Ukraine & sanctions : Why the US nuclear industry continues to import Russian uranium ?

To counter the horrors committed by Russia in Ukraine, European states, Germany in the forefront, which were 45% dependent on Russian natural gas pipelines before February 24, are under strong and public pressure to eliminate Moscow from their natural gas and oil horizons. And, unlike Europe, as of March 8, 2022, Joe Biden easily banned Russian energy deliveries, which account for only 7% of his oil imports, although in reality they will continue until August deliveries.

Few NGOs have protested

But the US sanctions did not include its purchases of Russian uranium. The nuclear industry produces 20% of Washington’s electricity, and it would be costly to substitute Russia by another supplier, it accounts for nearly 20% of US uranium imports. Curiously, very few NGOs have protested the continuation of this trade relationship between Washington and Moscow. For its part, France sources its uranium mainly from Kazakhstan, Australia, Niger and Uzbekistan.

Washington’s other difficulty with economic sanctions is another dependency: the conversion and enrichment of uranium into low grades, from 3% to 5%, for current power plants and into high grades, between 5% and 20%, for future power plants. Although Urenco, a joint venture between the United States, the Netherlands, Germany and the United Kingdom, is the Western supplier of low-grade uranium to these countries, it suffers from underinvestment because of the reduced interest of its shareholders, particularly Germany, which is moving away from nuclear power. As a result, the U.S. is dependent on other suppliers, including Rosatom, the Russian energy company.

The latter holds nearly 40% of the world market for conversion and 35% of the world market for enrichment, and is an indispensable supplier in the short term, but is no longer a recommendable partner in the long term, because it is involved in the occupation of Ukrainian power plants. Indispensable for American energy security, Rosatom is also indispensable for Europe, since between February and April 2022, despite the war, it declared that it had delivered fuel to nuclear power plants in the Czech Republic, Slovakia and Hungary. Wartime or not, producers of commodities still need their customers and vice versa.

Bypassing Rosatom

In response to these events, especially the US electrical sovereignty in the backyard of the war in Ukraine, uranium prices have doubled in one year.

However, there are ways to bypass Rosatom.

On the one hand, it was only on 19 March that the Republican senator from Wyoming proposed a bill, which has not yet been passed, banning Russian uranium imports. It was felt that his state, but also Utah and Arizona, which are rich in uranium, could eventually benefit from mining investments to replace Russian exports. However, this prospect will inevitably see the usual elements of US national security, i.e. the supply of electricity companies, clashing with the interests of the Indian communities of these territories.

Secondly, Russia accounts for only 16% of the world’s uranium mining production and 70% is produced between Kazakhstan, Canada, Australia, Namibia and Niger. In a war economy, there are ways to substitute one supplier for another, or even to modify contracts (cf. payment for Russian natural gas in rubles).

On the other hand, analysis of the enrichment bottleneck reveals that the world’s number 3 is Orano, a French company that is gradually recovering from ten years of calamitous management during the Areva period. Its future production capacities are perhaps an interesting ray of hope for the free world.

Finally, a last solution is to transform our current nuclear waste into fuel. France and Europe already have this nuclear waste which, if burned in fast neutron reactors, which are already operating in Russia or China, would make it possible to produce electricity for the next 5,000 and 10,000 years without fresh uranium from mining.

Germany imposes uranium sanctions

Facts are sometimes surprising. Europe, especially Germany, is trying to get out of the grip of Russian natural gas as quickly as possible, while the United States is urging it to act, because it has already freed itself from it. But while the United States and Central Europe will undoubtedly experience a long and complicated disengagement from Moscow’s uranium, Germany is initiating all-out sanctions against Rosatom – uranium, enrichment and industrial cooperation – thus transferring to its partners the pressure it is suffering over natural gas.

Energy diplomacy between allies sometimes resembles a playground squabble over the Ukrainian drama. But this is no hypocrisy as each one acts according to its national security and interests, because there is no such thing as a NATO of energy.

This last idea appears, however, in a form similar to our analysis of Public Resource Strategies and Strategic Solidarity, in Treasury Secretary Janet Yellen’s latest speech. Her new world trade order has as key words those of sovereignty and independence: free but secure global markets, available, sustainable, securely accessible natural resource supplies, and finally, the replacement of non-resilient “just-in-time” with strategic “just in case” security storage. Finally, a common sense program!