home Politics, U Tariffs On Uranium Would Make More Sense Than Trump’s Protections On Steel And Aluminum

Tariffs On Uranium Would Make More Sense Than Trump’s Protections On Steel And Aluminum

Thomas Duesterberg , Contributor to Forbes

Using Section 232 of U.S. trade law to apply tariffs on steel and aluminum imports was a questionable use of this tool. Those tariffs did get the attention of exporting nations, but also needlessly irritated both domestic and international allies. A clearer and more compelling case for Section 232 use has been filed by the two remaining significant U.S. uranium mining firms, who seek to limit uranium imports to the U.S. These small mining companies supply only about 5% of annual U.S. consumption. Much of the rest comes from Russia and its allies and affiliated companies in Canada and elsewhere. The U.S. Department of Commerce should take the petition for relief seriously and find a way to help preserve U.S. suppliers. National defense requirements for uranium and processed products by law must be met by domestic firms. Both long term national security needs and the strength of the U.S. commercial nuclear sector are threatened by the looming dominance of Russian and Chinese industries.

The U.S. nuclear industry has been in slow decline since at least the Three Mile Island disaster in 1979. The shock and ensuing efforts to create a new safety regime have all but paralyzed commercial nuclear industry ever since. Despite providing 20% of U.S. electricity needs and a reliable baseload capacity much needed in an era of growing reliance on non-fossil fuels, the industry has been under siege by environmentalists, apocalyptic alarmists, and non-proliferation advocates for 40 years. Trying to balance the benefits of nuclear power and the ever-more complex need for safety has proven nearly impossible from an economic point of view. The most recent attempts to build a new generation of nuclear electricity plants in South Carolina and Georgia led to the bankruptcy of Westinghouse, the last bastion of American commercial nuclear technology.

The difficult economics of commercial nuclear power has slowly spilled over into the entire span of the nuclear supply chain. In 2013 the only remaining U.S. nuclear enrichment plant was shut down. The only surviving U.S.-owned conversion plant, which processes raw ore into uranium hexafluoride for enrichment, was put into mothballs last year. After the fall of the Soviet Union, excess enriched uranium and raw uranium ore began to flood the U.S. market and contribute to a slow fall in prices. Ore imports also increased from other parts of the world, including Canada, South Africa and Europe. Former Soviet countries Kazakhstan and Uzbekistan also ramped up exports at prices below the cost of North American production and displaced suppliers in the U.S. and Canada.

New competition led to the consolidation of the mining industry starting in the 1990s. In the 2000s the Russians and their Kazak allies not only flooded the U.S. market and drove down prices, but apparently used political connections to the Clinton and Obama administrations, along with outright bribery and kickback schemes, to win approval to buy valuable U.S. and Canadian mining assets. Russia and its allies now provide about 40% of the uranium ore used in America.

U.S. law requires that all uranium fuel used in national security related applications be made from ore mined, converted and refined in the United States by domestic companies. This fuel is of course required for the nuclear arsenal and nuclear-powered submarines (our entire fleet) and other advanced warships. The U.S. maintains a large stockpile of nuclear fuel that meets the domestic supply and processing standard. But the reserves are expected to meet needs only until around 2030. Tritium, now produced exclusively by the Tennessee Valley Authority and used in triggering nuclear weapons, is in especially short supply.

A viable U.S. uranium mining industry is needed to meet both defense requirements in the future and guard against becoming reliant on Russian and Russian-affiliated suppliers. Earlier this month, the Speaker of the Russian parliament introduced a bill to “end nuclear cooperation” with the U.S. as a reaction to the Trump administration sanctions. China too is ramping up production of nuclear fuel (mined in client states such as Namibia) and subsidizing production to build its own industry.
As early as 1992 the problem of reliance on Russian ore and fuel and erosion of the domestic industry was recognized by U.S. officials and an anti-dumping case against Russia resulted in a complex system of quotas to limit imports from Russia. Partly with the questionable acquisition of U.S. and Canadian miners in the 2000s, and partly in cooperation with Kazak and Uzbek miners, Russia has circumvented these quotas. In any case, the suspension and quota agreement is scheduled to terminate in 2020.

Source: Forbes