The debate over proposed US curbs on uranium imports
Amid the multi-pronged Trump trade wars, uranium has been largely overlooked, but any protectionist measures could undermine a major Canadian export
Brian Boner isn’t alone in applauding proposed U.S. curbs on uranium imports from foreign countries like Canada. His reasons for backing the idea, though, stand out.
As a former nuclear-missile crew commander — managing up to $5-billion worth of intercontinental atomic firepower — the Wyoming state senator says he knows the importance of a robust domestic uranium industry.
“I was responsible directly to the president for potential launch actions on anywhere from 10 to 50 ICBMs,” Boner says in comments to the U.S. Commerce Department, referring to intercontinental ballistic missiles. “An increasingly uncertain geopolitical environment requires prudence and caution, especially in these crucial matters of defending our country from its existential threat.”
His stance is shared by U.S.-based uranium companies that convinced the Trump administration to consider imposing “national-security” import quotas to encourage domestic production. Doing so would benefit Wyoming’s uranium mines.
But the majority of more than 900 written submissions filed with the department in recent months oppose the White House’s latest threat to invoke what was once a little-used trade weapon.
Canadian governments and uranium companies and some American business groups warn that slapping limits on uranium from here would actually undermine U.S. national security, increasing dependence on subsidized imports from places like Kazakhstan, Russia and China. It’s those imports that are cited as the justification for quotas.
“This situation could in fact worsen, having the exact opposite effect to what U.S. stakeholders are seeking,” the federal government argues in its submission.
And it notes that, despite Boner’s concerns about keeping the nuclear arsenal armed, Canada does not allow its uranium to be used in weapons. That need is still fulfilled entirely by American producers, notes the conservative Heritage Foundation in its submission.
Amid the multi-pronged Trump trade wars, uranium has been largely overlooked, but any protectionist measures could undermine a major Canadian export.
The Commerce Department is investigating possible action under section 232 of the U.S. Trade Expansion Act, which allows the president to take trade-protection measures if certain imports are deemed a threat to national security.
Though rarely invoked in the past, Trump has already imposed section-232 tariffs on steel and aluminum imports from Canada and elsewhere, and threatened them on auto imports.
The recent North American trade agreement includes side letters that would shield Canada and Mexico from possible vehicle levies, but the metal tariffs remain in place — as well as retaliatory duties levied by affected countries.
The uranium action was requested by U.S. companies Energy Fuels Resources Corp. and Ur-Energy USA Inc., who are proposing that 25 per cent of the American market be reserved for domestic producers and the government buy all its uranium locally.
They cite world prices that have plummeted 70 per cent since 2011, and blame an oversupply from largely state-owned companies in central Asia under the Russian sphere of influence, Russia itself and China. Those countries now supply 40 per cent of uranium used in commercial American reactors, they say.
“Russia is willing to use its energy resources as an economic and political weapon,” the Uranium Producers of America write in their submission. “It is naïve to believe they would not employ the same tactics against the U.S. with uranium supply.”
Yet in calling for protection, they do not suggest exempting imports from allies like Canada — still the biggest single supplier of uranium to the States.
The Canadian government and others acknowledge that a glut of production from those state-owned enterprises is part of the problem, creating the grimmest market conditions in decades.
But the biggest cause of depressed prices, Canada argues, is a worldwide drop in demand largely triggered by Japan’s 2011 Fukushima nuclear disaster, which prompted it and other countries to close numerous reactors.
Protection for U.S. producers lacks a national-security rationale and would “implicate” allies like Canada and Australia, adds the Heritage Foundation.
“Simply because certain products, materials, and technologies are used for national defense activities, it does not follow that the companies producing them should be shielded from market competition,” the think tank says. “’National security’ must not be abused as a bailout program for industries facing economic challenges.”
The trade group for American nuclear-energy companies cites a study that predicted the proposed quotas would increase their costs by up to US$800 million a year, and have a “disastrous” impact on the viability of reactors that generate a fifth of the country’s electricity.
Saskatchewan Premier Scott Moe, noting that he met with Commerce Secretary Wilbur Ross in June, wrote that Saskatchewan uranium “plays a critical role in maintaining U.S. nuclear energy security.” Any trade action should exclude Canada, he argued.
Saskatoon-based Cameco Corp., the world’s largest uranium company, wrote in its submission that it opposed the suggested quotas because they’re too broad, would affect Canadian imports as well as those from Central Asia and are “unrealistic in their estimate of feasible U.S. production levels.”
Cameco also urged the department to take a “broad view” of the issue, noting that increasing the use of atomic energy would mean more demand and higher prices for uranium.
“The ultimate solution to the economic challenges facing uranium mines in the United States is a robust U.S. and global nuclear electric generating industry.”
But the largest group of submissions came from individual Americans concerned not about national security or domestic jobs, but the Grand Canyon. They argued against any measure that might bolster the U.S. industry — and lead to expanded uranium mining around the national park.
The Commerce Department has until next spring to recommend whether the trade restrictions are necessary.
Source: Edmonton Journal