The Trump administration’s newly proposed budget would throw a $1.5 billion lifeline to the struggling U.S. uranium industry, long battered by declining demand and cheap imports.
If approved by Congress, Trump’s proposed “uranium reserve” would spend up to $150 million annually for 10 years to buy domestically sourced uranium, much of which would be mined in Utah and neighboring states, to protect the nation “in the event of a market disruption.”
This strategic stockpile would supply the nation’s nuclear-generating plants and nuclear-powered naval fleet.
But environmentalists fear the reserve amounts to a subsidy to prop up a commodity that has left a toxic legacy across the Colorado Plateau, where uranium was heavily mined in the 1960s.
“The United States doesn’t need additional uranium. This is a ploy to avoid the inevitable. There isn’t demand for the product; there hasn’t been for decades. They [uranium producers] want to protect their bottom line with taxpayer dollars,” said Amber Reimondo, energy program director for the Grand Canyon Trust. “This government support is going to send more uranium to [Utah’s] White Mesa Mill and open more mines on the Colorado Plateau.”
In 2018, U.S. production of uranium oxide, or yellowcake, used in nuclear fuel rods, sunk to about 1.5 million pounds, a 70-year low going back to the early days of commercial nuclear energy, according to the U.S. Energy Information Agency. Yet, also that year, the nation’s 97 nuclear reactors consumed about 40 million pounds, much of it coming from Russia and Kazakhstan, nations that U.S. industry complains are dumping uranium on the global market and artificially driving down prices.
The reliance on foreign sources for a strategically important mineral is not only costing thousands of U.S. jobs but also undermining national security, say industry representatives such as Rich Nolan of the National Mining Association.
“Domestic uranium production is teetering on the edge of disappearing," Nolan said. "The nation’s growing mineral import reliance for uranium and other minerals should be alarming to all Americans, especially when the U.S. is home to ample resources, stringent environmental protections, and the most advanced mining technologies and best practices in the world."
Establishing a uranium reserve would reduce the nation’s “overdependence” on imports that are disrupting the marketplace and idling U.S. mines, according to Mark Chalmers, president and CEO of Energy Fuels. The nation’s leading uranium producer, Canadian-owned Energy Fuels controls most of Utah’s uranium mines and the White Mesa Mill, which recently laid off a third of its workforce.
“As the owner of the only operating uranium mill in the United States, together with our extensive U.S. uranium production portfolio and existing inventories ... we believe we are well-positioned to provide a significant portion of the uranium needed for the reserve," Chalmers continued.
Energy Fuels, whose Utah operations surround Bears Ears National Monument, was one of two uranium producers that had petitioned the Trump administration to impose uranium quotas on the nuclear power industry, requiring it to domestically source a certain percentage of its fuel needs. Trump turned down the request and instead impaneled the Nuclear Fuel Working Group, which has since offered recommendations that remain under wraps.
The proposed uranium reserve mirrors one of several requests an electrical utility trade association put in its formal comments to the working group last year. The Nuclear Energy Institute, which strongly opposes quotas, urged the federal government to buy 2 million to 3 million pounds of domestically produced uranium each year.
In a recent interview on CRUX Investor’s YouTube channel, Chalmers said he hopes to see Energy Fuels become a billion-dollar company, which would require its production levels to reach 1.5 million to 2.5 million pounds a year. With current prices below $40 a pound, uranium production is not economical, so plans to resume operations at several idle mines, including those in southeastern Utah, remain stalled.
Uranium prices would need to reach $65 a pound to sustain the uranium industry, and at least $50 to spur new investment, Chalmers said.
If Trump’s proposed uranium reserve pays $65, it could stockpile 2.3 million pounds each year, an amount that corresponds with Energy Fuels’ ambitions.
Chalmers told the CRUX interviewer he expects the Nuclear Fuel Working Group to deliver recommendations that will help the industry, but he said the spot price of uranium will inevitably rebound.
“The spot price has to come back because the true value of producing a pound of uranium is north of $50,” Chalmers said. “The industry will not survive if it doesn’t.”