1.01 < 0.784 0.7!13 '! 0.8 ~ I o.6 :!!l ! 0.4 E. j 02

iQ 2014 2015 2016 2017 2018

■ /We- O..btRallo ■ Median D

Source: U.S. Department of Commerce, Bureau of Industry and Security, Front-End Survey, Tab 5 20 Respondents

Average quick ratios and average Values greater than one indicate that a term liabilities with assets (see Figure current ratios indicate whether, on company’s assets can cover their near 46). average, companies are able to cover term liabilities, but it does not ensure near term liabilities in the short term. that a company is able to cover long

Figure 46: U.S. Mining Companies Quick and Current Ratios

3 2.67

2.5

2

1

0.5 0.55 0.6

0 2014 2015 2016 2017 20111

-Average Quick Ratio --Average Current Ratio

ffEXT REDACTED} SOurc-e: U.S. Department of commerce, Bureau of l.ndustry and Security, Front-End Survey, Tabs 19 Respondents

Uranium miners have also suffered margin for the surveyed companies is miners are losing money on operations from low profit margins (see Figure 47) strongly negative and when paired with at an alarming rate. and persistently negative net income the average net income it shows that (see Figure 48). The average gross profit

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Figure 47: U.S. Miners Gross Profit Margins

20 -·-·····----····-·····---······ - -0.04 0.24 0.29 0.32 0.53 0

-20 .5 1:1!'.. -40 ...::i: e... -60 -80 . -83.• 12 .. I!)i -100

-120

-140 2014 2015 2016 2017 2018

-Average Gross Profit Margin -Median Gross Prafd: Margin

NOTE: 11 out of 20 respondents had .no net sales at all from 2014-2018 and by 2018 only 7 companies reported any net sales Source: U.S. Department of Commerce, Bureau of Industry and Security, Front-End Survey, Tab5 20 Respondents

Figure 48: U.S. Miners Net Income

-440 -2,000 -1,766 -1,613 -2,528

-5,435

Q -'6,000 ~ ~

-12,000

-14,000

-16,000 2014 2015 2016 2017 2018

-Average Net Income -Median Net Income

Source: U.S. Department of Commerce, Bureau of Industry and Security, Front-End Survey, Tab 5 20 Respondents

Both gross profit margin and net due to the cost of maintaining permits contracts, miners have purchased off the income should be interpreted in the and machinery. [TEXT REDACTED] 135 spot market to mitigate the financial context of the few actively operating This is in fact the case with other losses from producing themselves or companies currently suffering the miners as well. In order to fulfill fulfilling contracts with their largest losses. Many of the idled companies reported negative net income 135 [TEXT REDACTED].

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inventories. [TEXT REDACTED] 136 To operations will continue to have Uranium Converters this end financial statements do not surmounting financial struggles. If fully capture the cost cutting current market conditions continue to There is only one location in the U.S. implementations being made to remain exist, mining companies will begin to that has conversion services. This is an solvent. exit the market and this vital component integral point in the fuel cycle, yet it is Without a decrease in imports and an of the fuel cycle will be lost. not immune to financial struggles faced increase in prices and demand, mining by the miners. [TEXT REDACTED] 137

[TEXT REDACTED]

[TEXT REDACTED]

[TEXT REDACTED] fTEXT REDACTEDl

136 [TEXT REDACTED]. 137 [TEXT REDACTED].

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[TEXT REDACTED] [TEXT REDACTED]

[TEXT REDACTED] [TEXT REDACTED]

Uranium Enrichers though only Urenco currently operates [TEXT REDACTED] in that capacity. [TEXT REDACTED] 138 Urenco USA and Centrus Energy are the only uranium enrichers in the U.S., 138 [TEXT REDACTED].

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[TEXT REDACTED] [TEXT REDACTED]

[TEXT REDACTED] rTEXT REDACTEDl

[TEXT RED AC TED] [TEXT REDACTED]

[TEXT REDACTED] [TEXT REDACTED]

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Enrichment is a key part of the domestic fuel cycle, as their financial Fuel Fabricators nuclear fuel cycle and these two struggles are driven by the current state The fuel fabricators are largely companies represent the entire U.S. of the market. unaffected by financial struggles in capability to commercially enrich other sectors of the industry. Debt ratios nuclear material. Retaining their vital show that most cover the majority of capabilities is necessary to preserve the their liabilities (see Figure 53).

[TEXT REDACTED] [TEXT REDACTED]

fTEXT REDACTEDl [TEXT REDACTED] fTEXT REDACTEDl

[TEXT REDACTED]

[TEXT REDACTED] [TEXT REDACTED]

fTEXT REDACTEDl [TEXT REDACTED] fTEXT REDACTEDl

[TEXT REDACTED] Over the longer that Russia and Chinese SOEs will sell electric power operators, bypassing the term, the fuel fabricators are concerned fabricated fuel directly to the nuclear need for U.S. domestic fuel fabricators.

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[TEXT REDACTED] [TEXT REDACTED]

[TEXT REDACTED] fTEXT REDACTEDl

8. Research and Development expenditures are needed to devise and The oversupplied global uranium Expenditures implement new manufacturing market has impacted the industry’s techniques and improved processes. ability to support continued R&D and Research and development (R&D) is R&D is particularly critical for uranium expenditures have been consistently critical to the future competitiveness of enrichment and fuel fabrication, as their declining over the 2014 to 2018 period the U.S. uranium industry. Across all uranium products are highly engineered (see Figure 56). sectors, from initial mining through and tailored to individual utility final fuel fabrication, consistent R&D customers’ specifications.

Figure 56: Total Front-End U.S. Uranium Industry R&D Expenditures, 2014-2018

$180,000

~ $160,000 :) 1 $140,000 IIJ "'S: $120,000 ~ ';;;' $100,000 GI ::, $80,808 :li $80,000 & - ~ $60,000 0 Only 9 of 34 front-end survey respondents indicated t $40,000 any R&0 expenditures 2014-2018, with expenditures declining almost SO percent in the past 5 years. ! $20,000 $0 ' __ ,______

2014 2015 2016 2017 2018

Source: U .s. Department of Commerce, Bureau of Industry and Security, Fmnt-End Survey, Tab 7 34 Respondents

[TEXT REDACTED] Other mining owning deposits for future the maintenance of existing sites and company respondents, including both development, have limited available development costs (particularly existing mining companies and those working capital. These firms prioritize permitting) for future sites, and have no

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ability to spend on R&D. The lack of this area will constrain future growth. converters and enrichers hold R&D spending by mining companies, Depressed uranium prices, caused by significant investments in their caused by poor uranium market artificially low-priced imports, oblige proprietary conversion and enrichment conditions, will negatively affect their U.S. firms to cut costs wherever processes; and fuel fabricators also have long-term competitiveness. These firms possible, particularly in R&D. Low R&D significant investments in the will not be able to develop new expenditures will, in turn, inhibit U.S. equipment and facilities needed to make production methods and techniques- for firms from being competitive on a global fuel assemblies. Capital investment in example, [TEXT REDACTED] level. the industry, however, has been [TEXT REDACTED] noted that poor hampered by poor uranium market economic conditions caused them to 9. Capital Expenditures conditions, with capital expenditures significantly cut R&D expenditures. All sectors of the U.S. uranium across the U.S. uranium industry falling [TEXT REDACTED] industry are capital-intensive. Mining Although U.S. uranium firms are companies hold significant capital by 60.2 percent from $330.8 million in currently able to fund a small amount of investments in their deposits and the 2014 to $131.7 million in 2018 (see R&D, their limited ability to invest in associated mining equipment; Figure 57).

Figure 57: Total Front-End U.S. Uranium Industry Capital Expenditures, 2014-2018

$350,000

o $300,000 ::I ,:,"' $250,000 C IIJ "'::I 0 .c $200,000 t:. "',_G) $150,000 ------·-··········--······ ;;i '6- $100,000 - -· ...... C Capital Expenditures_have. G) 0. declined by 60.2 percent since 2014 wX iii $50,000 ~ a. Ill V $0 5 2014 2015 2016 2017 2018 0 I-

Source; U.S. Department of Commerce, Bureau of Industry and Security, Front-End Survey, Tab 6a 18 Respondents

Global uranium market conditions 2018 period. [TEXT REDACTED] These term Russian and Chinese efforts to sell have had various impacts on different increases indicate the comparatively fuel directly to U.S. nuclear electric stages of the fuel cycle. [TEXT strong state of the U.S. fuel fabrication power utilities will also negatively REDACTED] sector. Due to prohibitive tariffs and impact domestic fuel fabricators. [TEXT REDACTED] Both of these reporting requirements associated with A viable U.S. uranium industry must firms are representative of the effect of imported fuel assemblies, U.S. nuclear be able to make adequate capital global import trends on U.S. uranium power generators opt to have their expenditures to maintain existing mining as well as U.S. uranium assemblies produced in the United production levels and prepare for future enrichment. Excess global supply of States. U.S. fuel fabricators do not expansion. However, in the current uranium concentrate, as well as excess experience the same market pressures as depressed uranium market, it is not global capacity to produce enriched do U.S. producers of uranium possible for U.S. firms to do so. material, places pressure on domestic concentrate and enriched uranium. C. Trade Actions: Anti-Dumping and U.S. producers, thus impacting their However, should demand for nuclear Countervailing Duties ability to invest in expanding fuel in the U.S. drop due to continued productive capacity. or accelerated reactor retirements, these The U.S. Government has taken action In contrast, however, U.S. fuel firms will likely experience financial against artificially low-priced uranium fabricators reported an increase in pressures that will force them to cut imports. Several anti-dumping capital expenditures over the 2014 to capital expenditures. In addition, long- investigations conducted by the

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Department and the U.S. International engaged in dumping and other anti- investigations into uranium imports Trade Commission (USITC) affirm that competitive practices to the detriment of since 1991: many sources of imported uranium have U.S. producers. Figure 58 lists USITC U.S.S.R. Less Than Fair Value Sales

FIGURE 58: U.S. INTERNATIONAL TRADE COMMISSION URANIUM CASES SINCE 1991

Country Date Finding

Union of Soviet Socialist Republics (U.S.S.R.) ...... December 23, 1991 Affirmative. Russia, Belarus, Ukraine, Moldova, Georgia, Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Uzbek- June 3, 1992 ...... Affirmative. istan, Tajikistan, Turkmenistan *. Tajikistan ...... July 8, 1993 ...... Negative. Ukraine ...... July 8, 1993 ...... Affirmative. Kazakhstan ...... July 13, 1999 ...... Negative. Ukraine ...... August 22, 2000 .... Negative. Russia (First Review of 1992 Determination) ...... August 22, 2000 .... Affirmative. France, Germany, the Netherlands, and the United Kingdom ...... February 4, 2002 ... Affirmative. Russia (Second Review of 1992 Determination) ...... August 2006 ...... Affirmative. France (First Review of 2002 Determination) ...... December 2007 ..... Affirmative. Russia (Third Review of 1992 Determination) ...... February 2012 ...... Affirmative. Russia (Fourth Review of 1992 Determination) ...... September 2017 .... Affirmative. France (Third Review of 2002 Determination) ...... November 2018 ..... Negative. * The cases determined on June 3, 1992 were a continuation of the December 23, 1991 anti-dumping case against the U.S.S.R. As the U.S.S.R. was dissolved December 25, 1991; the International Trade Commission opened cases against the twelve former Soviet republics. Source: USITC.

In December 1991, the Department materially injure, U.S. industry. By December 2013 affirmed that the anti- and the USITC determined that imports 2000, only the agreement with Russia dumping duties were needed to deter of uranium from the U.S.S.R., including remained in force. In its 2000, 2006, less than fair value sales of French LEU. natural and enriched uranium, were 2012, and 2017 reviews of the Russian Following a final review in November sold in the U.S. at less than fair value Suspension Agreement (RSA), USITC 2018 and a lack of domestic interested and threatened material injury to the reaffirmed that imports of Russian parties, the Department revoked the U.S. uranium industry.139 Following the uranium beyond the quantities anti-dumping duties on French LEU on dissolution of the U.S.S.R. in the same permitted in the RSA would lead to a March 15, 2019.143 month, the single investigation was then ‘‘recurrence of material injury’’ to the Prior actions by USITC and the 141 transformed into twelve separate U.S. uranium industry. Department support the U.S. investigations, which covered most France, Germany, the Netherlands, and Government’s broader concern about the former Soviet republics.140 In June 1992, the United Kingdom viability of the domestic uranium the Department and USITC found that industry as well as the clear impact of uranium imports from each of these In December 2000, United States anticompetitive practices by non-U.S. republics were sold at less than fair Enrichment Corporation (now Centrus suppliers on U.S. producers. value and threatened to materially Energy Corp.) filed a petition with the injure U.S. producers. Subsequently, six Department and USITC concerning D. Displacement of Domestic Uranium of the republics—Russia, Kazakhstan, imports of low-enriched uranium (LEU) by Excessive Quantities of Imports Has Kyrgyzstan, Tajikistan, Ukraine, and from France, Germany, the Netherlands, the Serious Effect of Weakening Our Uzbekistan—signed agreements with the and the United Kingdom. In February Internal Economy U.S. government to suspend the 2002, USITC concluded that LEU 1. U.S. Production Is Well Below underlying antidumping duty imports from these countries were sold Demand and Utilization Rates Are Well investigations. These suspension inside the U.S. at less than fair value Below Economically Viable Levels agreements permitted the countries in and had a ‘‘significant adverse impact’’ question to import defined amounts of on domestic U.S. LEU production.142 Based on the Department’s 2019 uranium into the United States, thereby Commerce accordingly imposed survey data, U.S. uranium production is avoiding the imposition of antidumping countervailing duties on LEU imports well below U.S. demand even though duty orders and the resulting duties. from all of the above countries as well adequate capabilities and resources After 1992, most of the antidumping as anti-dumping duties on French exist. In 2018, U.S. utility requirements duty orders and suspension agreements imports. were about 51.9 million pounds of U308 had been terminated pursuant to Subsequent actions by the Department to run all reactors at full capacity, and proceedings; the Department and USITC revoked all of the countervailing duties total U.S. licensed and operating determined that imports of uranium by May 2007. However, the anti- uranium production capacity was about from most of the Soviet republics were dumping duties on French LEU 226 million pounds of U308. However, not materially injuring, or threatening to remained in place. Further USITC U.S. uranium production in 2018 was reviews in December 2007 and 139 U.S. International Trade Commission. 143 Low-Enriched Uranium from France: Final Uranium from the U.S.S.R.’’ Investigation No. 731– 141 Ibid. 1. Results of Sunset Review and Revocation of TA–539 (Preliminary). (Washington, DC: 1991). 142 U.S. International Trade Commission. Low Antidumping Duty Order, Federal Register 84 FR https://www.usitc.gov/publications/701_731/ Enriched Uranium from France, Germany, the 9493, (March 15, 2019), https:// pub2471.pdf. Netherlands, and the United Kingdom, 18. www.federalregister.gov/documents/2019/03/15/ 140 ‘‘Uranium from Russia: Investigation No. 731– Investigation Nos. 701–TA–409–412 and 731–TA– 2019-04882/low-enriched-uranium-from-france- TA–539–C (Fourth Review).’’ USITC. (September 909, Final. (Washington, DC: 2002). https:// final-results-of-sunset-review-and-revocation-of- 2017). www.usitc.gov/publications/701_731/pub3486.pdf. antidumping-duty.

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less than two million pounds of U308 (see Figure 59).

Source: U.S. Department of Commerce, Bureau of Industry and Security, Front-End Survey, Tab 3a, 4a Nuclear Power O rator Sector SUrve , Tabla

The average projected utility the U.S. uranium industry worsens with prohibiting restart is low uranium spot requirements of U308 for 2019 to 2025 only 331,000 pounds of U308 prices. An additional two mines are are 280 million pounds. These production in 2019, which is 53 percent completely shut down due to low variations are due to the 2019 lower than 2018 and is only six percent uranium spot prices. Total production decommissioning of two reactors with of 2014 levels. by U.S. mines and mills of uranium ore potentially eleven more reactors closing This decline is largely due to and concentrates continues to decrease by 2025. In addition, four new reactors unfavorable market conditions. For drastically as global uranium market will be coming online by 2020.144 example, the 25 mines that are currently conditions continue to decline (see Despite this demand, the prognosis for idled/in standby said the primary factor Figure 60).

Figure 60: U.S. Production and Global Spot Price of U308

10,000,000 $36.76 $40.00 2: Average Price per Pound U308 for "iii 9,000,000 .:;IJ U.S.. Producers to be Viable: $50t $35.00 VI QJ 8,000,000 0 E $30.00 II') 7,000,000 ::., 8 5,962,244 "C $25.00 .5 8 6,000,000 QJ ::, ·cV 5,000,000 $20.00 Q..... "eQ.. 0 00 4,000,000 0.. 0 $15.00 II') rt') ::., 3,000,000 rt')~ 0 $10.00 :> - 2,000,000 1,432,806 "C ""c:; ::, $5.00 0 1,000,000 331,000 Cl. .~'-'"""•~~••S-,.«•,so;,.,h .•... ,.••• ,.,.... _.lllllllll .... ,.,., .. $- 2014 2015 2016 2017 2018 2019 (projected)

Source: U.S. Department of Commerce, Bureau of Industry and Security, Front-End Survey, Tab4a; Federal Reserve Bank of St. Louis 6 respondents

144 U.S. Nuclear Regulatory Commission.

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The low uranium spot price also industry average capacity utilization However, once market conditions contributes to utilization rates that are rate U.S. uranium producers need to improve, U.S. uranium producers can well below economically viable levels. remain profitable is roughly 56 percent. justify restarting operations and/or According to BIS survey data, front-end In the recent past, the utilization rate starting new operations. Most U.S. U.S. uranium producers indicated has been 3/10 of one percent (0.3 uranium miners and millers are unable widely varying capacity utilization rates percent) of licensed/operating capacity. to produce at a viable level at the needed to remain profitable, with the The industry cannot sustain at these current low spot prices, but are ready to lowest recorded at 25 percent, and the unprofitable rates. produce when economic conditions are highest recorded at 100 percent. The more favorable (see Figure 61).

Figure 61: Current State of the U.S. Uranium Miners

- Of the 14 mines "under development,• 6 are "permitted to operate• and 2 are ready to start operations. - Of the 39 mines in nstandby/idle." 28 are "permitted to operate" and 4 are ready to start operations. - Of the 5 mines "operating," one (1) is expected to enter "standby/idle" (2019--2023).

Source: U.S. Department of Commerce, Bureau ofl ndustry and Security, Front-End Survev, Tab 3a

BILLING CODE 3510–33–P cost to fully restart production varied pounds of U308) and can be extracted Of the uranium mining projects in more widely with the maximum being when the price reaches a level for idling/standby status, many indicated $100 million, the minimum being $200 production to be economically viable that it would take about one year to thousand, and the average being $12.8 (see Figures 62 and 63). restart production, with a maximum million. time period estimated at four years and Furthermore, uranium deposits in the the minimum estimated at 30 days. The U.S. are vast (approximately 1.2 billion

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1 includes mined and milled products produced by miller.;; only So1rn:e: U.S. Department of Commen::e, Bureau of Industry and Security, front-End Survey, Tab3a, 4a; 58 Respondents Nuclear Power Operator SUrvey, Tab3a

Figure 63: Undeveloped U.S. Uranium Resources

State Measured Inferred Avg .. Est. ' Effected FTEs , Resources Resources Production Cost

source: U.S. Department of commerce, Bureau of Industry and security, Front-End Survey, Tab 3b 15 respondents

BILLING CODE 3510–33–C domestic uranium production is pounds of uranium concentrate 2. Domestic Uranium Production Is severely weakened and concentrated. projected for 2019. Consequently, the Severely Weakened and Concentrated Since imports as a percentage of U.S. mills which process uranium ore are utilities’ annual uranium consumption near to shuttering operations. As the U.S. uranium industry have increased to upwards of 94 [TEXT REDACTED] contracts and shuts down due to the percent, U.S. production of uranium imports adversely impacting its concentrate has declined from 12.3 economic welfare and viability, million pounds in 1989 to just 331,000

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[TEXT REDACTED] [TEXT REDACTED]

[TEXT REDACTED] fTEXT REDACTEDl

3. Reduction of Uranium Production facilities limits the capacity available in miners side, sales and export data show Facilities Limits Capacity Available for the event of a national emergency. The that U.S. producers are selling more a National Emergency and Threatens To United States cannot be subject and product than they are producing, Impair National Security should not be subject to foreign indicating that contracts are being dependence in the face of potential fulfilled with either inventory, spot Key factors in this investigation uranium needs in an emergency market purchases, or other. U.S. mines include growth requirements of scenario. The decline of the U.S. have resorted to buying spot market domestic industries to meet national uranium production industry limits uranium in order to fulfill contracts defense requirements; however, availability and puts the U.S. at risk, since it is cheaper than producing reduction of uranium production impairing national security. On the themselves.

[TEXT REDACTED] ACTED] [TEXT T T T REDACTED] ACTED] ACTED] ACTED] [TEXT T T T REDACTED ACTED ACTED ACTED [TEXT T T T REDACTED ACTED ACTED ACTED TEXT REDACTED [TEXT REDACTED] TEXT REDACTED

The U.S. uranium industry’s low dependence on foreign uranium requirements less than 331,000 pounds production levels force U.S. nuclear supplies. Of the 98 active U.S. nuclear U3O8 per year, which is the total U.S. power generators into heavy reactors, only four have annual

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production expected for 2019 (see suppliers of uranium, and with inventory and minimal U.S. production Figure 65). additional U.S. capability to convert and highlights the national security threat Projected 2019 U.S. uranium enrich the mined uranium, U.S. utilities imposed by U.S. nuclear electric production would be sufficient to fuel are able to fulfill their need of domestic utilities’ near complete dependence on only one of these reactors. [TEXT uranium for national security or imports of uranium to fuel their REDACTED] Low U.S. production levels national emergency use. reactors. In the event of a supply denote that a sudden loss of access to As previously discussed, the stockpile disruption, U.S. utilities’ would be foreign uranium supplies has the maintained by DOE is anticipated to unable to supply the 19 percent of U.S. potential to severely disrupt the nuclear satisfy needs for LEU and HEU through electricity consumption they usually power plants that provide almost one- 2041 and 2060 respectively. However, provide after [TEXT REDACTED]. The fifth of the nation’s electricity. U.S. nuclear electric power utilities only continued loss in U.S. production [TEXT REDACTED] Therefore, a maintain enough inventory of uranium capabilities ensures that a disruption in remedy to resolve the inhibiting factors to fuel their reactors for an average of supply to the nation’s 98 reactors would to production must be implemented so [TEXT REDACTED] (see Figure 66). The be catastrophic to U.S. critical that U.S. miners are once again reliable compounded effects of both minimal infrastructure.

TEXT REDACTED [TEXT REDACTED] [TEXT REDACTED]

E. Uranium Market Distortion by State- demand. By 2016, global uranium increase on 2016 levels. However, Owned Enterprises Is a Circumstance production filled 98 percent of world current poor market conditions, That Contributes to the Weakening of demand. exacerbated by artificially low-priced the Domestic Economy However, the increasing pace of SOE producers, have forced many reactor retirements, cancellation of producers in the U.S. and other 1. Excess Russian, Kazakh, and Uzbek proposed new reactors, and excess countries to idle production or close Production Adversely Affects Global supply caused by the shutdown of mines entirely. U.S. and other market Markets and Creates a Dangerous U.S. German and Japanese reactors all producers may therefore not be present Dependence on Uranium From These impacted the global uranium market. in the market to take advantage of Countries Accordingly, between 2016 and 2017, higher future demand. Although global uranium production global uranium production dropped by Thus, while U.S. production declined increased by 42 percent between 2008 4.7 percent—remaining production by 16 percent between 2016 and 2017, and 2016, the subsequent supply glut could satisfy 93 percent of 2017 Russian and Kazakh production following the Fukushima disaster and demand. As more reactors come online declined only by 5.1 and 2.9 percent reactor retirements has begun to affect in certain regions, particularly in Asia, respectively (see Figure 67). Uzbek production.145 As the potential for new the Middle East, and Africa, global production remained constant. Even reactor construction increased, new demand is expected to grow once more. Canada and Australia, which have mines came online to meet potential By 2025, the International Atomic historically produced more than the demand. In 2008, the world’s uranium Energy Agency estimates that global U.S., cut their production to a greater mines produced enough uranium to uranium demand could be as high as degree than did Russia, Kazakhstan, and fulfill 70 percent of existing world 68,920 metric tons—a 10 percent Uzbekistan.

FIGURE 67: CHANGES IN URANIUM PRODUCTION, 2016–2017

2016 Production 2017 Production Change in Country (metric tons (metric tons production uranium) uranium) (percentage)

United States ...... 1,125 940 ¥16.4 Canada ...... 14,039 13,116 ¥6.55 Australia ...... 6,315 5,882 ¥6.86 Russia ...... 3,004 2,917 ¥2.89 Kazakhstan ...... 24,586 23,321 ¥5.14 Uzbekistan ...... 2404 2404 0 China ...... 1616 1885 16.6 Source: World Nuclear Association, March 2019, 2018 data has not been released.

145 ‘‘World Uranium Mining Production.’’ World information-library/nuclear-fuel-cycle/mining-of- Nuclear Association. http://www.world-nuclear.org/ uranium/world-uranium-mining-production.aspx.

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Russia’s Rosatom, Kazakhstan’s uranium prices remain low, U.S. utilities are purchasing increasing Kazatomprom, and Uzbekistan’s Navoi producers will not be able to compete amounts of uranium products from are able to maintain higher production with price-insensitive production in these countries. Figure 68 shows the levels than most producers despite these countries. extent to which U.S. utilities rely on unfavorable global markets because they As U.S. and other market production Russia, Kazakhstan, and Uzbekistan for are state-owned enterprises. Should declines and Russian, Kazakh, and a significant share of their uranium global market trends persist and Uzbek production remains stable, U.S. needs.

Figure 68: U.S. Utility Purchases of Uranium Products from

Russia, Kazakhstan, and Uzbekistan, 2014-2018

160,000,000

140,000,000 U.S. Utilities Rely on Uranium from Russia, Kazakhstan, and Uzbekistan for:

uranium Concentrate - 25 percent Uranium Hexaflourlde - 33 percent Enriched Uranium Hexaflouride ... 88 percent 100,000,000 Enrichment Services - 20 percent

80,000,000

60,000,000

40,000,000

20,000,000

0 Uranium Concentrate (lbs Uranium Hexafluoride (lbs Enriched Uranium Enrithmen.t Services U308l uaos equivalent) Heqfiuoride (K,gU} (Se~rative Work Unlts/SWU)

Som-ce: US. .Oepanment of u:immerre, Bureau of tmruRy and Se1:U1ity, Nudeai-l"owerOperamr Stmrey, Tab !J 16 Hespomiel'IIS

Between 2014 and 2018, U.S. utilities at their nuclear generators. As U.S. and Chapter VI, Canadian and Australian relied on material from Russia, other market producers cut or cease producers have had to idle production Kazakhstan, and Uzbekistan for 25 uranium production due to unfavorable at their own mines due to poor market percent of their uranium concentrate, 32 market conditions, it is likely that U.S. conditions. Furthermore, to fulfill percent of their uranium hexafluoride, utilities will increase purchases of contracts with U.S. utilities, Canadian, 14 percent of their conversion services, uranium from price-insensitive Russian, Australian, and French producers have and 20 percent of their enrichment Kazakh, and Uzbek producers. procured material from state-owned services. Consequently, U.S. utilities are Continued high levels of Russian, suppliers. Figure 69 shows that dependent on imports from these Kazakh, and Uzbek production is also Canadian, Australian, and French countries to maintain normal operations affecting U.S. allies. As described in producers used Russian, Kazakh, and

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Uzbek uranium to fulfill many 2018 contracts with U.S. utilities.

Figure 69: Uranium Concentrate Purchased by U.S. Utilities

from French, Australian, and Canadian firms, 2018

(Pounds U308}

6,000,000

Imports from Russia, ,Kazakhstan, and 5,000,000 Uzbekistan constituted 29 pen:ent of Canadian sales to U.S. utilities~ 17 percent of Australian sales, and 34 4,000,000 60,000

3,000,000

2,000,000 15,000

1,000,000

0 Canadian firms, 2018 Australian firms, 2018 French finns, 2018

■ Rest of Wor1d □ Russia II Kazakhstan ■ Uzbekistan

*"Rest of Wodd' indudes Australia, Brazil, canada, Malawi, Nammia, Niger, South Africa, the United states, Ukraine, and unspecified West Africa

Source: U.S. Depatment d Conmerce,. Bureauof lmfuslry andSecU'ity, Nuclear PowerOJBator SUlvE!l Tab9 16 lespondents

BILLING CODE 3510–33–C integral part of its strategy to a significant majority of uranium Continued excess production of ‘‘undermine the international order.’’ 146 shipments from Kazakhstan and artificially low-priced uranium by U.S. utilities’ direct dependence on Uzbekistan transit through Russia on Russia, Kazakhstan, and Uzbekistan will Russian enriched uranium for 20 their way to U.S. customers. make U.S. and foreign market producers percent of their annual supply gives the noncompetitive on global markets. As Kremlin significant economic leverage. [TEXT REDACTED] U.S. and other allied nations decrease Moscow exercises further leverage their production due to poor market through its de facto control of uranium conditions, U.S. nuclear power exports from Kazakhstan and generators will purchase increasing Uzbekistan. Although Kazakh and amounts of Russian, Kazakh, and Uzbek Uzbek SOEs are controlled by their uranium to meet their needs. respective governments and not Russia, Dependence on such imports raises a 146 Coats, Daniel. Director of National distinct national security concern. The Intelligence, Senate Select Committee on Office of the Director of National Intelligence. Statement for the Record: Worldwide Intelligence’s 2019 Worldwide Threat Threat Assessment of the US Intelligence Community, 37. January 29, 2019. https:// Assessment identifies Russia’s www.dni.gov/files/ODNI/documents/2019-ATA- ambitions to expand its ‘‘global military, SFR-SSCI.pdf. commercial, and energy footprint’’ as an

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[TEXT RED/\CTED] [TEXT REDACTED]

[TEXT REDACTED] [TEXT REDACTED] fTEXT REDACTEDl

In the event of increased political or China’s activity in Namibia is of million SWU.152 Chinese producers potential military tensions, Russia could particular interest.151 Namibia has two intend to use this excess capacity to choose to ban uranium exports to the active uranium mines—Husab and increase the country’s presence in the United States; denying U.S. utilities a Rossing. Chinese firms have a majority nuclear fuels trade. A China National significant share of their enriched stake in Husab and purchased a majority Nuclear Corporation (CNNC) executive uranium. Russia further possesses the stake in Rossing. However, the Rossing remarked in 2013: ‘‘On the basis of military means to deny U.S. and U.S.- transaction is under review by the securing its domestic supply [of SWU], aligned countries access to Kazakh and Namibia Competition Commission. A CNNC will gradually expand its foreign Uzbek uranium exported through Chinese firm does have a 25 percent markets and make China’s fuel industry Russian ports, principally on the Baltic stake in the Langer Heinrich mine, but internationally competitive.’’ 153 China’s Sea.147 In either of these circumstances, that mine was placed in care and increasing control of global uranium U.S. utilities would conceivably be maintenance in 2018 and thus cannot be deposits and its excess enrichment denied a significant percentage of their characterized as active. These mines’ capacity will allow it to further enter the uranium requirements and could face production costs exceed current global nuclear fuels market and undermine critical fuel shortages. uranium prices, and so cannot support U.S. and other market producers. 2. The Increasing Presence of China in commercial production. However, cost 3. Increasing Global Excess Uranium the Global Uranium Market Will Further recovery is seemingly not a concern for Production Will Further Weaken the Weaken U.S. and Other Market Uranium Chinese-state owned producers. Internal Economy as U.S. Uranium Producers Between 2014 and 2018, U.S. utilities Producers Will Face Increasing Import Although China’s uranium industry purchased approximately 347,781 Competition has been developed primarily to serve pounds of uranium concentrate, 2.33 Continued high levels of production the country’s growing fleet of nuclear million pounds of U3O8 equivalent of by state-owned enterprises in Russia, reactors, China is increasing its conversion services, and 1.4 million Kazakhstan, Uzbekistan, and China will involvement in the global nuclear fuel separative work units (SWU) of place further financial pressure on U.S. industry.148 China’s involvement in the enrichment services—enough to supply uranium producers. U.S. uranium global nuclear fuel industry is an 16 average reactors per year—from concentrate production, which declined outgrowth of its domestic uranium Chinese producers. U.S. utilities also by 94 percent between 2014 and 2018, procurement strategy. As China has only have contracts with Chinese producers will be non-existent in the near future limited domestic uranium reserves, it for at least 130,000 SWU between 2019 as subsidized foreign production has also acquired interests in uranium and 2023, indicating an interest in continues. deposits outside China. This ‘‘two continued relationships with Chinese Foreign market producers are not markets, two resources’’ 149 policy has producers. U.S. utilities have also immune from the effects of state-owned led Chinese firms to acquire significant contracted with CGN Global Uranium producers either. As described in shares of mines in Kazakhstan and Ltd., the trading arm of Chinese SOE Chapter VI, Canadian and Australian Namibia, with prospective China General Nuclear, for certain producers have had to idle production developments in Niger and Canada.150 uranium purchases. Between 2014 and at their own mines due to poor market 2018, U.S. utilities purchased 800,000 conditions. Furthermore, to fulfill 147 Since the Russian annexation of Crimea and pounds of uranium concentrate from contracts with U.S. utilities, Canadian, intervention in eastern Ukraine in 2014, Russia has CGN Global. Australian, and French producers have steadily built up its military assets in the Baltic Sea region. Russia therefore could close Baltic Sea As the bulk of China’s uranium procured material from state-owned shipping lanes with comparative ease. Oder, Tobias. concentrate production is consumed by suppliers. ‘‘The Dimensions of Russian Sea Denial in the domestic nuclear power generators, Baltic Sea.’’ Center for International Maritime VIII. Conclusion Security, January 04, 2018. http://cimsec.org/ most Chinese exports of uranium will dimensions-russian-sea-denial-baltic-sea/35157. likely be in the form of enrichment A. Determination 148 ‘‘China’s Nuclear Fuel Cycle.’’ World Nuclear services. Domestic Chinese enrichment Based on these findings, the Secretary Association. http://www.world-nuclear.org/ capacity is increasing faster than information-library/country-profiles/countries-a-f/ of Commerce has concluded that the china-nuclear-fuel-cycle.aspx. domestic demand: By 2020, the present quantities and circumstance of 149 Pascale Massot and Zhan-Ming Chen. ‘‘China country’s enrichment centrifuges will uranium imports are ‘‘weakening our and the Global Uranium Market: Prospects for have a total capacity of 12 million SWU, internal economy’’ and ‘‘threaten to Peaceful Coexistence.’’ The Scientific World compared to domestic demand of 9 Journal, 2013. https://www.hindawi.com/journals/ tswj/2013/672060/. 152 Hui Zhang, ‘‘China’s Uranium Enrichment 150 ‘‘China’s Nuclear Fuel Cycle.’’ World Nuclear 151 ‘‘Rio Tinto to sell Ro¨ssing stake.’’ World Capacity: Rapid Expansion to Meet Commercial Association. http://www.world-nuclear.org/ Nuclear News, November 26, 2018. http:// Needs’’, (Cambridge: Harvard Kennedy School, information-library/country-profiles/countries-a-f/ www.world-nuclear-news.org/Articles/Rio-Tinto-to- 2015), 32. china-nuclear-fuel-cycle.aspx. sell-Rossing-stake. 153 Ibid., 34.

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impair the national security’’ as defined increase in domestic uranium import challenges to fuel fabricators, in Section 232. An economically viable production. while also recognizing the market and and secure supply of U.S.-sourced Absent immediate action, closures of pricing challenges confronting the U.S. uranium is required for national defense the few remaining U.S. uranium mining, nuclear power utilities. needs. International obligations, milling, and conversion facilities are Recommendation including agreements with foreign anticipated within the next few years. partners under Section 123 of the Further decreases in U.S. uranium Due to the threat to the national Atomic Energy Act of 1954, govern the production and capacity, including security, as defined in Section 232, from use of most imported uranium and domestic fuel fabrication, will cause excessive uranium imports, the generally restrict it to peaceful, non- even higher levels of U.S. dependence Secretary recommends that the explosive uses. As a result, uranium on imports, especially from Russia, President take immediate action by used for military purposes must Kazakhstan, Uzbekistan, and China. adjusting the level of these imports generally be domestically produced Increased imports from SOEs in those through implementation of an import from mining through the fuel fabrication countries, and in particular Russia and waiver to achieve a phased-in reduction process. Furthermore, the predictable China, which the 2017 National of uranium imports. The reduction in maintenance and support of U.S. critical Security Strategy noted present a direct imports of uranium should be sufficient challenge to U.S. influence, are infrastructure, especially the electric to enable U.S. producers to recapture detrimental to the national security.154 power grid, depends on a diverse and sustain a market share of U.S. The high risk of loss of the remaining supply of uranium, which includes uranium consumption that will allow U.S. domestic uranium industry, if the U.S.-sourced uranium products and for financial viability, and enable the present excessive level of imports services. maintenance of a skilled workforce and continue, threatens to impair the the production capacity and uranium The Secretary further recognizes that national security as defined by Section output needed for national defense and the U.S. uranium industry’s financial 232. critical infrastructure requirements. The and production posture has significantly The Secretary has determined that to reduction imposed should be sufficient deteriorated since the Department’s remove the threat of impairment to to enable U.S. producers to eventually 1989 Report. That investigation noted national security, it is necessary to supply 25 percent of U.S. utilities’ that U.S. nuclear power utilities reduce imports of uranium to a level imported 51.1 percent of their uranium that enables U.S. uranium producers to uranium needs based on 2018 U.S. U308 requirements in 1987. By 2018, imports return to an economically competitive concentrate annual consumption had increased to 93.3 percent of those and financially viable position. This requirements. utilities’ annual requirements. Based on will allow the industry to sustain Based on the survey responses, the comprehensive 2019 industry data production capacity, hire and maintain Department has determined that U.S. provided by U.S. uranium producers a skilled workforce, make needed uranium producers require an amount and U.S. nuclear electric power utilities capital expenditures, and perform equivalent to 25 percent of U.S. nuclear to the Department in response to a necessary research and development power utilities’ 2018 annual U308 mandatory survey, U.S. utilities’ usage activities. A modest reduction of concentrate consumption to ensure of U.S. mined uranium has dropped to uranium imports will allow for the financial viability. Based on the nearly zero. [TEXT REDACTED] Based revival of U.S. uranium mining and Department’s analysis, if U.S.-mined on the current and projected state of the milling, the restart of the sole U.S. uranium supplied 25 percent of U.S. U.S. uranium industry, the Department uranium converter, and a reduction in nuclear power utilities’ annual U308 has concluded that the U.S. uranium concentrate consumption, U.S. uranium industry is unable to satisfy existing or 154 U.S. White House Office. National Security prices will increase to approximately future national security needs or Strategy of the United States of America. $55 per pound (see Figure 71). The (Washington, DC: 2017), 2 https:// respond to a national security www.whitehouse.gov/wp-content/uploads/2017/12/ current spot price is low due to emergency requiring a significant NSS-Final-12-18-2017-0905-2.pdf. distortions from SOEs.

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Figure 71: U.S. Uranium Supply Curve $90 $80 Approximate optimal price ($55/lb.) to ensure $70 Current u.s. usoa economic viability. concentrate price {"'$40). a $60 en .a~ $50. ~~~~-----·· .... ~ $40 An increase of $15/lb. would increase C. *$30 U.S. US08 concentrate production by • Uranium spot price "'$25 "'5.5 million lbs. $20 (April 1, 2019) $10 so 0.0 2.0 4.0 6.0 8.0 10.0 12.0 Pounds supplied (Millions)

I Assumes only production at currently permitted mines.

Source: US. Department of Commerce, Bureau of Industry and Security, FrontEnd Survey, Tab 4b

The $55 per pound price will increase The Secretary recommends that either Kazakhstan, Uzbekistan, and China (the mine capacity to the point where U.S. a targeted or global quota be used to ‘‘SOE countries’’) to enable U.S. uranium mines can supply adjust the level of imports and that such uranium producers to supply approximately 6 million pounds of quota should be in effect for a duration approximately 25 percent of U.S. uranium concentrate per year, which is sufficient to allow the necessary time nuclear power utility consumption. A approximately 25 percent of U.S. needed to stabilize and revitalize the U.S. nuclear power utility or other nuclear power utilities’ consumption for U.S. uranium industry. According to domestic user would be eligible for a U308 concentrate in any given year. survey responses, the average time to waiver that allows the import of restart an idle uranium production uranium from the SOE countries, with The Secretary recommends that the facility is two to five years, and several any import of uranium from Russia import reduction be phased in over a additional years are needed to add new subject to the Russian Suspension five-year period. This will allow U.S. capacity. Market certainty, which can be Agreement, after such utility or user uranium mines, mills, and converters to provided by long-term contracts with files appropriate documentation with reopen or expand closed or idled U.S. nuclear power utilities, is needed the Department. In the case of a U.S. facilities; hire, train and maintain a to build cash flow, pay down debt, and nuclear power utility, the skilled workforce; and make necessary raise capital for site modernization; documentation must show that such investments in new capacity. This workforce recruitment; and to conduct utility has a contract or contracts to phased-in approach will also allow U.S. environmental and regulatory reviews. purchase for their consumption on an nuclear power utilities time to adjust annual basis not less than the Option 1—Targeted Zero Quota and diversify their fuel procurement percentage of U.S. produced uranium contracts to reintroduce U.S. uranium This targeted zero quota option would U308 concentrate shown in the phase- into their supply chains. prohibit imports of uranium from in table below.

PERCENT OF ANNUAL U308 CONCENTRATE CONSUMPTION REQUIRED TO BE SOURCED FROM THE U.S.

2024 and Year 2020 2021 2022 2023 beyond

Percent of Annual U308 Concentrate Consumption Required to be Sourced from the U.S...... 5 10 15 20 25

Phased-in incrementally over five investments required for future financial time to adjust their fuel procurement years, this option will help facilitate the viability without causing unintentional strategies. reopening and expansion of U.S. harm to other market economy uranium The zero quota on uranium imports uranium mining, milling, and producers. This option avoids undue from SOE countries would not apply to conversion facilities, and will ensure financial harm to U.S. nuclear power uranium imports from SOE countries for that U.S. uranium producers can make utilities by affording them sufficient use by U.S. milling, conversion,

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enrichment, and fuel fabrication not sourced directly from the country of generation resources in favor of services’ that produce uranium products import. intermittent resources, such as natural for export from the United States. A U.S. Imports of uranium from Russia under gas, solar, and wind, result in unjust, milling, conversion, enrichment, or fuel a waiver would also be subjected to the unreasonable, and unduly fabricator seeking to import uranium Russian Suspension Agreement. This discriminatory rates that distort energy from an SOE country for use to produce option assumes that such agreement markets, harm consumers, and uranium products for export would will continue to be in effect over the undermine electric reliability. If so, need to file appropriate documentation relevant time period and would apply to FERC should consider taking with the Department to obtain a waiver any Russian uranium imports by U.S. appropriate action to ensure that rates for the import of such uranium for nuclear power utilities, thus holding are just and reasonable. export. Russian uranium imports to their The Department of Commerce, in The Secretary believes that this option current level of approximately 20 consultation with other appropriate to impose a zero quota for imports of percent of U.S. enrichment demand. In departments and agencies, will monitor uranium from SOE countries, while the event that the Russian Suspension the status of the U.S. uranium industry continuing to allow unrestricted Agreement is not extended and and the effectiveness of this remedy and importation of uranium from Canada, terminates, then the Secretary will make recommendations to the Australia, and EURATOM member recommends that a quota on uranium President regarding whether it should countries based on their security and imports under a waiver of Russian be modified, extended, or terminated. economic relationships with the United Uranium Products (as defined in the States, should address the threatened Russian Suspension Agreement) of up to Option 2—Global Zero Quota impairment of U.S. national security. 15 percent of U.S. enrichment demand This would be accomplished by be imposed. If adopted this quota would This option would establish a zero promoting the economic revival of the be administered by the Department in quota on imports of uranium from all U.S. uranium industry, so long as there the same manner as the Russian countries until specific conditions are is not significant transshipment or Suspension Agreement is presently met to enable U.S. producers to supply reprocessing of SOE country uranium administered. 25 percent of U.S. nuclear power through these unrestricted countries. The adjustment of imports proposed utilities’ annual consumption of The Department will monitor these under this option would be in addition uranium U308 concentrate. A U.S. unrestricted imports to ensure there is to any applicable antidumping or nuclear power utility or other domestic not significant transshipment, countervailing duties collections. user would be eligible for a waiver to reprocessing, or book transfers from To complement the proposed trade import uranium from any country after SOE countries to unrestricted countries action, the Secretary recommends that submitting appropriate documentation in an attempt to circumvent and the Federal Energy Regulatory to the Department. In the case of a U.S. undermine the U.S. uranium producers’ Commission (FERC) act promptly to nuclear power utility, the ability to provide 25 percent of U.S. ensure that regulated wholesale power documentation must show that such annual U308 concentrate consumption. market regulations adequately utility has a contract or contracts to Many companies in unrestricted compensate nuclear and other fuel- purchase for their consumption on an countries supply uranium sourced from secure generation resources. annual basis not less than the SOE countries. Consequently, up to one- Specifically, FERC should determine percentage of U.S. produced uranium third of the materials delivered to U.S. whether current market rules, which U308 concentrate shown in the phase- nuclear power utilities, at this time, are discriminate against secure nuclear fuel in table below.

PERCENT OF ANNUAL U308 CONCENTRATE CONSUMPTION REQUIRED TO BE SOURCED FROM THE U.S.

2024 and Year 2020 2021 2022 2023 beyond

Percent of Annual U308 Concentrate Consumption Required to be Sourced from the U.S...... 5 10 15 20 25

Phased-in incrementally over five fabricator seeking to import uranium for U.S. uranium industry. This option also years, this option will help facilitate the use to produce uranium products for prevents the possibility of reopening and expansion of U.S. export would need to file appropriate transshipment of SOE overproduction uranium mining, milling, and documentation with the Department to through third countries and avoids conversion facilities, and will ensure obtain a waiver for the import of undue harm to U.S. enrichment and fuel that U.S. uranium producers can make uranium for export. fabrication export operations. These investments required for future financial The Department will provide domestic export operations rely on an viability. This option avoids undue adequate time for U.S. industry to ability to access working uranium stock financial harm to U.S. nuclear power receive a waiver prior to a zero quota regardless of the specific mining origin utilities by affording them sufficient being implemented globally. Based on of a given uranium-based material. time to adjust their fuel procurement information received during the Tennessee Valley Authority (TVA) strategies. investigation, the Department believes purchases of Canadian UO3 natural The zero quota on uranium imports that this option will not cause undue uranium diluent in its execution of the would not apply to uranium imports for burdens. National Nuclear Security use by U.S. milling, conversion, The Secretary believes that this option Administration’s current highly- enrichment, and fuel fabrication to impose a zero quota for imports of enriched uranium (HEU) down-blending services’ that produce uranium products uranium will address the threatened campaign would be excluded from the for export from the United States. A U.S. impairment of U.S. national security by zero quota on imports of uranium. In milling, conversion, enrichment, or fuel promoting the economic revival of the addition, any transfer pursuant to a

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Mutual Defense Agreement that FERC should consider taking other fuel-secure generation resources. references special nuclear material appropriate action to ensure that rates Specifically, FERC should determine would be excluded from the zero quota are just and reasonable. whether current market rules, which on imports of uranium. The Department of Commerce, in discriminate against secure nuclear fuel Imports of uranium from Russia under consultation with other appropriate generation resources in favor of a waiver would also be governed by the departments and agencies, will monitor intermittent resources, such as natural Russian Suspension Agreement. This the status of the U.S. uranium industry gas, solar, and wind, result in unjust, option assumes that such agreement and the effectiveness of this remedy to unreasonable, and unduly will continue to be in effect over the determine if it should be modified, discriminatory rates that distort energy relevant time period and would apply to extended, or terminated. markets, harm consumers, and any Russian uranium imports by U.S. Option 3—Alternative Action undermine electric reliability. If so, nuclear power utilities, thus holding FERC should consider taking Russian uranium imports to their Should the President determine that appropriate action to ensure that rates current level of approximately 20 the threatened impairment of national are just and reasonable. percent of U.S. enrichment demand. In security does not warrant immediate The Department of Commerce, in the event that the Russian Suspension adjustment of uranium imports at this consultation with other appropriate time but that alternative action should Agreement is not extended and departments and agencies, will monitor be taken to improve the condition of the terminates, then the Secretary the status of the U.S. uranium industry U.S. uranium industry to enable the recommends that a quota on uranium and the effectiveness of this remedy and U.S. industry to supply 25 percent of imports under a waiver of Russian recommend to the President if any U.S nuclear power utilities annual Uranium Products (as defined in the additional measures are needed. consumption of uranium U308 Russian Suspension Agreement) of up to Alternatively, the Secretary may initiate concentrate, the President could direct 15 percent of U.S. enrichment demand another investigation under Section 232. the Department of Defense (DOD) and be imposed. If adopted this quota would the Department of Energy (DOE) to B. Economic Impact of 25 Percent U.S.- be administered by the Department in report to the President within 90 days Origin Requirement the same manner as the Russian on options for increasing the economic Suspension Agreement is presently viability of the domestic uranium The Department analyzed the administered. mining industry. The report should economic impact of a 25 percent U.S.- The adjustment of imports proposed include, but not be limited to, origin uranium concentrate requirement under this option would be in addition recommendations for: (1) The on the U.S. uranium mining industry as to any applicable antidumping or elimination of regulatory constraints on well as U.S. nuclear power utilities. The countervailing duties collections. domestic producers; (2) incentives for Department’s analysis and modeling To complement the proposed trade increasing investment; and (3) ways to indicates that U.S. uranium mining and action, the Secretary recommends that work with likeminded allies to address milling will substantially benefit from the Federal Energy Regulatory unfair trade practices by SOE countries, the 25 percent U.S.-origin uranium Commission (FERC) act promptly to including through trade remedy actions concentrate requirement and will return ensure that regulated wholesale power and the negotiation of new rules and to an economically competitive and market regulations adequately best practices. The President could also financially viable industry. U.S. nuclear compensate nuclear and other fuel- direct the United States Trade power utilities will experience only secure generation resources. Representative to enter into negotiations marginal increases in fuel costs and Specifically, FERC should determine with the SOE countries to address the slight decreases in revenue due to usage whether current market rules, which causes of excess uranium imports that of U.S.-origin uranium concentrate for discriminate against secure nuclear fuel threaten the national security. 25 percent of their fuel supply. generation resources in favor of To complement the proposed The Department’s analysis indicates if intermittent resources, such as natural alternative action, the Secretary Option 1 or 2 is implemented, U.S. gas, solar, and wind, result in unjust, recommends that the Federal Energy uranium producers between 2020 and unreasonable, and unduly Regulatory Commission (FERC) act 2024 will see a substantial increase in discriminatory rates that distort energy promptly to ensure that regulated their production compared to the markets, harm consumers, and wholesale power market regulations projected 2019 level of 331,000 pounds undermine electric reliability. If so, adequately compensate nuclear and U3O8 equivalent (see Figure 72).

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Figure 72. Projected U.S. Uranium Concentrate Production and Per-Pound Price, 2020-2024 Price Per Pound Given Projected U.S. Demand

Source: U.S. Department of Commerce, Bureau of Industry and Security, Front-End Survey, Q4B 13 respondents

Over the five-year implementation, 6 million pounds U3O8 equivalent per U.S. utilities will need to have at least U.S. uranium concentrate producers, year, or 25 percent of U.S. concentrate some of that material converted including mines and mills, will see requirements based on 2018 data. domestically. [TEXT REDACTED] prices rise to a level that will support [TEXT REDACTED] By acquiring BILLING CODE 3510–33–P sustained production of approximately more U.S.-origin uranium concentrate,

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[TEXT REDACTED] [TEXT REDACTED]

[TEXT REDACTED] [TEXT REDACTED] rTEXT REDACTEDl

[TEXT REDACTED] Preserving enrichment facility in the coming retirements, overall uranium ConverDyn’s conversion capacity is decades. requirements are expected to decrease imperative to preserving the U.S.’s U.S. utilities will experience only by approximately 6.9 percent over the entire nuclear fuel cycle capabilities, marginal effects from the 25 percent next five years (see Figure 74). particularly as DOE looks to build a new U.S.-origin requirement. Due to reactor

Figure 74. U.S. Utility Uranium Requirements, 2018; Projected 2019-2024

5l. Aggregate uranium requirements are expected to decrease by 3.6 million pounds U308 by 2024. This assumes 8 reactor closings and 2 new openings.

49.0 Other potential reactor openings may ba possible if U.S. Government loan guarantees, FERC action, and other initiatives are pursued.

47,1 47.1 4'1,.1 46,6 46.5

Source: U.S. Department of Commerce, Bureau of Industry and Security, Nuclear Power Generator Survey, Q3B 98 reactors

BILLING CODE 3510–33–C modelling indicates that a 25 percent aggregate utility fuel costs by $120.1 Based on this projected level of U.S.-origin requirement will increase million, or 13.72 percent, between 2020 consumption, the Department’s

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and 2024. This is based on aggregated utility fuel costs of nearly $900 million in 2018 (see Figure 75).

Figure 75. U.S. Utility Aggregate Change in Projected Operating Costs: Phased-In 25 Percent U.S. Origin Requirement, 2020-2024 Incorporates U308 Concentrate

25% U.S. origin comentlncreaMsannuel utility operetlng costtl by 1.2'1!.•

, ... -··· . . ······~-- --..... -·····- ...... , ...... , ...... -·· ., . -·· ... , --- , ..... ,, .... -·...... ··- ...... , ...... ~ ► -~,--,.., .. ,,,_...._,,_,-.,~-,~._,,,,-.-...""'' -.,-,-. ,.. ~-,,.,....,._,_., , ' ,,_ ·•····"'"' ..., ~~--""''-"~ --"~ ---- .. •"¼.~~---- -~-----,- .. --- ... , .. ... ················ ... '-····~. •······ ...... I .. , ,,,.;:·· ,.. ,.,··••·•··••·•c•::·,., .• ·••·~.:::····::, .:.:,,.,.. •••··•··••:.··•··'·••.•·•··••·•••·•··•··•• L.'.·••·•••••·>·•:·•··••···•··••··· :i .... _$1___ _

,., ...... •...... , , .....• ,.. _, , ... , ... , ... -. '

____ ., .. ,-.,.,.. .,

, .....·······" -...... ,'

_,,,,,,.,~"-'""" ~ ,...... ,

'""""""'''"'· "' 2020-21 2021,22 2022·23 2023-24 2024-25 5% U.S. Content 10% U.S. Content 15% U.S. Content 20% U.S. Content 25% U.S. Content

1-oenotn difference 1 ■ 2018 Utility Costs ■ 2020-2024 Projected U.S. Content Costs

**This includes financial data for both utilities reporting at 1he. mmpany-wide level as well as nuclear-specificopNating units. EXT REDACTED] were not included due to imp.roper! submitted data Source: U.S. Department of Commerce, Bureau of Industry and Security, Nuclear Power Generator Survey, Q98Q 20 respondents

On a per-reactor basis, the 25 percent million, or 13.76 percent, between 2020 million per reactor in 2018 (see Figure U.S.-origin requirement will increase and 2024. This calculation is based on 76). fuel costs by approximately $1.3 overall fuel reactor costs of nearly $9.2

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Figure 76. U.S. Utility Per-Reactor Change in Projected Fuel Costs: I

Phased-In 25 Percent U.S. Origin Requirement, 2020-2024 I U308 Concentrate Consum tion $1l.O " A 25% u.s. ongm contentrequnmentin«Nsennnualutility twt c,osnperreactorby 13.8% ,_ ~ &! $10.5

-· .. ,.•.•·····~•··-· ., $9.,0 ··············1·•··-.·,....._.__,...,,._..., "'

.•..- ...•.....•..••..•.•.•.....•••.••... ·•··· $8,S 2020-21 2021-22 2022·23 2023-24 2024-25 •Denotes difference 5% U.S. Content 10% U.S. Content 15% U.S. Content 20% U.S. Content 25% U.S. Content Th =Thousand M=Million 112018 Utility Costs • 2020-2024 Projected U.S. Content Costs

Source: U.S. Department of Commerce, Bureau of Industry and Security, Nuclear Power GeneratorSurvey, Q98-Q *ITEXT REDACTED] were not included due to improperly submitted data. 95 reactors"'

On a per-megawatt hour (MWh) basis, revenues since 2014. Between 2014 and revenues have recovered since 2016. the Department’s data shows that U.S. 2016, average net revenues per MWh U.S. nuclear electric utilities reported nuclear electric utilities have dropped from $23.60 to $15.00, a 36.4 an average per-MWh net revenue of experienced declining average net percent decline. However, average net $15.00 in 2018 (see Figure 77).

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Figure 77. U.S. Utility Average Revenue and Operating Costs Per MWh, 2014-2018 $70

Despite decreasing average revenue per MWh, utilities on average continue to have positive net revenues per MWh. 2018 averaged the lhlrd highest average net revenue per MWh of the surveyed .. . years. Total operating costs per MWh is on a downward trend.

so ...... ······~ 2014 2015 2016 2017 2018 -Average Revenue per MWh -Average Net Revenue -Total Operating Costs per MWh

*"'Excludes [TEXT REDACTED] Source: US. Department of Commerce, Bureau of l ndustry and Security, Nuclear Power Generator Survey, Q6C 20respondents

A similar trend can be observed on a utility per-KWh revenues fell from before increasing to $0.015 in 2018 (see per kilowatt-hour (KWh) basis. U.S. $0.024 in 2014 to just $0.009 in 2016 Figure 78):

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Figure 78. U.S. Utility Average Revenue and Operating Costs Per KWh, 2014-2018 $0.07

Despite decreasing average revenue per KWh, Utilities on average continue to have posilive net revenues per KWh. 2018 averaged the tlird highest average net revenue per KWh of Ille surveyed years. Total operating costs per KWh is on a downward trend.

2014 2015 2016 2017 2018 ....,_Average Revenue per KWh .-Average Net Revenue -Total Operating Costs per KWh

**[TEXT REDACTED] Source: U.S. Department of Commerce, Bureau of Industry and Security, Nuclear Power Generator Survey, Q6C 20 respondents

The Department’s analysis also operating costs per MWh will increase per MWh will drop slightly to $14.50, projected the U.S.-origin requirement to $34.45 in 2024, a small 1.29 percent a marginal 3.4 percent decline through 2024. The Department’s increase over the projected 2020 cost of compared to projected 2020 net analysis concludes that U.S. utility $34.01. U.S. utility average net revenues revenues of $15.01 (see Figure 79).

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Figure 79. U.S. Utility Average Revenue and Operating Costs I Per MWh, 2014-2018 and Projections to 2024 ]

2014 2015 2016 2017 2018 2020 2021 2022 2023 2024 -Average Revenue pa- MWh 5%U.S. 10%U.S. 15%U.S. 20%U.S. 25%U.S. eontent Content Content Content content lllillllllllAvemge Net Revenue -Total Operating Costs per MWh

"'"'Excludes [TEXT REDACTED] Source: U.S. Department of Commerce, Bure.au of Industry .and Security, Nuclear Power Gener.at or Survey, Q6C 21 respondents

C. Public Policy Proposals (1) Expansion of the American Assured average inventory U.S. nuclear power Fuel Supply (AFS) utilities already maintain (see Figure The Secretary finds that the effect of 66). The LEU procured for the AFS imported uranium on the national The Department of Energy maintains should come from newly mined, security can only be addressed through a reserve of enriched uranium for nuclear power generators known as the converted, and enriched U.S.-origin targeted Section 232 remedies. The uranium. Secretary has noted that the U.S. American Assured Fuel Supply (AFS), uranium industry and nuclear power which is an emergency source of fuel for (2) Adoption of a Domestic Uranium generators face other non-trade both U.S. and foreign nuclear power Purchase Tax Credit 156 challenges that hinder their ability to plants. The AFS currently includes Congress should institute a tax credit remain financially solvent and 230 metric tons of LEU, only enough for domestic uranium purchases for a economically competitive. material to reload six average nuclear five-year period. Under this proposal, These challenges, as discussed in reactors once (the U.S. has 98 U.S. nuclear power generators would 157 Chapters VI and VII, include the reactors). DOE should increase the receive a fixed dollar amount-per pound premature shutdown of U.S. reactors, AFS’s inventory to 500 metric tons of tax credit for purchasing uranium competition from natural gas-fired LEU, enough to fuel 13 reactors in the mined in the United States. The credit generators, and subsidized renewable U.S. and allied countries. This could would be claimable in the tax year in energy sources. In addition, the nuclear supplement the [TEXT REDACTED] which the nuclear power generator takes power industry is hindered by delivery of the material. electricity market rules that do not plan, opening the Arctic National Wildlife Refuge (3) Continue the Moratorium on DOE consider nuclear energy’s unique to oil exploration, oil and gas licensing reform, and technical tax changes. U.S. Department of Stockpile Sales operational attributes. To address these Commerce, Bureau of Export Administration; ‘‘The issues, the Secretary advances the Effect of Crude Oil and Refined Petroleum Product Under the Atomic Energy Act of 1954, following public policy proposals for Imports On The National Security’’; January 1989. the DOE possesses authority to sell or discussion which complement the 156 In 2005, the Department of Energy (DOE) transfer its stockpiles to other parties.158 announced that it would set aside 17.4 metric tons DOE has used this authority to pay for Section 232 remedies identified in this of highly-enriched uranium (HEU) for conversion to 155 investigation. low-enriched uranium (LEU) that could be released cleanup efforts at the Portsmouth to nuclear power generators in times of national Gaseous Diffusion Facility. While DOE’s 155 Section V of the January 1989 Section 232 emergency. investigation into crude oil and refined petroleum 157 Notice of Availability: American Assured Fuel 158 U.S. Government Accountability Office. imports contained several non-trade policy Supply. The Federal Register/FIND. Vol. 76. Highlights of GAO–17–472T, a testimony before the recommendations to be executed by Congress or Washington: Federal Information & News Dispatch, Committee on Environment and Public Works, U.S. other Federal departments. These recommendations Inc., 2011. http://search.proquest.com/docview/ Senate, 5. (Washington, DC: Mar. 8, 2017). https:// included implementation of an oil and gas leasing 884208970/. www.gao.gov/assets/690/683764.pdf.

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determination process evaluates retirements and solidify utility demand for imports, exports, and other nuclear whether DOE transfers are having a for U.S.-produced uranium. material inventory changes. NMMSS, as the national U.S. system material effect on the industry, (5) Mandate That Federal Departments of nuclear material accounting, can add respondents to the Department’s 2019 and Agencies Use Nuclear Power uranium survey have reported that the capability to track mining origin DOE’s uranium transfer program has The Federal government can support data. However, this outcome required negatively impacted uranium producers’ U.S. nuclear power generation by changes impacting NRC regulations, 123 business. Congress should block further requiring Federal departments and Agreements, and industry practices. transfers of DOE stockpile material. agencies to purchase an average of 20 The Secretary recommends that the percent of their power from nuclear NRC and NNSA work with the (4) State Adoption of Zero Emissions power plants for a period of five years Departments of Commerce, Defense, Credits at a fixed price. This would provide Energy, Homeland Security, and Justice predictable demand for nuclear power to examine potential options and Implement zero emissions credits generators. mechanisms to enable the reporting of (ZEC) to compensate nuclear power origin data to NMMSS, and to generators for the value of the zero- (6) Expand the Responsibilities of the coordinate with NMMSS to identify emissions electricity that they produce. Nuclear Materials Management and Safeguard Systems (NMMSS) actions necessary for changes to the ZECs will help nuclear generators fairly system. compete against renewable sources such The 123 Agreements do not require as solar and wind, which are subsidized tracking and reporting of ‘‘mining Matthew S. Borman, through the federal production tax origin’’ data for nuclear material subject Deputy Assistant Secretary for Export credit (PTC) and similar state subsidies. to peaceful use provisions. Furthermore, Administration. ZECs, if adopted by more states, may the domestic U.S. operators are not [FR Doc. 2021–16113 Filed 7–30–21; 8:45 am] halt some current U.S. reactor required to report origin data to NMMSS BILLING CODE 3510–33–P

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