The US uranium industry awaits President Trump’s Nuclear Fuel Working Group findings

On July 13, 2019, President Donald Trump did not go ahead with the Department of Commerce recommendations which proposed (under Section 232 of the Trade Expansion Act) to have US Uranium users source up to 25% of their uranium from domestic mines. It’s not all bad news however as President Trump created a working group to review the country’s nuclear fuel supply chain over the next 90 days. The President is asking the group to identify other ways to boost the domestic uranium industry. The report/recommendation for President Trump from the Nuclear Fuel Working Group (NFWG) is expected by 10/10/2019 (or about 2 weeks from now).

The problem on the domestic supply side is that over 92% of the uranium used in nuclear reactors is imported from abroad, largely from Russia and Kazakhstan. For this reason, Trump has agreed that the impact of the supply chain on national security warrants further review.

A more holistic look at nuclear fuel production includes uranium mining, milling, conversion and enrichment. Remedies like quotas could still be on the table, but the creation of the Working Group opens up other ways to support the domestic industry including direct support, support to U.S. utilities for buying U.S. uranium products, tax breaks, regulatory reform, and other similar actions.

Energy Fuels has stated: “We were pleased that on July 12, 2019, President Donald Trump took meaningful action that has the potential to revive the U.S. uranium industry.”

Trump to soon review the NFWG recommendations on the US uranium sector

The Nuclear Energy Institute (NEI) has made some suggestions

Uranium mining companies and supporters of the quota had cited the potential economic benefits by viewing the quota as an opportunity to revitalize domestic uranium mining. They have claimed it would increase domestic uranium mining revenue from $150 million to $700 million, and U.S. uranium companies would go from producing 1.4 million pounds of uranium a year to 11 million pounds a year. The Nuclear Energy Institute (NEI) is also urging the Trump administration to authorize funds through the 1950 Defence Production Act, to procure domestic fuel for defence requirements and boost federal reserve’s of uranium for nuclear power utilities. In the letter, the NEI urges unspecified direct payments to either a U.S. utility or domestic uranium producer for sale of U.S. origin uranium to a utility.

In a July 12th memorandum, President Trump noted that “the United States uranium mining industry faces significant challenges in producing uranium domestically and that this is an issue of national security.”

Three uranium companies to consider

Energy Fuels Inc. (TSX: EFR | NYSE American: UUUU) is a leading integrated US-based uranium mining company. Their 100% owned White Mesa Mill in Utah is the only fully-licensed and operating conventional uranium mill in the United States, having a 21% share of all US produced uranium (2011-2015). The mill has an annual capacity of 8 million lbs of uranium, and in 2017 produced 366,000 lbs of uranium concentrate, and re-processed a further 946,000 lbs. Additionally, Energy Fuels recently announced the completion of a new processing agreement, under which they will assist in the cleanup of a formerly producing mine in New Mexico. Energy Fuels also has recently begun taking deliveries of cleanup material at their White Mesa Mill, and this initiative is expected to result in a total of approximately $1.0 to $4.25 million of value for the Company. This is the exact type of work they have proposed to the U.S. Environmental Protection Agency (EPA) to assist in the cleanup of Cold War era abandoned uranium mines on the Navajo Nation and other nearby lands. The EPA is holding over $1.5 billion set aside in trust for those purposes.

Western Uranium & Vanadium Corp. (CSE: WUC | OTCQX: WSTRF) current key focus is the Sunday Mine Vanadium Project located in western San Miguel County, Colorado. The complex consists of five individual mines covering approximately 3,800 acres and 221 unpatented claims. The Company has a total uranium resource of 70,000,000+ lbs. The Company has several previous producing uranium mines that could go back online at minimal CapEx pending a favourable result from the working group.

Blue Sky Uranium Corp. (TSXV: BSK | OTCQB: BKUCF) is one of Argentina’s best-positioned uranium & vanadium exploration companies with more than 4,000 km2 (400,000 ha) of prospective tenements. Argentina is the largest generator of electricity from nuclear energy in South America and is working to further expand its nuclear energy sector with additional power plants but currently lacks domestic uranium production. Blue Sky’s close proximity of properties & targets provides the potential for an integrated, low-cost uranium-vanadium producing operation, making Blue Sky an excellent candidate to be the first near-term uranium producer in Argentina.

The US uranium industry only has about 2 weeks now to wait for the recommendations from the Nuclear Fuel Working Group. The mere fact the group was agreed to be set up suggests the outcome will be favourable to the US uranium miners. My expectation is the US uranium miners may receive a boost in the form of tax breaks or other incentives, and true to Trump’s history he may place tariffs on uranium imports into the US, especially from subsidized uranium sources. In any event, it is hoped by the uranium industry to give it a much needed boost.

It has been a tough past decade for the US uranium industry with uranium spot prices below production costs, so finally, the US uranium industry should get a break, and hopefully prosper again.




Investors showing quiet confidence that Trump’s working group recommendations will see a revival of the US domestic uranium industry

The uranium Section 232 discussion continues. President Trump recently created the U.S. Nuclear Fuel Working Group (Working Group) to develop recommendations for reviving and expanding domestic nuclear fuel supply and production, following on from industry demands in Section 232 Petition. Remember 20% of US energy comes from nuclear plants, yet the US has almost no uranium production. The U.S. Department of Commerce Section 232 Report on uranium will soon be made public.

According to Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR), the Working Group being set up shows that President Trump clearly recognizes that the decline of domestic nuclear fuel production is a U.S. national security issue. The Working Group has been mandated to determine what to do about the issues raised in Proposition 232 (now Section 232 Petition) and they have until mid-October 2019 to provide recommendations to the President.

A brief reminder of Section 232 Petition

Section 232 Petition initiated by Energy Fuels looked at a 25% domestic (US) production quota for uranium, for national security reasons. The Petition highlighted industry concerns that cheap uranium is being dumped onto the US market. US uranium miners have to compete with state-subsidized mines in Russia and its allies in Kazakhstan. This means US uranium miners are operating at a loss or at best break-even levels.

It is understood that the US Commerce Department and other U.S. government agencies now recognize that Russia, China and their allies are working to control the global nuclear fuel market and marginalize the U.S. This also represents a national security threat as the U.S. needs domestically sourced uranium for defense purposes and general nuclear energy production.

The US Nuclear Fuel Working Group

With all this information, the current administration is taking a more holistic look at nuclear fuel production under the name of the U.S. Nuclear Fuel Working Group. This includes uranium mining, milling, conversion and enrichment. Remedies like quotas could still be on the table, but the creation of the Working Group opens up other ways to support the domestic industry including direct support, support to U.S. utilities for buying U.S. uranium products, tax breaks, regulatory reform, and other similar actions.

Insider buying by Energy Fuels management

Energy Fuels is very optimistic that something positive will come from this for the U.S. uranium mining and milling industry. This optimism extends to senior management of Energy Fuels who continue insider buying of company stock. On August 7, 2019 CEO Mark Chalmers bought 12,398 shares and on that same date, COO Paul Goranson bought 11,900 shares.

Energy Fuels Inc.

Energy Fuels Inc. is the US number 1 producer of uranium and vanadium.  The Company’s White Mesa Mill boasts a licensed capacity of over 8 million pounds of U3O8 per year that provides Energy Fuels with significant production scalability.

Energy Fuels stands to be a significant beneficiary if there are positive recommendations from the U.S. Nuclear Fuel Working Group. In particular, should a dual uranium pricing mechanism be adopted or US producers subsidized, then this will put Energy Fuels in an enviable position having the only operating conventional uranium mill in the U.S.

Recent Energy Fuels insider buying of their stock suggests management are quietly confident that Trump’s working group recommendations will see a revival of the US domestic uranium industry.




The implications if Section 232 Petition is made into law on the uranium market is upon us

For those of you that have been following the uranium market and Section 232 petition, wait no more. The 180 day decision period is almost upon us and a determination is expected from President Trump on or before 7/13/2019. This is two days from now.

A re-cap on Section 232 petition

Section 232 petition will try to create a level playing field in the domestic market. Section 232 petition requests that the US Government set a quota to limit imports of uranium into the US, thereby reserving 25% of the US nuclear market for US uranium production. US uranium miners have to compete with state subsidized mines in Russia and its allies in Kazakhstan. The remaining US uranium miners are operated at or near break-even levels. Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) is the only conventional uranium producer in America and can produce up to 8 million pounds of uranium per year. They were the company behind the filing of Section 232 petition with the US Commerce Department.

Over 40% of the uranium purchased in the US comes from higher risk countries. While the rest is secured largely from Canada and Australia, these countries have been reducing production due to the low prices coming out of Russia and Kazakhstan. Uranium spot prices remain well below the cost of production for most western uranium producers. The West just can’t compete against subsidized companies, but nor should it.

The US needs a secure source of uranium given its nuclear needs

Given 20% of US energy comes from nuclear plants and that the US has almost no uranium production, there is clearly a significant concern as to where the US will get uranium from should overseas supply be disrupted. Imagine for a minute 20% of US cities in darkness.

The other key US need for uranium is for the defense sector. US law requires that any uranium used for national defense purposes (E.g. nuclear-powered naval vessels) be mined and processed in the US. It’s now getting to a critical supply stage in the US as uranium stockpiles continue to dwindle and threaten the defense’s nuclear supplies. This is why miners have suggested reserving 25% of the total US demand for domestic producers.

The Nimitz class is a class of ten nuclear-powered US aircraft carriers

The implications if Section 232 Petition is made into law

If the Section 232 Petition is successful we will most likely see a uranium market with two prices – one for the global market and one for the US market. Given the massive shortage of US sourced supply (about 1-2% of US uranium comes from the US), a huge price spike for US uranium is likely. Conversely, once US supply picks up the loss of the US as a global demand source it may negatively impact global uranium prices and non-US uranium producers.

Two key US uranium companies that will benefit if Section 232 Petition succeeds

Energy Fuels Inc. (NYSE: UUUU | TSX: EFR)

Energy Fuels operate the only conventional uranium mill in the U.S. The Company operates the highly-strategic White Mesa Mill that boasts a licensed capacity of over 8 million pounds of U3O8 per year. A positive Section 232 ruling could give Energy Fuels a huge advantage as they have their assets in production and potential to increase production.

White Mesa Mill

Western Uranium & Vanadium Corp. (CSE: WUC | OTCQX: WSTRF)

Western Uranium & Vanadium is a near term producer that has acquired uranium and vanadium mineral assets in western Colorado and eastern Utah, USA. The Company has one of the largest US uranium and vanadium in-situ resources. The total uranium resource is 70,000,000 lbs. +/-, and the total vanadium resource is 35,000,000 lbs. +/- grading between 1.4-2.2%. The resource is spread over several properties. The Company is among the largest uranium resource holders with around 70,000 pounds of near term production available to be brought online if uranium prices were higher.

Sustainability and security of US uranium supply is the big issue. With very few uranium producers left in the USA will there even be enough uranium produced to even meet the short term demands of a 25% quota? The answer in the short term is clearly no. With new mines coming back online there will be a time lag and this could see both companies discussed above do very well indeed as they try to fill the US supply gap.

With only a matter of a two days before Trump is anticipated to make a determination — we will all soon know the fate of Section 232 petition. The US uranium industry stands to be the big winner if the petition is adopted.




The US uranium industry holds its breath over the result of Proposition 232

The US is currently very dependent on Russia (38.3%), Netherlands (25.9%), Germany (16.5%), UK (14.5%), and China (3.5%) for enriched uranium imports. Decades ago the U.S. dominated nuclear energy exports. Right now the US is facing stiff competition mostly Russian backed Kazakhstan. This is a worry for the Trump administration as the US share of the global uranium market was once quite high but has now fallen to ~<2%. Washington believes cooperation in the nuclear realm is central to its strategic relationships; however winning energy contracts isn’t easy as both China and Russia are aggressively pursuing those deals often with the help of state subsidies. The majority of the huge global nuclear power deals being made are with Russian and Chinese and other state-owned corporations. This is at a time when the US hasn’t been enriching uranium as they struggle to develop uranium mines at home.

Russia’s stranglehold on processing is exacerbated by their underfeeding capacity. Of the latest data available, Russia produced 38.3% of the enriched uranium but only mined 4.9%. To add to this the enriched product for Kazakhstan and Uzbekistan was collectively 17% but are working under depreciated currencies and very little if any environmental regulations. Russia has a relatively large uranium resource, but it is deriving most of its feed stock from Uzbekistan and Kazakhstan. Russia is the last step in the process and has the ability to cut off the U.S should any issue arise.

China is also building up ties with Russia and uranium supply

In a three day state visit to Russia last week, Chinese President Xi Jinping and Russian counterpart Vladimir Putin agreed to upgrade bilateral relations during 70 year celebrations on diplomatic ties. Russia and China believe they have no choice but to cooperate to make their economies more independent from the West. Both are in an economic war with the U.S. It is becoming apparent that both countries are securing future uranium needs. As China expands its nuclear energy capacity it continues to purchase uranium mines, many of which are located in Africa.

U.S. uranium concentrate production (1949-2017)

20% of US energy comes from nuclear plants yet the US has almost no uranium production

The US is the world’s largest producer of nuclear power with 30% of global nuclear electricity generation and needs to secure its nuclear fuel cycle for its 98 nuclear reactors. In fact, 20% of all US energy comes from nuclear plants making it a key source of US energy supply.

In 2019, it is expected US uranium supply will not even be enough to supply one reactor, leaving no uranium supply for defense purposes. As mentioned above unfair competition from state owned enterprises is currently disrupting uranium market pricing, hence the need for Proposition 232 (Section 232 petition).

Section 232 petition

Section 232 petition is key legislation that is considering requiring the US Government to set a quota to limit imports of uranium into the U.S., thereby reserving 25% of the U.S. nuclear market for U.S. uranium production.

The US nuclear industry is holding its breath waiting for the decision on Section 232 petition. A positive reply from the US President could be the ignition to re-ignite the US’s uranium industry in securing its future nuclear powered electricity needs. All the industry is asking for is a level playing field to compete with the subsidized state owned producers of Russia and China. We await a decision on or before 13 July, 2019.

Western Uranium & Vanadium Corp. (CSE: WUC | OTCQX: WSTRF) has seven past producing uranium mines that could go back online at minimal cost. They are currently not in production due to weak spot uranium prices; however the Sunday Mine and Saint Jude Mine are set to open this month (June 2019). Investors can read more in my recent update here.

The Company has four main properties, which are estimated to contain a total resource of 70 million pounds of uranium. In addition, three of the four properties contain 35 million aggregate pounds of vanadium, grading between 1.4-2%. In December 2015, the Company entered into a uranium concentrates supply agreement with a top 3 U.S. energy utility for uranium delivery commencing in 2018. If Section 232 petition succeeds, Western Uranium & Vanadium would be a key potential new supplier of uranium for the US market.




Pending Section 232 Investigation examines how Americans are playing Russian roulette with their uranium and nuclear fuel supply

Just imagine for a second what happens if your electricity is shut down. The US is currently very dependent on Russia (38.3%), Netherlands (25.9%), Germany (16.5%), UK (14.5%), and China (3.5%) for enriched uranium imports. Another 17% of natural uranium imports come from Russian allies, Kazakhstan and Uzbekistan, numbers expected to increase in the coming years as production in the US, Canada, and Australia drops. That uranium is powering 20% of US energy via nuclear plants. So if Russia and China suddenly decide to stop selling uranium to the US then there could well be a major problem.

Uranium is always a hot topic, especially when it comes to nuclear energy and what will be the outcome of the pending Section 232 investigation. The Section 232 petition submitted by Energy Fuels and Ur-Energy requests the US Government to set a quota to limit imports of uranium into the U.S., thereby reserving 25% of the U.S. nuclear market for U.S. uranium production. In 2019, less than 1% of U.S. reactor uranium requirements will be produced domestically.

On April 14, 2019, the US Department of Commerce (DOC) submitted to the White House the results of an investigation into the effects of uranium imports on US national security. From that date, US President Donald Trump has up to 90 days to decide whether to act on the DOC’s findings and recommendations. The investigation, under Section 232 of the Trade Expansion Act, was triggered by the filing in January 2018 of Petition 232 by uranium mining companies Energy Fuels Inc and Ur-Energy.

Energy Fuels stated: “The topic that’s on everybody’s lips at the moment, Petition 232, is an application for unfair practices against foreign jurisdictions. The whole idea of the Section 232 investigation from a global perspective is to even the playing field and make sure US national security and energy security is not compromised by being overly dependent on geopolitical foes for uranium and nuclear fuel.”

The loss of a viable US uranium mining industry would have a significant impact on the country’s national, energy and economic security and impeding its ability to sustain an independent nuclear fuel cycle.

Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) and Ur-Energy are both saying they have not seen the Department of Commerce report as it has remained classified; however, they do believe the facts are clear. The once robust American uranium mining industry is disappearing because a flood of State-subsidized imports that has made fair competition impossible.

Being a matter of national security US President Trump has broad power to make a decision.

Potential outcomes for Petition 232 due by 13 July 2019

Many potential outcomes are seen as possible:

  • A decision may be delayed.
  • President Trump may follow the recommendations of the US Department of Commerce (DOC).
  • President Trump may not follow the recommendations or may come up with his own ideas.

Energy Fuels is taking the approach of, let’s just see what happens. The world uranium market is seeing less activity, because the US is the world’s largest buyer of uranium annually. With the whole uranium energy supply chain affected it is possible that the White House could come back with something much broader than what was initially petitioned for.

Given what has been seen to date, many believe the facts support President Trump deciding to support the US uranium industry, both from an economic and national security point of view.

Clearly, the US is very vulnerable as 20% of the country’s electricity comes from nuclear and they are currently reliant on importing almost all of their uranium feedstock. The domestic industry in 2019 is expected to produce less than 1 percent of the U.S uranium’s utilities needs. The rest will come from other countries and increasingly from US adversaries, like Russia, China and their allies, while at the same time production from US allies, like Canada and Australia, is plummeting.

It is the uneven playing field that is contributing to uranium mining companies in other countries like Canada and Australia to suffer because of state-owned and  state-subsidized production elsewhere. Only one mine still operates today in Canada and production in Australia is declining.

Right now it seems like a waiting game for the decision by July 13. If Energy Fuels is correct that broad-based changes in the US nuclear sector are required, the Company and other US producers stand to benefit – perhaps significantly.

Energy Fuels Inc.’s White Mesa Mill is the only conventional uranium (and vanadium) mill operating in the U.S. today and has a licensed capacity of over 8 million pounds of U3O8 per year. The Company also has two low-cost ISR facilities with a combined capacity of 3.5 million lbs. of U3O per year; Nichols Ranch is in production, and Alta Mesa is on standby. The Company has a market cap of C$ 333.8 million.




The new magic market words: vanadium and uranium.

Uranium occurs in most rocks in concentrations of 2 to 4 parts per million and is as common in the earth’s crust as tin, tungsten and molybdenum. About 11% of the world’s electricity is generated from uranium in nuclear reactors. Vanadium is currently one of the hottest of all elements having tripled in price the past year. The most important use of vanadium is as an additive for steel, with approximately 80% of vanadium going into ferrovanadium, a steel additive.

Western Uranium Corporation (CSE: WUC | OTCQX: WSTRF) is a near term producer that has acquired uranium and vanadium mineral assets in western Colorado and eastern Utah, USA. Western Uranium has increasingly focused on monetizing its vanadium rich resources as vanadium prices are now near US$20/lb. To reflect this focus Western Uranium has received shareholder approval to change the name to Western Uranium & Vanadium Corp.

The Company has four main properties, which are estimated to contain a total resource of 70 million pounds of uranium. In addition, three of the four properties contain 35 million aggregate pounds of vanadium, grading between 1.4-2%. In December 2015, the Company entered into a uranium concentrates supply agreement with a top 3 U.S. energy utility for uranium delivery commencing in 2018 (terms are confidential).

The Company also controls a new technology called Ablation Mining Technology. It has been developed to reduce the cost of recovering uranium from the mine. This also gives the Company further opportunities for the technology to be used as a cleanup technology on other legacy uranium mining sites.

Sunday Mine Complex

Western Uranium is expecting the Sunday Mine Complex to derive its first production output soon. The Sunday Mine Complex property consists of 221 unpatented claims on public lands covering approximately 3,800 acres, 20 of these claims are subject to a 12.5% royalty on all ore produced. Already permitted, the Sunday Mine is a complex of 5 interconnected underground mines with historic uranium and vanadium production (most recently mined in 2009). The existing permits will need to be updated to include ablation onsite, and a mine water treatment plant will need to be installed (and the appropriate permits obtained) for treating mine water. The mine has strong U3O8 grades present (~0.25% to 0.36%) and a large surface stockpile of approx 100,000 tons ready for immediate production, with other uranium stockpiles identified. It is anticipated that a radiometric survey will commence in early October 2018.

An underground area of the West Sunday Mine has been labeled the “Candy Store”. The Candy Store has seam thicknesses of about 35 feet with average grades of 4,000 ppm (0.4% uranium). Other places in the Sunday Complex have similar characteristics including an area of 65 feet of uranium ore mineralization.

George Glasier, President and CEO of Western Uranium, commented: “We are very pleased that the Company was able to close over C$3.6 million in new equity capital since May. This funding allows Western to increasingly focus on operations and provides the necessary working capital to advance compelling strategic initiatives in vanadium, uranium, and ablation. Further, the recent progress of the Section 232 petition with the U.S. Department of Commerce has substantially increased market interest in Western’s near-term uranium properties.”

Western Uranium looks well positioned with their Sunday Mine set to start up again soon. They already have a uranium supply contract in place with a U.S. utility company. All that is now needed is some final mine improvements, additional economic supply contracts, and project funding. The rising vanadium price due to the steel (new rebar standards in China) and energy storage demand adds plenty of value to the Company. One could say that Western Uranium is like a kid in a candy store, super keen to start producing soon.




GoviEx CEO on their uranium projects in Niger, Zambia and Mali

March 26, 2018 – “I think what you see now is there were a lot of pressures on the top and each year we go past one of those pressures come off. I think the problem we have had is they have just taken longer for them all to add up. If you look at what UXC Consulting is saying they are looking at a deficit this year.” states Daniel Major, CEO of GoviEx Uranium Inc. (TSXV: GXU | OTCQB: GVXXF), in an interview with InvestorIntel’s Peter Clausi. 

Peter Clausi: GoviEx trades on the Toronto Stock Exchange, symbol GXU. You have uranium projects in Africa.

Daniel Major: Yes that is absolutely correct. We have got projects in Niger, Zambia and Mali.

Peter Clausi: What stage is each one of them at?

Daniel Major: The primary one is Niger. It is Madaouela. It is fully permitted, environmental permits, mining permits. We are working on finalizing the feasibility study for that. We are already working on the debt structuring. We have got expressions of interest from two ECAs and five banks to cover our full debt, which is two-thirds of our total capital. We are working on optimizing that project still, bringing the OPEX down, bringing the CAPEX down while the market is quiet. In Zambia we picked up two projects. We have merged them together. Got 140 kilometers of strike length already permitted by merging them together; fantastic economies of scale. Both of those projects will produce over 2½ million pounds per annum.

Peter Clausi: Where will you mill it?

Daniel Major: We will do the processing on site in both companies.

Peter Clausi: One mill for both sites or one mill each?

Daniel Major: They are so far apart country-wise. One is up in North Africa and one is in Southern Africa. It is a really long way. Both sites are going to be designed to produce yellowcake and ship out yellowcake from them. Both projects less than $38.00 a pound all including, all their capital. All the infrastructure is there, great jurisdictions. The last project we have is in Mali. It is an advanced exploration play. It has actually gone to PF once, but it was never issued so all the technical study is there. You have got a company now that has had $250 million dollars of technical studies invested on it, so well advanced.

Peter Clausi: The uranium market generally has been a hard one to predict over the past few years. We have all been waiting for a rebound in pricing and it is slowly battling its way up. What is your take on it?

Daniel Major: I have been with this company for 5 years. I have enjoyed the pleasure of sliding uranium prices. I think I have to stay a little longer to enjoy the upside. I think what you see now is there were a lot of pressures on the top and each year we go past one of those pressures come off. I think the problem we have had is they have just taken longer for them all to add up. If you look at what UXC Consulting is saying they are looking at a deficit this year. I think the overhangs we have got at the moment; you have got the impact to the U.S. guys, the Section 232 …

Peter Clausi: Right, from Energy Fuels and  . . .

Daniel Major: What it has done is just take the U.S. buyers out of the market and they are the biggest spot buyers. The guys you want there are in the market buying, they are just not there at the moment…to access the complete interview, click here