RESPONDING TO RUSSIAN FUEL BAN | SPECIAL REPORT
NexGen: Playing the long game Like other fuel cycle executives, Travis McPherson, CCO at Canadian uranium mining company NexGen, takes a wider view. McPherson sees the US ban as the result of an east-west split which, he believes, will continue to grow, and which is significant in driving current critical mineral strategies.
“I think [the split] was really brought to the front by
Covid and all of the supply chain challenges around it,” he says, “and then, on top of that, you have a desire by Western policymakers and the general public to establish sustainable supply chains onshore or with allies.” Asked if the US is ready for the ban, McPherson says
“they’re ready with what they’ve proposed, which is to enable waivers through to 2028. They only produced 82,000 pounds [37,000kg] of uranium in the country in Q1/2024 and have limited nuclear fuel supply chain capacity… If Russia retaliates that could be a big, big problem because obviously the US is [phasing out Russian uranium] in a controlled fashion that doesn’t turn the lights off – but if Russia retaliates, there’s a risk of that happening, not overnight but in a relatively short timeframe.” Most of the nuclear fuel cycle, McPherson argues, is
“quite easy to fix – it just takes money and permits and a little bit of time”. With uranium, though, exploration firms “have to have a lot of luck. You have to get all of the stakeholders involved, get buy-in from local communities, go through the detailed engineering process. Capital markets have to be there so you can fund all of this – and then you have to build a mine.” This part of the fuel cycle hasn’t received a lot of government focus yet, he says, but “being in that side of the business, I can tell you it is the part that needs the attention, and it’s the side that isn’t in the control of any policymaker or government official.” A mine that can be ramped up or down to adjust to
market conditions is strategic and unique, McPherson says, since “markets are either over- or undersupplied, and we don’t have that crystal ball so being able to ramp our mine up or down will ensure optimisation of market dynamics”. NexGen’s Rook I project “has the potential to do that now”, he says. McPherson adds that utilities looking ahead to 2028-29 and beyond can reasonably foresee a world “where aboveground inventories are lower, or still low.” NexGen’s recent $250m uranium procurement deal with MMCap International, he says, was designed to optimise current contract negotiations given that the US ban will affect both utilities’ uranium supply forecasts “and their thinking about supply post-2028, when the waivers are done”. Utilities “are not particularly confident,” he says, “that if there are hiccups to their supply forecasts, they’ll be able to source uranium from the spot market or from on-hand inventories, because those don’t really exist anymore – and it doesn’t look like there’s going to be a big restocking of inventories between now and then.”
Outlook: “Bleak” or business as usual? Several industry insiders speaking off the record said that the nuclear power generation scenario for the US post-2028 now looks, as one put it, “pretty bleak”, and that keeping America’s lights on may prove challenging without access to Russian LEU. But many companies along the nuclear fuel cycle seem to view the ban as a mere bump in the business- as-usual road.
www.neimagazine.com | June 2024 | 19 Indeed, Timothy Matthews, Alex Polonsky and Scott
Clausen of global law firm Morgan Lewis, which advises companies across the fuel cycle and power generation spaces on fuel supply contracts as well as other risk and regulatory issues, said in a May brief that non-Russian sources of uranium and enrichment services plus a revitalised domestic fuel sector “should eventually blunt any significant impacts from the Act on the US nuclear industry.” The ban’s potential negative effects are “not expected
to be significant in the short term,” Morgan Lewis said, due to the industry’s efforts – in anticipation of a US ban, a Russian export ban, or both – to acquire uranium from non- Russian sources: “Thus, the cost of a possible disruption may already be reflected in uranium pricing.” The law firm also noted that since US reactors’ fuel inventories only need replenishing every 18-24 months, most should be covered in the short term – although “Even so, assuring that material has been delivered to the US may be important.” In the medium term, however, the ban could have a
more significant impact given the waiver programme’s planned termination in 2028, when any fuel that’s currently stockpiled will likely have run out as well. Under such conditions, companies can try to obtain LEU from the DOE’s reserves under the American Assured Fuel Supply (AFS) programme, described by the DOE as designed “to serve as a backup fuel supply for foreign recipients to be supplied through US persons, or for domestic recipients, in the event of a fuel supply disruption.” The DOE says it is “committed to making the AFS available
to eligible recipients in the case of supply disruptions in the nuclear fuel market” – but Morgan Lewis notes that such access will only be granted if DOE decides that a “fuel supply disruption that cannot be addressed by normal market mechanisms” has occurred. And, since the programme has never actually been accessed, the time it would take for DOE to grant a request is another big unknown.
Also unknown, the Morgan Lewis authors concluded, is the long-term impact of the US ban, although they pointed to its potential for positive impact in encouraging the growth of a domestic fuel cycle. But whether demand will be high enough, and import restrictions will bite hard enough, to prompt the necessary capital commitment and facility expansion “remains to be seen”. Further US policy support, the law firm said, may ultimately be needed to keep the lights on. ■
Below: The US Senate recently passed the Prohibiting Russian Uranium Imports Act
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