NEW YORK – The Trump administration’s decision to consider tariffs on uranium imports may raise the cost of fuel for nuclear reactors and undermine a separate initiative to shore up struggling electricity generators.
The Commerce Department said Wednesday it will probe whether uranium imports “threaten to impair” national security. US miners Energy Fuels Inc. and Ur-Energy Inc, which requested the probe in January, want 25% of the domestic market reserved for US producers. Domestic companies supply less than 5% of US consumption and would need about three years to ramp up production to meet that target.
The prospect of trade barriers comes after President Donald Trump last month ordered his energy secretary to take action to extend the life of money-losing coal and nuclear power plants that face competition from cheap natural gas and renewable energy. Those efforts may be hindered as the prospect of tariffs threatens to deal another blow to financially strapped reactor operators.
“It is likely that if the tariffs are enacted, it would drive up the price of uranium,” said Shawn Flaherty, a spokesman for the South Texas Project Electric Generating Station, a nuclear plant about 90 miles (145 kilometers) southwest of Houston.
Uranium prices have slumped since the 2011 Fukushima disaster led big buyers including Japan and Germany to shut down or decommission reactors. Compounding the problem was a global supply glut that prompted Kazakhstan, the world’s biggest producer, to cut back last year. Canada’s Cameco, the top North American supplier, followed suit in November.
Nuclear reactors supply about 20 percent of US electricity, and uranium accounts for about 20 percent of their costs, according to the Nuclear Energy Institute.
“Clearly the purpose of a tariff is to raise the price,” Kit Konolige, a utility analyst at Bloomberg Intelligence, said by phone. “Ultimately, in most states, it would end up being borne by the end consumer.”
Trump is trying to shore up nuclear and coal plants, generators that are considered “fuel-secure” because they store fuel on site and aren’t dependent on pipelines that can be disrupted, wind that stops blowing or a sun that sets. Under a draft plan, the administration would take action under two laws: the Federal Power Act that allows the government to guarantee profits for power plants amid grid emergencies, and the 68-year-old Defense Production Act, a Cold War-era statute once invoked by President Harry Truman to help the steel industry.
Most utilities have uranium supplies contracted through 2020 or 2021, according to Nima Ashkeboussi, director for fuel cycle programs at the Nuclear Energy Institute in Washington. It’s unclear how the Commerce Department would treat those contracts if tariffs are levied.
“The administration is searching for ways to help nuclear power plants that are financially struggling right now,” Ashkeboussi said. “We wouldn’t want to see counterproductive action to their stated goal of saving nuclear power.”