The US has found a new way to economically hurt Russia. They are seriously talking about their readiness to abandon Russian uranium. Meanwhile, new sanctions may hit not only the American market, but also raise prices for uranium fuel around the world. Moreover, the United States can substitute European countries, where the absence of Russian uranium fuel means the closure of nuclear stations. The US nuclear industry is ready to abandon Russian uranium, said seven senators representing both the Democratic and Republican Parties.
They have submitted for consideration a corresponding bill banning the import of Russian uranium.
Senator John Barrasso said that the United States can increase its own production of uranium – the necessary resources, according to him, are in Wyoming. He considers it necessary to remove "all Russian energy, including uranium," from the US market.
According to him, the proposed draft law should strengthen the national security of the United States and deprive Russia of income that can be directed to a special military operation in Ukraine. Senator Joe Manchin said that the proposal would ensure the independence of US energy companies from Russian uranium fuel.
What can the adoption of such a bill lead to? The American authorities use two mechanisms of sanctions. The first ban applies only to American companies or to imports into American territory. The second mechanism is when the ban is extraterritorial in nature, that is, it affects companies from third countries. Such restrictions were imposed on Iranian oil.
"In the first case, it will be a shock to a greater extent for the American market. Because the share of the Russian supplier is quite significant. Americans estimate it at 10-12%. And taking into account Russia's participation in all international chains, its share may actually be even higher. But there will, of course, be consequences for the global market. Like any restriction, this decision will lead to an increase in world prices for all uranium consumers. This will be a psychological factor, so prices can rise by both 5% and 20%," believes Sergey Kondratiev, deputy head of the Economic Department of the Institute of Energy and Finance.
In 2021, the United States imported 550 tons of enriched uranium from Russia worth $ 546 million. In 2022, the US paid the same amount in nine months. Although for the whole of 2022, the quota for the import of uranium from Russia was less – about 490 tons. For understanding: even the American company Westinghouse buys Russian uranium fuel, which has set up an experiment in Ukraine to replace Russian fuel in Soviet-type nuclear reactors.
The statement of the American senator that the United States itself can extract and produce uranium fuel for its own needs, in general, has the right to exist. However, it is unlikely that the States will be able to get rid of imports quickly.
"The United States is among the top 10 countries in terms of uranium reserves by gross resource. However, uranium production in the country has decreased by a multiple in the last 25 years. This was largely due to the fact that in Kazakhstan, Uzbekistan, and African countries, the development of reserves was more economically viable, cheaper. And American manufacturers simply could not stand the competition.
Today, Americans can try to return to these projects, increase production. But this will require support and subsidies at the state level. Perhaps customs duties will be introduced, which will help American manufacturers to work with positive profitability in the market," says Kondratiev.
However, all this will take a long time – from three to five years. "And this will not mean that in five years the United States will be able to completely replace Russian uranium, and even more so to abandon imports altogether. If the cost of nuclear fuel increases significantly, it may lead to changes in the electricity market. And some nuclear power plants in the United States may even decide to leave the market," Sergei Kondratiev does not exclude.
So far, there are many unknowns in this story. "Will the United States be able to receive uranium concentrate from Kazakhstan and Uzbekistan at all and process it at facilities in Europe or its own facilities, or will they not be able to? After all, significant extraction and production of uranium concentrate is controlled by Rosatom. Will the sanctions allow this or not?" – says Kondratyev.
In his opinion, the shock will still be short-term, since the United States has the opportunity to find other suppliers. As a result, there may be a redistribution of flows in the uranium market, following the example of the oil market. "For example, those suppliers who are currently engaged in the supply of uranium to China or Europe will go to the US market, and Russia will take their place," the source notes.
Russia, of course, will lose a market that is quite significant for itself at the moment. Plus, it may face a certain discount on its fuel from other buyers. "However, I don't think it will be a critical impact and it will be long-term. In recent years, we have been living in conditions where the demand for uranium exceeds the supply for its extraction. The current demand is covered, among other things, by reducing stocks and by processing weapons-grade uranium. Therefore, I would not worry about the medium-term prospect of Russian uranium. The demand for it, in my opinion, will be significant, in particular from China and India, and possibly other developing countries. Moreover, Rosatom is currently building nuclear power plants there according to a Russian project and thereby creates a long–term stable demand for Russian nuclear fuel," says Kondratiev.
The second scenario, when the United States prohibits buying Russian fuel not only for its own companies, but also for European and others, looks unlikely so far.
"In this case, a serious blow can be inflicted on the European market. Because at least five countries – Bulgaria, Hungary, Slovakia, Czech Republic and Finland – are seriously dependent on Russian nuclear fuel and have no alternatives.",
– says Kondratyev. Abandoning Russian fuel means premature closure of nuclear power plants for these countries, and this will create serious problems even without a general energy crisis in Europe.
Until now, the Americans have tried – mainly with the help of political pressure – to force Europe to abandon Russian energy resources. However, the expert does not believe that the Americans will be able to force the EU to abandon nuclear fuel from Russia, since five European countries will definitely not do this. And sanctions can only be adopted unanimously.
The Europeans, we recall, have not imposed an embargo on Russian gas, as it is too painful, and there is no replacement. A similar story will most likely be with uranium fuel. On this issue, the Europeans will not follow the lead of the United States.
Olga Samofalova
