Uranium price is +4.75% to 26.30 USD per Pound!
In January 2018, the only two remaining US uranium producers, Ur-Energy and Energy Fuels, filed a petition with the U.S. Department of Commerce to highlight the relevance of U.S. uranium production in terms of potential security concerns and increasing dependence of the energy industry on uranium imports. The two companies argued that imports from successor countries of the former Soviet Union (namely Russia, Kazakhstan and Uzbekistan) now account for 40% of US demand for uranium, while only 5% of demand is produced in the US itself. The dependence, both of the US energy industry (after all, 20% of the electricity consumed in the USA is generated from nuclear power plants) and of the military, on these nations has increased alarmingly as a result. With their petition, the two producers want both the Ministry of Commerce and President Trump to work out a clear assessment of the import dependency of the USA on Russia, Kazakhstan and Uzbekistan and to promote the USA's own uranium industry.
Trump now announced on 12 July 2019 that the US Department of Commerce has determined that the import of uranium poses a threat to US national security. At the same time, he founded the U.S. Nuclear Fuel Working Group to further investigate nuclear fuel production in the U.S., including uranium mining, as the next phase of this petition. Over the next 90 days, the working group will review the current state of US nuclear fuel production and develop recommendations to revitalize the entire nuclear fuel supply chain in line with US national safety objectives.
This seems more than logical given the fact that the US uranium mining industry will produce less than 1 percent of the uranium needed to operate US nuclear power plants itself this year. The USA's only domestic uranium conversion facility was shut down in 2017, so the USA currently does not have the capability to enrich uranium for national safety applications. The industrial base to support US nuclear fuel production is gradually disappearing, and dependence is shifting more and more to foreign nuclear fuel sources and technologies in a similar way to rare earth minerals. The US needs nuclear power, backed by a robust and reliable domestic uranium and nuclear fuel industry, to achieve Trump's stated goal of a stronger, growing economy and national security.
As President Trump rightly pointed out, the USA imports almost all its uranium to meet its own needs, mainly because foreign state-owned companies have distorted world market prices and made it more difficult for US mines to compete.
Conclusion: The Trump government has thus clearly identified uranium as critical for the security and economic prosperity of the USA and has now set up a U.S. Nuclear Fuel Working Group, which is to work out within 90 days to what extent the demands of Petition 232 are justified and can possibly still be implemented. The whole thing looks a bit like Trump not only wants to buy himself a little more time, but at the same time also wants to initiate a broader investigation of several ministries and groups and thus better legitimize a corresponding result. It remains to be seen to what extent foreign policy strategies will also play a role. Petition 232 is far from dead, as the exaggerated price discounts on many US uranium stocks make it look. Especially for the producers Ur-Energy and Energy Fuels (currently even generating a significant cash flow from vanadium production), but also for Uranium Energy, for example, nothing has changed compared to before the submission of the petition.
We assume that this is far from being the last word on the matter. After all, Trump is the epitome of "America First" or "Buy American" and he doesn't like dependencies at all.
Swiss Resource Capital AG and the authors of Swiss Resource Capital AG currently hold or intend to hold shares in the following companies mentioned in this issue: Ur-Energy, Energy Fuels, Uranium Energy, Fission 3.0, Fission Uranium, Cameco, Skyharbour.
Swiss Resource Capital AG has concluded IR consulting agreements with the following companies mentioned in this issue: Uranium Energy.
This publication is based on Swiss Resource Capital AG's detailed risk warnings, limitations of liability and disclaimers, which can be viewed here: Risk Disclosure and Disclaimer