Canada could get caught in cross fire of US uranium trade review

Marco Green
July 21, 2018

But Ross has been given a new task - after two American uranium producers, Energy Fuels and Ur-Energy petitioned the Commerce Department to open a so-called Section 232 investigation into whether "the dominance of imports in the USA uranium market raises national security concerns".

USA uranium producers Energy Fuels Inc. and Ur-Energy Inc. filed a petition in January requesting an investigation under section 232 of the 1962 Trade Expansion Act - the same provision used to justify tariffs of 25 per cent on steel and 10 per cent on aluminum imports from countries including Canada, Mexico and Europe.

In a statement citing idle USA mines and massive layoffs in the us uranium mining sector over the past two years, Ross announced that he had accepted a petition from two USA energy companies to launch the probe.

Uranium is used in the US nuclear arsenal and powers the Navy's nuclear aircraft carriers and submarines, along with 99 USA commercial nuclear reactors that produce 20 percent of the electricity consumed in the United States.

The provision allows for duties without a vote by Congress if imports are deemed a national-security threat, and was used this year to slap tariffs on steel and aluminum imports.

"Targeting Canada's uranium industry would be absurd and would suggest a deliberate escalation by the Trump administration - for its own political purposes - of a trade war with America's closest ally", he said in a statement. The Saskatchewan-based uranium company accounts for 18 per cent of the world's uranium production and sells 30 per cent of its uranium to the United States.

The companies have blamed the drop in US domestic production on foreign nations' subsidies for uranium production.

Canada was the largest individual foreign supplier, producing 35% of uranium purchases by USA plants.

The companies added they expected more nuclear fuel from state-subsidized companies in Russian Federation and China will be imported in the coming years, likely further displacing USA production.

Entergy Corp. and FirstEnergy Corp., operators of nuclear power plants, led decliners on the S&P 500 Utilities index, falling as much as 1.7 per cent and 1.9 per cent respectively.

The U.S. Energy Information Administration said in May that uranium production plummeted in the first quarter of this year to 226.8 million pounds. "Today, U.S. uranium production has dropped to only five percent of U.S. requirements". "Foreign policies of other nations should not be permitted to jeopardize this crucial USA industry", the statement said.

Prices have since bumped up to about $23 a pound following production cuts at leading producers KazAtomProm in Kazakhstan and Cameco Corp.in Canada. The Department of Commerce states that 20% of the US electric grid is powered by nuclear energy. "If the issue in question is the over-reliance of the United States on uranium supplied by state-controlled enterprises from countries not aligned with American policy interests, this clearly does not apply to Canada or Cameco", Gitzel said.

The companies that requested the trade case asked that the Commerce Department limit imports so that 25 percent of the uranium used in the United States would be produced domestically.

The investigation comes a day before the department holds a hearing on whether the imports of automobiles and automotive parts threaten US national security.

Other reports by Click Lancashire

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