Donald Trump’s uranium move tipped to revive demand
US president says imports of the nuclear fuel are not a threat to national security
Neil Hume, Natural Resources Editor 15 MINUTES AGO Print this page0
Uranium is tipped to regain momentum after US president Donald Trump surprised the market and said imports of the nuclear fuel were not a threat to national security.
Late on Friday, Mr Trump declined to impose tariffs or quotas on foreign shipments of the metal, against the advice of the US commerce department, led by Wilbur Ross.
Instead, he ordered a 90-day review of the entire nuclear supply chain to identify ways to revive and expand domestic production of uranium. The US imports 93 per cent of its commercial uranium, up from 85.8 per cent a decade ago.
Analysts said getting the “232 decision” — a reference to a section of the 1962 Trade Act — out of the way would help end some of the uncertainty that had seen buyers pull back from the uranium market.
The commodity has been in the doldrums since Japan ordered the shutdown of 40 reactors following the 2011 Fukushima disaster. That upended demand projections for the fuel in Japan and other countries such as Germany, which also closed nuclear plants and cancelled plans to build new ones.
However, the price of uranium started to pick up in 2018, helped by production cuts and interest from financial investors. It hit $29 a pound in December but has drifted back to about $25. In 2011, before the Fukushima disaster, it was trading above $70 a pound.
“The Section 232 investigation has created an 18-month period of uncertainty which has severely restricted activity in the uranium market,” said Andre Liebenberg, chief executive of Yellow Cake, a London-listed investment vehicle that has made a big bet on the price of the commodity through a purchase agreement with Kazatomprom, the world’s biggest producer. Shares in Yellow Cake rose 3.2 per cent to 222.5p on Monday.
After a petition by two domestic miners, the commerce department launched an investigation last year into the national security implications — both from a military and civilian perspective — of buying so much uranium from overseas. They wanted the US nuclear industry and military to purchase 25 per cent of its uranium domestically.
While more clarity was needed, analysts said the investigation ordered by Mr Trump was likely to be focused on the requirements of the defence department in terms of fuelling submarines and aircraft carriers and as a source for nuclear weapons.
“In this context, we believe that the working group will focus far more on the later stages of the fuel manufacturing supply chain than on the import of uranium oxide and the impact of the domestic mining industry,” said Michael Stoner, an analyst at Berenberg.