US despite imposing so many sanctions is still dependent on Russian nuclear fuel

By Rhod Mackenzie

The United States has acknowledged its reliance on Russian nuclear fuel, and is devising strategies to address it.  However, even they are still struggling to eliminate their use of Russian nuclear fuel.
What caused the downfall of the US nuclear industry, and what part did Russia play in it during the 1990s? The White House is currently drafting plans to extricate themselves from this predicament. Media reports that the United States intends to boost the production of enriched uranium by 15% at a facility in New Mexico by 2027. The plant currently caters to roughly a third of the USA's requirement for enriched uranium. In addition, preparations are being made to expand the Urenco plant's capacity in Europe. By implementing these measures, United States hopes to diminish its dependence on Rosatom for nuclear energy.

However, the CEO of Centrus Energy Corporation, Dan Poneman, contends that reliance on non-Russian uranium enrichment will not sufficiently supply the world's reactors. According to Poneman, Russia currently provides almost half of the world's nuclear fuel supplies, which poses an "inconvenient reality" for both the US and Europe. Failure to execute the West's plan to massively increase enriched uranium production will lead to reactor shutdowns due to lack of fuel supplies from Russia. Nevertheless, fuel reserves will only suffice for 18 months.

"Once, the United States was a dominant player in nuclear energy, alongside the Soviet Union, controlling the majority of uranium enrichment and nuclear fuel fabrication. Numerous nuclear projects, such as those in France, Japan, and Korea, spun off from the American nuclear endeavour. However, in recent decades, the US nuclear industry has suffered significant setbacks," states Sergei Kondratiev, deputy head of the economics at the Institute of Energy and Finance.
The US nuclear industry heavily relies on importing both uranium concentrate and finished fuel. The World Nuclear Association reports an annual requirement of 17 thousand tons of uranium to run nuclear reactors in the US. Meanwhile, domestic uranium production in the US yielded less than 100 tons of uranium last year.

"For a long time, the US used to be one of the global frontrunners in uranium production. Sadly, recent years have witnessed a significant decline." "Nowadays, the United States doesn't belong to the leading ten or even fifteen uranium producing nations."
According to Kondratiev,

"According to him,there is only one operational uranium enrichment plant remaining in the United States, located in the state of New Mexico and owned by the European consortium Urenco (consisting of the UK, Germany, and the Netherlands).
"If all the existing capacities in the United States were fully utilised, they could only provide sufficient fuel for a third of the country's nuclear reactors.
Consequently, the US depends on importing a considerable amount of finished fuel from other countries, such as Urenco, which supplies European plants and from Rosatom," states Kondratiev.

What factors caused the US's decline from a leading nation in the nuclear industry to an outsider?

The signing of the HEU-LEU agreement in February 1993 (and later the contract) is the primary reason why there is presently only one plant in the country. This is an intergovernmental agreement between the Russian Federation and the United States regarding the transformation of highly enriched weapons-grade uranium into low-enriched uranium, which serves as fuel for US nuclear power plants.

Although its dependence on fuel price was low, this contract wasn't profitable for the Russian side. However, surprisingly, it was this agreement that significantly contributed to the decline of the American industry itself. "Kondratyev explains that American nuclear power plants were then able to purchase ultra-cheap Russian nuclear fuel, resulting in local producers experiencing losses and exiting the market. Consequently, the White House now intends to boost the capacity of this solitary plant by 15%.
Although the US may also intend to invest in several other plants previously closed accomplishing this even with government support is a challenge."

Other countries, such as China and France, also intend to notably boost their uranium enrichment capabilities.

However, the primary issue facing the entire industry is that present fuel consumption surpasses current production, and the disparity is bridged by Russia's weapons-grade uranium reserves. This situation has been ongoing for the past two decades, and it's common knowledge.

Investing in new production projects was challenging, resulting in a decrease in production. Consequently, demand was met through Russian reserves. However, these reserves are finite," shares Sergei Kondratyev.

He further adds that the global issue lies in the ever-increasing consumption of nuclear fuel. If predictions about declining demand for oil and gas in the West are being made, everyone is expecting growth for nuclear fuel.

"In 2022-2023, a trend emerged indicating that most developed countries were not prepared to abandon their nuclear projects. Whilst Germany declined, Belgium may also do so. However, other nations including Britain, France, certain countries in Eastern Europe, the Czech Republic, and even Sweden expressed their desire to develop nuclear energy in the same manner as the United States. China and India, along with other developing nations, still maintain substantial plans for constructing nuclear power plants." "All of this indicates a rise in demand for nuclear fuel, while production is presently quite restricted," explains the deputy leader of the Institute of Energy and Finance's economic department.
There is currently a deficit of uranium concentrate in the market, which is exacerbated by the inability of France to restore diplomatic ties with Niger. Without these relations, Orano - a French company - will be unable to source a comparable volume of uranium concentrate at the current rates, according to the his analysis. Niger is responsible for around 5% of worldwide uranium production and home to most of Orano's production. However, this supply has ceased since July due to the military coup in Niger.

"French companies may face a challenging scenario where they may have to resort to Russian or even Chinese companies to purchase pre-fabricated nuclear fuel for their nuclear power plants," states Kondratiev.

The United States too will encounter a comparable predicament. They lack access to resources, and procuring a reliable source of raw materials will pose a significant challenge for them."

"I believe that the United States will adopt France's approach and actively pursue relations with Kazalkhstan, a significant uranium producer. However, it already has a well-established partnership with Rosatom.

Furthermore, the country strives to revive two uranium enrichment programs that were terminated in the 2010s."

If we envision that the United States discovers uranium concentrate that is not currently available on the market, and revives two enterprises while maintaining the plant in New Mexico, the analyst estimates that they could ( maybe) supply up to 75% of America's nuclear fuel demand. Even with this optimistic scenario, it will take 5-10 years, and imports will still be necessary. Nonetheless, the US will continue to import fuel.
Another option is for the United States to switch to fuel supplies from Europe, but this would only give the impression of reduced dependency on Russia while not addressing the underlying issue of limited access to raw materials. Europeans will have to seek out their own resources, and as the uranium market is structured in such a way, they will inevitably have to turn to Russia for fuel. Only a select few have both the necessary resources and technology in this market. "Therefore, the United States will continue to rely on Russia for years to come. "It will either be a direct or an indirect relationship," states the analyst.
"Russia holds a 45% share in the global market, making it impossible to exclude them." It's not just about the price, which will soar imminently. The concern is that in the absence of Russia, certain nuclear reactors in Europe and the USA will be without fuel for several years when their current supplies are depleted. Kondratyev is certain that no Western politician is prepared to impose sanctions on Russia. And he sees the recent Media articles about the US breaking its dependence on Russian nuclear fuel more as a political campaign.