Russia’s invasion of Ukraine has had negative geopolitical consequences that will last for years. As countries around the world raced to place sanctions on Russia for its unprovoked invasion, it became pretty clear that the energy sector was bound to take a major hit. Russia, which is a major supplier of uranium, provides an estimated 35% of the world’s enriched uranium.
In 2020, the Eastern-European country was the second-largest supplier of uranium to the United States, accounting for 16.5% of the country’s uranium imports and supplying about 23% of the uranium imports the nation needed to power its commercial reactors.
Data from the World Nuclear Association also shows that Russia has the largest enrichment capacity in the globe at 43%, followed by China. However, in the wake of the Russia-Ukraine war, the American government is looking for ways to wean itself off of Russia’s uranium and beef up its domestic supply.
The government is calling for legislators to allocate $4.3 billion as part of a plan that would see the country steadily reduce its imports of uranium from Russia, in favor of uranium sourced domestically. Specifically, the $4.3 billion would see the U.S. government become a guaranteed buyer of any enriched uranium that is domestically produced. It would encourage private enterprises to invest in uranium enrichment and spur the development of the country’s local uranium industry.
The Biden administration has dispatched congressional staff to hold discussions with Department of Energy officials regarding the matter. The U.S. Department of Energy is apprehensive of the plan because it believes any interruption in the supply of enriched uranium from the Kremlin could impede operations at local commercial nuclear reactors.
However, the government had stated in the past that it would consider sanctioning Russian uranium imports due to its invasion of Ukraine, which means that such a plan could be underway. The government also discussed the possibility of Russia halting the uranium exports on its own.
This plan will also help to shore up domestic production of uranium, which has been on a steep decline for the past couple of years. In fact, production figures have been so low that the numbers did not reach the Energy Information Administration’s reporting threshold.
Despite this, experts note that it won’t be easy for the United States to reduce its reliance on enriched uranium from Russia and jump-start its own struggling uranium industry. At the moment, there is only one enrichment facility in the country. The facility is located in New Mexico and is operated by Urenco, a British-German-Dutch consortium.
The plan to enrich a lot more uranium domestically is likely to be a shot in the arm of local uranium mining entities such as Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) since the government is likely to gobble up all the yellow metal they can dig out of the earth.
NOTE TO INVESTORS: The latest news and updates relating to Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) are available in the company’s newsroom at http://ibn.fm/UUUU
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