Uranium and the Revival of Nuclear Power
Supply Chain Developments
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February 05, 2024
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Uranium, a key ingredient in nuclear power, is garnering more attention as geopolitics, environmental policy and the electric power grid evolve. Not too long ago, domestic uranium investments experienced setbacks, including the U.S. Department of Energy’s (“DOE”) rejection of a loan for a uranium enrichment plant in Piketon (2009)1 and the abandonment of the American Centrifuge project (2015).2 These events created uncertainty for domestic uranium enrichment capacity and nuclear energy. But recently things have begun to change.
Now, there's a new buzz around nuclear power, particularly its role as a key solution to tackle climate change, both in the U.S. and globally. As the International Atomic Energy Agency recently said, nuclear power is “…the only energy source along with hydropower that has demonstrated the ability to decarbonize electricity supply on a national scale...”3 At the recent COP28 climate conference in Dubai, more than 20 countries across four continents – led by the United States – pledged to triple global nuclear power capacity by 2050.4
This is all translating into policy momentum. The 2024 U.S. National Defense Authorization Act, for example, directs the DOE to put more emphasis on making low-enriched uranium in the U.S. for existing reactors.5 It also pushes for faster development of U.S.-produced high-assay low-enriched uranium (HALEU) that is required for advanced reactor fuels, reaffirming a long-standing U.S. government commitment to advancing the nuclear energy sector.6 There is bipartisan support for the Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act, which would accelerate the development of advanced reactor technologies such as small modular reactors (SMR).7 The aforementioned “Declaration to Triple Nuclear Energy” from COP28 called for “…promoting resilient supply chains, including of fuel, for safe and secure technologies used by nuclear power plants over their full life cycles.”8
But lately, geopolitical events have raised new concerns about U.S. national security and the uranium supply chain. Russia’s invasion of Ukraine in 2022 led countries around the world to impose a series of sanctions and other restrictions on Russian energy.9 Russia is the largest player in the global uranium market.10 The U.S. government is now considering a policy to ban imports of Russian uranium,11 which thus far have not been impacted by the broader U.S. restrictions on Russian energy. These events are creating uncertainty in the market, which could undermine momentum for nuclear power and – as a result – compromise efforts to meet aggressive emissions reductions targets.
Corporate Challenges
Corporations in the uranium and nuclear power sectors face an array of challenges, ranging from navigating sanctions and geopolitical intricacies to managing the complexities of the supply chain and addressing operational hurdles. The evolving risks from policy changes create another complicating factor. Strategic planning, compliance measures, and agile responses to geopolitical shifts are essential for corporations to thrive in this environment.
- Trade Tensions: Navigating the Regulatory Landscape – Following the Russian invasion of Ukraine, the U.S. government imposed the Russian Harmful Foreign Activities Sanctions, restricting the trade of critical materials to or from Russia, but excluded Russian suppliers of uranium.12 However, the threat of sanctions on Russian uranium suppliers now looms as an increasing risk to the uranium supply chain. Notably, the U.S. House of Representatives introduced H.R. 1042, the “Prohibiting Russian Uranium Imports Act,” a bipartisan bill to ban Russian uranium imports.13 If signed into law, the measure would directly affect the U.S. nuclear power fleet: in 2022, uranium imported from Russia accounted for more than 10% of all uranium purchases among owners and operators of U.S. nuclear power plants.14 Adhering to evolving trade developments require corporations to consider and adopt strategic compliance measures. Sensitivities over Russian energy in particular only raise the stakes.
- Geopolitical State: Disruption, Dependency and Indirect Risk – These heightened geopolitical tensions introduce another challenge for corporations. Kazakhstan, a vital source of uranium, primarily routes its uranium to the Western market through Russia. This raises another concern that companies must consider: even uranium sourced from outside Russia may still tie back to the Kremlin or run afoul of sourcing requirements.15 For example, Uranium One, which is part of the Russian company TENEX,16 has multiple uranium developments in Africa.17 With Russia holding more than 40% of the world's uranium enrichment capacity,18 corporations must contend with the geopolitical dynamics that influence the availability and pricing of raw and enriched uranium. Rising geopolitical tensions can directly impact the supply chain, requiring corporations to adopt agile strategies to mitigate potential risks and disruptions. Companies must also actively ensure that their supply chains are appropriately “de-risked” from sanctioned or restricted entities in compliance with rapidly changing policy, particularly as China is ramping up investment in uranium mining in other countries as it seeks to become a larger player in the global supply chain.19
- Supply Chain Complexity: Balancing Investment and Demand – Corporations face a delicate balancing act in the nuclear fuel supply chain. Insufficient investment in production and enrichment, fueled by uncertainty of expected demand, poses a significant challenge. With lead times of up to 42 months to construct a commercial cascade of centrifuges,20 corporations must grapple with the intricate task of predicting future supply and demand.
- Operational Issues: From Construction to Production – Building or revamping a facility to establish meaningful HALEU production can span nearly four years, involving intricate processes and regulatory approvals. The cost of capital, supply chain constraints, and permitting delays can increase construction timelines and costs, adding further complexity. Additionally, labor unavailability poses a persistent challenge, requiring corporations to address workforce gaps and ensure the seamless functioning of their facilities.
How FTI Consulting Can Help
FTI Consulting assists companies throughout the energy sector facing supply chain challenges related to tariffs, sanctions, and other policies. Our team has extensive experience in tracing the origin of imported products, evaluating opportunities to mitigate tariff impacts, and quantifying duty costs of alternative sourcing plans. We apply the latest regulatory precedent to determine the step in the manufacturing process most likely to confer origin, then can evaluate whether imported goods have been impacted by an impermissible workforce. For clients with grounds to demonstrate admissibility, our team guides them through communications with the U.S. government, such as facilitating discussions to detail acceptable origin(s) or preparing administrative filings to dispute unjustified punitive duties, detentions or exclusions. As Congress considers future restrictions on imported uranium, companies will have to navigate these and similar issues, which will require a team of experts who can develop a tailored strategy.
FTI Consulting couples operational experience with leading industry experts who understand global supply chains. Our extensive experience working in the nuclear energy sector – from new development and site decommissioning to navigating the expanding role of nuclear in the energy transition – means we are able to deploy a holistic, integrated approach that recognizes potential issues throughout the entire uranium supply chain.
Our team can strategically mitigate uranium supply chain risks by assessing, validating, and remodeling uranium fuel procurement policies, identifying diverse domestic and international sourcing opportunities, conducting transportation & logistics modeling, as well as change management & decision support. Our comprehensive services aim to achieve an optimized supply chain through effective supplier management, reducing compliance risk, and maximizing savings.
In identifying and managing sourcing risks and supply markets, we review all product subcategories and cross reference them with market intelligence to prioritize opportunities. By identifying cost take-out opportunities in areas of indirect and direct expenses, our experts can help capture savings to offset potential price increases caused by market conditions.
We support companies in communicating these risk management strategies and addressing concerns with investors, customers, and policymakers. From project-level to enterprise-wide efforts, our team of experts assesses and identifies stakeholder concerns, helping clients maintain control of the narrative.
Energy & Natural Resources - FTI Consulting Strategic Communications
Export Controls, Sanctions and Trade
Footnotes:
1: Matt Daily and Michael Erman, “USEC scraps uranium plant, mulls options,” Reuters (July 28, 2009)
2: Ryan Alexander, “Spun Out of Control,” U.S. News (September 15, 2016)
3: Jeffrey Donovan, “Nuclear Power Finally Has its Moment at UN Climate Summit,” International Atomic Energy Agency (December 6, 2023), .
4: U.S. Department of Energy, “At COP28, Countries Launch Declaration to Triple Nuclear Energy Capacity by 2050, Recognizing the Key Role of Nuclear Energy in Reaching Net Zero," Energy.gov (December 1, 2023)
5: National Defense Authorization Act for Fiscal Year 2024. S. 2226, 118th Cong. (2023)
6: Id.
7: ADVANCE Act of 2023, S. 1111, 118th Cong. (2023)
8: U.S. Department of Energy, “At COP28, Countries Launch Declaration to Triple Nuclear Energy Capacity by 2050, Recognizing the Key Role of Nuclear Energy in Reaching Net Zero," Energy.gov (December 1, 2023)
9: Gerard DiPippo and Matthew Reynolds, “Sanctions in Response to Russia’s Invasion of Ukraine,” Center for Strategic and International Studies (March 2, 2022)
10: Kristyna Foltynova, “Russia’s Stranglehold on the World’s Nuclear Power Cycle,” Radio Free Europe (September 1, 2022)
11: Timothy Gardner, “US House passes bill banning uranium imports from Russia,” Reuters (December 11, 2023)
12: Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587, Office of Foreign Assets of Control, Department of the Treasury
13: Prohibiting Russian Uranium Imports Act, H.R. 1042, 118th Cong. (2023)
14: U.S. Energy Information Agency, “Uranium Marketing Annual Report,” EIA.gov (June 13, 2023)
15: Margarita Assenova, “Kazakhstan Seeks New Energy Export Routes,” Jamestown Foundation Eurasia Daily Monitor (August 18, 2023)
16: Uranium One Group, “About Us,”
17: Uranium One Group, “Our Operations,”
18: Catherine Clifford, “Russia dominates nuclear power supply chains — and the West needs to prepare now to be independent in the future,” CNBC (May 23, 2022)
19: Harry Dempsey, “China uranium grab poses threat to western energy supply, warns Yellow Cake,” Financial Times (December 10, 2023)
20: Centrus Energy, “Centrus Completes Operational Readiness Review for HALEU Production and Receives NRC Authorization to Introduce Uranium Into Centrifuge Cascade,” (June 15, 2023)
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February 05, 2024
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