The US plans to ban imports of Russian uranium for twenty years. At the same time, the United States is now completely dependent on imported nuclear fuel. The consequences for the nuclear market from such an embargo may be even more severe than for the global oil market, experts believe
The draft law banning imports of low-enriched uranium of Russian origin until 2040 has been approved by the U.S. House of Representatives, news agencies report. The bill proposes to ban the purchase of uranium that was produced in Russia or by one of the Russian-registered companies.
However, the main point of the bill is different: it proposes to prescribe the possibility of lifting the ban if no other sources of supply can be found or “for the sake of the national interests of the United States”. This can be done jointly by the US Secretary of Energy in coordination with the State Department and the Secretary of Commerce. Moreover, the U.S. Department of Energy will be able to issue permits to import Russian uranium in the amounts permitted under current U.S. law.
If this law is passed, it will be the states themselves who will suffer the most.
“Russia is, after all, still a critical supplier of nuclear fuel to the United States and the world market. If the U.S. intervenes so abruptly in the nuclear sector, the consequences will be more severe and complex than the consequences for the global oil market after the imposition of oil sanctions. The nuclear market is more oriented towards long-term contracts than the oil market. In addition, the nuclear sector is more concentrated, and this is a problem. Russia controls 11-12 per cent of the world’s production capacity in the global oil market, and in the uranium enrichment services market, Russia holds more than 40 per cent. For the nuclear fuel market, this could be a game with completely unpredictable consequences, primarily for the U.S. market itself,” said Sergei Kondratyev, deputy head of the economic department at the Institute of Energy and Finance.
Once upon a time, the United States was a leader in the nuclear power industry and, along with the Soviet Union, controlled the majority of uranium enrichment and nuclear fuel fabrication. But the situation has long been different.
The World Nuclear Association estimates that 17,000 tonnes of uranium are needed annually to operate American nuclear reactors, but uranium production in the United States last year was less than 100 tonnes. In the US, only one uranium enrichment plant remains in operation in New Mexico, and it belongs to the European consortium Urenco (Great Britain, Germany, and the Netherlands). All the raw materials are imported. The US has to import fuel, particularly from Urenco, which supplies fuel to the US from European plants, and from Rosatom.
According to the expert, the attempt to restrict such a major player in the nuclear market as Russia will inevitably lead to an increase in costs and fuel prices worldwide, and it is American consumers who will have to pay the most.
“We may see a situation similar to the oil market, when Russian oil began to be sold at a discount after sanctions were imposed. The new consumer will contract for Russian nuclear fuel at a discount. But since prices in the world will rise very seriously, even with a discount, our fuel will cost more than the prices we have now. In fact, these sanctions will be paid for by the American consumer, who will pay the highest price,” Kondratyev argues.
At the same time, unlike the oil market, the nuclear market is unlikely to have intermediaries – traders who will resell Russian nuclear fuel to American companies.
“This is a different market where it is difficult to carry out trading activities. Given the scale of the US market, they will scurry all over the market and try to find other suppliers. Right now it looks like an almost impossible task. That’s because fuel supplies are subject to long-term contracts for decades. I think it will be very difficult to find consumers in the market who will be ready to transfer their volumes to the Americans. The current capacity structure does not imply the possibility of choice. It was possible in the early 1990s, but a lot has changed since then. There is no such capacity surplus in the Western world now,” says the expert of the Institute of Energy and Finance.
It is difficult for the US to rely even on its friends – the Europeans. “Now France does not supply itself fully and depends on supplies from the same Russia. If French companies start working for the American market, it will mean even greater dependence of French consumers on Russia. I am not sure that the French government will go for this, and the US will be ready for such a scenario,” Kondratiev says.
In Asian countries, in the same India, again Rosatom is present. China has a lot of its own capacity, but it will be very difficult for the US to come to an agreement with Beijing.
“I don’t believe there will be such a global redistribution when everyone agrees to supply uranium to the United States to replace supplies from Russia, and it all goes relatively quickly and according to plan,” the industry expert believes.
Therefore, these potential sanctions look more like an element of political bargaining within the United States between different political forces. “Generating companies that operate nuclear power plants in the US usually support the Republicans. The Democratic Party is more likely to get support from renewable energy companies. The Democrats are probably trying to play the “Russia card” here, which they have done frequently in recent years, and impose sanctions against the Russian nuclear industry. Their political opponents, in order not to be accused of sympathising with Russia, have to often support the most bizarre anti-Russian measures. Therefore, it could potentially lead to such sanctions being adopted,” Sergey Kondratyev does not rule out.
However, the most likely scenario is as follows: the decision will be made at the Congress level for political reasons, but then the US administration will act rationally and freeze or suspend these restrictions, the expert adds. This scenario has been played out more than once.
Still, the expert does not rule out that something will go wrong in the U.S. administration and the sanctions will really take effect. But in this case, there is a high probability that after some time – say a year – they will be suspended.
The peculiarity of the nuclear industry is that there are large stocks of nuclear fuel for several months or even years ahead. And the fuel itself is poured into the reactors every few months. Therefore, the imposition of sanctions will not lead to the rapid closure of nuclear power plants in the United States, they will continue to buy stockpiled fuel, just at a higher price. And when the stockpile runs out, the US authorities will be able to lift the ban on imports of Russian fuel. It is not by chance that such a possibility is clearly stipulated in the draft law.
Olga Samofalova, VZGLYAD