[Federal Register Volume 86, Number 145 (Monday, August 2, 2021)]
[Notices]
[Pages 41540-41610]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16113]



[[Page 41539]]

Vol. 86

Monday,

No. 145

August 2, 2021

Part II





 Department of Commerce





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 Bureau of Industry and Security





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Publication of a Report on the Effect of Imports of Uranium on the 
National Security: An Investigation Conducted Under Section 232 of the 
Trade Expansion Act of 1962, as Amended; Notice

Federal Register / Vol. 86 , No. 145 / Monday, August 2, 2021 / 
Notices

[[Page 41540]]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

RIN 0694-XC078


Publication of a Report on the Effect of Imports of Uranium on 
the National Security: An Investigation Conducted Under Section 232 of 
the Trade Expansion Act of 1962, as Amended

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Publication of a report.

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SUMMARY: The Bureau of Industry and Security (BIS) in this notice is 
publishing a report that summarizes the findings of an investigation 
conducted by the U.S. Department of Commerce (the ``Department'') 
pursuant to Section 232 of the Trade Expansion Act of 1962, as amended 
(``Section 232''), into the effect of imports of uranium on the 
national security of the United States. This report was completed on 
April 14, 2019 and posted on the BIS website in July 2021. BIS has not 
published the appendices to the report in this notification of report 
findings, but they are available online at the BIS website, along with 
the rest of the report (see the ADDRESSES section).

DATES: The report was completed on April 14, 2019. The report was 
posted on the BIS website in July 2021.

ADDRESSES: The full report, including the appendices to the report, are 
available online at https://bis.doc.gov/232.

FOR FURTHER INFORMATION CONTACT: For further information about this 
report contact Erika Maynard, Special Projects Manager, (202) 482-5572; 
and Leah Vidovich, Trade and Industry Analyst, (202) 482-1819. For more 
information about the Office of Technology Evaluation and the Section 
232 Investigations, please visit: http://www.bis.doc.gov/232.

SUPPLEMENTARY INFORMATION:

The Effect of Imports of Uranium on the National Security

An Investigation Conducted Under Section 232 of the Trade Expansion Act 
of 1962, As Amended

U.S. Department of Commerce

Bureau of Industry and Security

Office of Technology Evaluation

April 14, 2019

Table of Contents

I. Executive Summary
II. Legal Framework
    A. Section 232 Requirements
    B. Discussion
III. Investigation Process
    A. Initiation of Investigation
    B. Public Comments
    C. Site Visits and Information Gathering Activities
    D. Interagency Consultation
    E. Review of the Department of Commerce 1989 Section 232 
Investigation on Uranium Imports
IV. Product Scope of the Investigation
V. Background on the U.S. Nuclear Industry
    A. Summary of the U.S. Uranium Fuel Cycle
    B. Summary of U.S. Nuclear Power Generation Industry
VI. Global Uranium Market Conditions
    A. Summary of the Global Uranium Market
    B. Uranium Transactions: Book Transfers and Flag Swaps
    C. The Effect of the Fukushima Daiichi Incident on U.S. and 
Global Uranium Demand
    D. The Effect of State-Owned Enterprises on Global Uranium 
Supply
VII. Findings
    A. Uranium Is Important to U.S. National Security
    1. Uranium Is Needed for National Defense Systems
    2. Uranium Is Required for Critical Infrastructure
    B. Imports of Uranium in Such Quantities as Are Presently Found 
Adversely Impact the Economic Welfare of the U.S. Uranium Industry
    1. U.S. Utilities' Reliance on Imports of Uranium in 1989
    2. U.S. Utilities' Reliance on Imports of Uranium Continue To 
Rise
    3. High Import to Export Ratio
    4. Uranium Prices
    5. Declining Employment Trends
    6. Loss of Domestic Long Term Contracts Due to Imported Uranium
    7. Financial Distress
    8. Research and Development Expenditures
    9. Capital Expenditures
    C. Trade Actions: Anti-Dumping and Countervailing Duties
    D. Displacement of Domestic Uranium by Excessive Quantities of 
Imports Has the Serious Effect of Weakening Our Internal Economy
    1. U.S. Production Is Well Below Demand and Utilization Rates 
Are Well Below Economically Viable Levels
    2. Domestic Uranium Production Is Severely Weakened and 
Concentrated
    3. Reduction of Uranium Production Facilities Limits Capacity 
Available
    E. Uranium Market Distortion by State-Owned Enterprises Is a 
Circumstance That Contributes to the Weakening of the Domestic 
Economy
    1. Excess Russian, Kazakh, and Uzbek Production Adversely 
Affects Global Markets and Creates a Dangerous U.S. Dependence on 
Uranium From These Countries
    2. The Increasing Presence of China in the Global Uranium Market 
Will Further Weaken U.S. and Other Market Uranium Producers
    3. Increasing Global Excess Uranium Production Will Further 
Weaken the Internal Economy as U.S. Uranium Producers Will Face 
Increasing Import Competition
VIII. Conclusion
    A. Determination
    B. Economic Impacts of 25 Percent U.S.-Origin Requirement
    C. Public Policy Proposals

Appendices

Appendix A: Section 232 Investigation Notification Letter to 
Secretary of Defense James Mattis, July 18, 2018
Appendix B: Federal Register Notices--Notice of Requests for Public 
Comments on Section 232 National Security Investigation of Imports 
of Uranium, July 25, 2018; Change in Comment Deadline for Section 
232 National Security Investigation of Imports of Uranium, September 
10, 2018
Appendix C: Summary of Public Comments
Appendix D: Survey for Data Collection (Front-End Uranium Industry)
Appendix E: Survey for Data Collection (Nuclear Electric Power 
Generation Industry)
Appendix F: Uranium Product Specific Trade Flows
Appendix G: Summary of Commerce Department 1989 Section 232 Uranium 
Investigation
Appendix H: The National Security Aspect of U.S. Uranium Industry 
Regulation
Appendix I: The Role of State Owned Enterprises in the Global 
Uranium Market
Appendix J. U.S. Naval and Nuclear Weapons Uses of Uranium
Appendix K: Glossary

Prepared by Bureau of Industry and Security

http://www.bis.doc.gov

I. Executive Summary

    This report summarizes the findings of an investigation conducted 
by the U.S. Department of Commerce (the ``Department'') pursuant to 
Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 
1862 (``Section 232'')), into the effect of imports of uranium \1\ on 
the national security of the United States.
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    \1\ See Figure 1 in Section IV, ``Product Scope of the 
Investigation,'' for the uranium products addressed by this report.
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    In conducting this investigation, the Secretary of Commerce (the 
``Secretary'') noted the Department's prior investigations under 
Section 232. This report incorporates the statutory analysis from the 
Department's 2018 reports on the imports of steel and aluminum \2\ with 
respect to applying the

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terms ``national defense'' and ``national security'' in a manner that 
is consistent with the statute and legislative intent.\3\
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    \2\ U.S. Department of Commerce. Bureau of Industry and 
Security. The Effect of Imports of Steel on the National Security 
(Washington, DC: 2018) (``Steel Report'') and U.S. Department of 
Commerce. Bureau of Industry and Security. The Effect of Imports of 
Aluminum on the National Security (Washington, DC: 2018) (``Aluminum 
Report'').
    https://www.bis.doc.gov/index.php/documents/steel/2224-the-effect-of-imports-of-steel-on-the-national-security-with-redactions-20180111/file.
    https://www.bis.doc.gov/index.php/documents/aluminum/2223-the-effect-of-imports-of-aluminum-on-the-national-security-with-redactions-20180117/file.
    \3\ Steel Report at 13-14; Aluminum Report at 12-13.
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    As required by the statute, the Secretary considered all factors 
set forth in Section 232(d). In particular, the Secretary examined the 
effect of imports on national security requirements, specifically:
    i. Domestic production needed for projected national defense 
requirements;
    ii. the capacity of domestic industries to meet such requirements;
    iii. existing and anticipated availabilities of the human 
resources, products, raw materials, and other supplies and services 
essential to the national defense;
    iv. the requirements of growth of such industries and such supplies 
and services including the investment, exploration, and development 
necessary to assure such growth; and
    v. the importation of goods in terms of their quantities, 
availabilities, character, and use as those affect such industries; and 
the capacity of the United States to meet national security 
requirements.
    The Secretary also recognized the close relation of the economic 
welfare of the United States to its national security. Factors that can 
compromise the nation's economic welfare include, but are not limited 
to, the impact of ``foreign competition on the economic welfare of 
individual domestic industries; and any substantial unemployment, 
decrease in revenues of government, loss of skills, or any other 
serious effects resulting from the displacement of any domestic 
products by excessive imports.'' 19 U.S.C. 1862(d). In particular, this 
report assesses whether uranium is being imported ``in such 
quantities'' and ``under such circumstances'' as to ``threaten to 
impair the national security.'' \4\
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    \4\ 19 U.S.C. 1862(b)(3)(A).
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Findings

    In conducting the investigation, the Secretary found:
A. Domestic Uranium Production Is Essential to U.S. National 
Security.\5\
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    \5\ Domestic uranium production refers to all stages of the 
nuclear fuel cycle and their associated products, including uranium 
mining, uranium milling, uranium conversion, uranium enrichment, and 
nuclear fuel fabrication. Uranium mining and milling produce uranium 
concentrate, uranium conversion produces uranium hexafluoride (UF6), 
uranium enrichment produces enriched uranium product (EUP), and 
nuclear fuel fabrication produces finished nuclear fuel assemblies.
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    1. Domestic uranium is required, based on U.S. policy and 
restrictions in international agreements on the use of most imported 
uranium, to satisfy the U.S. Department of Defense (DoD) requirements 
for maintaining effective military capabilities, including nuclear fuel 
for the U.S. Navy's fleet of 11 nuclear powered aircraft carriers and 
70 nuclear powered submarines, source material for nuclear weapons, 
depleted uranium for ammunition, and other functions.
    2. Uranium is also essential to maintaining U.S. critical 
infrastructure sectors, specifically the nation's 98 reactors for 
nuclear power generation to support the Nation's commercial power grid. 
Nuclear reactors supply 19 percent of U.S. electricity consumed in the 
U.S. and they support 15 of the 16 critical infrastructure sectors 
identified by the Department of Homeland Security (DHS).\6\ Maintaining 
a robust civilian nuclear power industry is essential to U.S. national 
security, including both national defense and critical infrastructure 
requirements. DoD installations in the U.S. rely on the commercial 
power grid for 99 percent of their electricity needs.\7\ The entire 
U.S. nuclear enterprise--weapons, naval propulsion, nonproliferation, 
enrichment, fuels services, and negotiations with international 
partners--depends on a robust U.S. civilian nuclear power industry.
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    \6\ U.S. White House. Office of the Press Secretary. Critical 
Infrastructure Security and Resilience. Presidential Policy 
Directive 21. (Washington, DC: 2013) https://obamawhitehouse.archives.gov/the-press-office/2013/02/12/presidential-policy-directive-critical-infrastructure-security-and-resil.
    \7\ U.S. Department of Defense. Office of the Undersecretary of 
Defense for Acquisition, Technology, and Logistics. Report of the 
Defense Science Board Task Force on DoD Energy Strategy. 
(Washington, DC: 2008), 18. https://apps.dtic.mil/dtic/tr/fulltext/u2/a477619.pdf.
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    3. Domestic uranium production and processing, referred to in this 
report as the ``front-end'' of the fuel cycle, depends on an 
economically viable, competitive U.S. commercial uranium industry.\8\ 
The distinct stages of the U.S. nuclear fuel cycle extract uranium from 
the ground and ultimately transform it into fuel suitable for civilian 
nuclear power. The same stages of the U.S. nuclear fuel cycle are 
needed to fulfill national defense requirements for uranium used in 
naval nuclear fuel and tritium production in the future.
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    \8\ For the purposes of this report, the front-end industry is 
defined as companies owning or operating uranium mines, uranium 
mills, uranium converters, uranium enrichers, and nuclear fuel 
fabricators.
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    4. Since 1946, U.S. legislation governing the uranium production 
and nuclear power generation industries has consistently made explicit 
written reference to these industries' national security functions.\9\
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    \9\ Atomic Energy Act of 1946, as amended; Atomic Energy Act of 
1954; 1964 Private Ownership of Special Nuclear Materials Act; The 
Energy Policy Act of 1992; The United States Enrichment Corporation 
Privatization Act of 1996.
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B. Imports in Such Quantities as Presently Found Adversely Affect the 
Economic Welfare of the U.S. Uranium Industry
    1. In 2018, almost all uranium used for civilian U.S. nuclear 
electric power generation was imported, totaling approximately 94 
percent of consumption. Between 2009 and 2018, U.S. nuclear electric 
power generators increased their reliance on imported uranium products 
from 85.8 percent to 93.3 percent of their annual requirements.\10\ In 
comparison, the Department's 1989 Section 232 investigation into ``The 
Effect of Imports of Uranium on the National Security'' found that 
imported uranium satisfied just 51 percent of U.S. nuclear electric 
power generators' requirements at that time. \11\
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    \10\ U.S. Energy Information Administration, ``Table S1a. 
Uranium purchased by owners and operators of U.S. civilian nuclear 
power reactors, 1994-2017'', 2017 Uranium Marketing Annual Report 
(May 31, 2018), https://www.eia.gov/uranium/marketing/pdf/umartableS1afigureS1.pdf.
    \11\ U.S. Dept. of Commerce. Bureau of Export Administration; 
The Effect of Imports of Uranium on the National Security; 1989 
(``1989 Report'') available at https://www.bis.doc.gov/index.php/documents/section-232-investigations/88-uranium-1989/file.
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    2. Uranium is imported into the United States in eight forms, with 
the two largest categories being uranium concentrate and enriched 
uranium. Uranium concentrate is primarily imported from Australia, 
Canada, Kazakhstan, and Uzbekistan. Enriched uranium is primarily 
imported from Russia, the United Kingdom, Germany, France, and the 
Netherlands.
    3. Between 2014 and 2018, an average of 52 percent of U.S. nuclear 
electric power generator requirements of uranium concentrate was 
provided by Australia and Canada, 25 percent from Kazakhstan and 
Uzbekistan, and the remainder from Namibia (8.4 percent), Niger (2.5 
percent), South Africa (2.2 percent), Malawi (1.4 percent), China (0.3 
percent), and Russia (0.2 percent). The Department notes that between 
2014 and 2018, an average of 24.2 percent of the uranium concentrate 
provided by Australian and Canadian

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companies to U.S. nuclear power generators was originally sourced from 
Kazakhstan and Uzbekistan. In the same period, 20 percent of enrichment 
services purchased by U.S. utilities were from Russia. While a 
significant portion of imports come from Australia and Canada, the non-
market practices of state-owned enterprises (SOEs) have similarly 
harmed the financial operations of uranium producers in these countries 
and threaten their continued ability to supply uranium mined in 
Australia or Canada to the U.S. market. China is also making steady 
strides to become a major supplier in the U.S. and global nuclear fuel 
market.
    4. The entrance of China's state-owned nuclear fuel companies as 
potential actors in the global nuclear fuel industry will further 
intensify pressure on market economy producers in Canada, Australia, 
Europe, and the U.S. By 2020, China could have enrichment capacity 
beyond their domestic needs. U.S. utilities have reported purchases of 
uranium concentrate and enrichment services from Chinese controlled 
companies in the 2014-2018 period. China provided two percent of U.S. 
utilities' enrichment services contracts during this period, and is 
expected to supply even more in the coming years. Overall, the non-
market business practices of Russia, Kazakhstan, Uzbekistan, and 
China's uranium industries continue to erode U.S. uranium mining and 
processing capacity.
    5. Import competition from state-owned uranium enterprises has 
caused a significant atrophy in U.S. uranium infrastructure to the 
point where production levels from front-end companies are no longer 
economically sustainable. Documented declines in employment and skilled 
workforce (front-end employment is down 47 percent since 2009), as well 
as idling and closures of mining (13 since 2009), milling (only one of 
five remaining U.S. mills is presently active), and uranium conversion 
operations (the last U.S. facility is idled), demonstrate the steep 
decline in U.S. production capacity. Additionally, loss of long-term 
contracts with nuclear utilities, minimal market share, falling 
marginal net income, and a tenuous financial outlook indicate a 
moribund U.S. uranium industry.
C. Displacement of Domestic Uranium by Excessive Quantities of Imports 
Has the Serious Effect of Weakening Our Internal Economy
    1. U.S. nuclear electric power utilities and uranium suppliers face 
multiple challenges. Federal Energy Regulatory Commission (FERC) market 
rules do not compensate nuclear power and other fuel-secure generation 
resources for their resilience value. In addition, subsidized renewable 
energy and lower natural gas prices are causing premature retirements 
of U.S. civilian nuclear power plants before the end of their useful 
lives. To cut costs and remain viable in distorted U.S. electricity 
markets, many nuclear power operators have ended long-term contracts 
with higher-priced U.S. uranium producers and turned to foreign SOEs 
for artificially low-priced uranium imports. The loss of long-term 
contracts, which provided the revenue stability needed to adequately 
support capital investment, research and development (R&D), and 
facility expansion, as well as to maintain workforce and production, 
has adversely impacted all elements of the U.S. uranium industry.
    2. High dependence on uranium imports--averaging 93.3 percent of 
annual U.S. nuclear power utility consumption in 2018--has caused all 
elements of the U.S. uranium sector to shut down production capacity, 
struggle to maintain financial viability, reduce workforce, cut R&D, 
and slash capital expenditures. Excessive imports have dropped U.S. 
uranium mining production to some of the lowest levels seen since 
uranium mining began in the late 1940s.
    3. Without a viable U.S. uranium industry, the United States cannot 
effectively respond to moderate or extended national security 
emergencies, or over the long-term meet the domestic uranium 
requirements of the U.S. Department of Defense. Moreover, U.S. nuclear 
electric power generators would not be able to operate at full capacity 
and would not be able to support critical infrastructure electric power 
needs if foreign nations, particularly Russia and other former Soviet 
states, chose to suspend or otherwise end uranium exports to the United 
States.
D. Uranium Market Distortion by State-Owned Enterprises Is a 
Circumstance That Contributes to the Weakening of the Domestic Economy
    1. The 2011 Fukushima Daichii incident prompted the shutdown and/or 
idling of existing nuclear operators in Japan, Germany, and other 
countries. Additionally, many proposed nuclear reactors around the 
world, including in the United States, were cancelled. These actions 
decreased global demand for uranium, creating a supply glut and low 
uranium prices. This has severely affected the financial viability of 
U.S. uranium mining and milling in particular, as uranium imports have 
reached over 94 percent of U.S. utility consumption.
    2. The Fukushima incident caused similar declines in other elements 
of the U.S. front-end nuclear fuel business, including conversion, 
enrichment, and fuel fabrication companies. [TEXT REDACTED] As of 2018, 
the total domestic front-end uranium industry employs 4,958 workers, 
compared to 9,232 workers in 2009, a decline of 47 percent.
    3. During this same period SOEs in Russia, Kazakhstan, and 
Uzbekistan undercut U.S. uranium producers with lower priced uranium. 
SOEs in China also injected additional quantities of uranium into the 
marketplace despite lower prices and a drop in overall demand. In 
contrast, U.S. producers significantly cut production, shut down 
capacity, and shrank workforce levels.
    4. Market economy uranium producers such as Australia, Canada, 
South Africa, France, Germany, the Netherlands, and the United Kingdom 
have also been forced to curtail or suspend operations due to the 
excess production by SOE uranium producers that has depressed global 
uranium prices. SOE competition has displaced demand for Canadian and 
Australian product. Between 2016 and 2017, Canada cut back domestic 
production approximately 6.6 percent. Australia reduced output by 6.9 
percent. In contrast, Russia and Kazakhstan decreased their production 
by only 5.1 and 2.9 percent, respectively; but China increased 
production by 16 percent. Uzbekistan made no production cuts.
    5. U.S. nuclear electric power generators maintain only a limited 
amount of nuclear fuel materials in reserve to address potential supply 
disruptions. The U.S. Government maintains only a small stockpile of 
enriched uranium for utility use in the event of a fuel supply 
disruption. U.S. nuclear electric power generators are therefore 
vulnerable to sudden and extended disruptions in the nuclear fuel 
supply chain, especially product supplied through Russia and 
Kazakhstan.

Conclusion

    Based on these findings, the Secretary of Commerce has concluded 
that the present quantities and circumstance of uranium imports are 
``weakening our internal economy'' and ``threaten to impair the 
national security'' as defined in Section 232. An economically viable, 
secure supply of U.S.-sourced uranium is required for national defense 
needs. International obligations, including agreements with foreign 
partners under Section 123 of the Atomic Energy Act of

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1954, govern the use of most imported uranium and typically restrict it 
to peaceful, non-explosive uses. As a result, uranium used for military 
purposes must generally be domestically produced from mining through 
the fuel fabrication process. Furthermore, the predictable maintenance 
and support of U.S. critical infrastructure, especially the electric 
power grid, depends on a diverse supply of uranium, which includes 
U.S.-sourced uranium products and services.
    The Secretary further recognizes that the U.S. uranium industry's 
financial and production posture has significantly deteriorated since 
the Department's 1989 Report. That investigation noted that U.S. 
nuclear power utilities imported 51.1 percent of their uranium 
requirements in 1987. By 2018, imports had increased to 93.3 percent of 
those utilities' annual requirements. Based on comprehensive 2019 
industry data provided by U.S. uranium producers and U.S. nuclear 
electric power utilities to the Department in response to a mandatory 
survey, U.S. utilities' usage of U.S. mined uranium has dropped to 
nearly zero. [TEXT REDACTED] Based on the current and projected state 
of the U.S. uranium industry, the Department has concluded that the 
U.S. uranium industry is unable to satisfy existing or future national 
security needs or respond to a national security emergency requiring a 
large increase in domestic uranium production.
    Absent immediate action, closures of the few remaining U.S. uranium 
mining, milling, and conversion facilities are anticipated within the 
next few years. Further decreases in U.S. uranium production and 
capacity, including domestic fuel fabrication, will cause even higher 
levels of U.S. dependence on imports, especially from Russia, 
Kazakhstan, Uzbekistan, and China. Increased imports from SOEs in those 
countries, and in particular Russia and China, which the 2017 National 
Security Strategy noted present a direct challenge to U.S. influence, 
are detrimental to the national security.\12\ The high risk of loss of 
the remaining U.S. domestic uranium industry if the present excessive 
level of imports continue threatens to impair the national security as 
defined by Section 232.
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    \12\ U.S. White House Office. National Security Strategy of the 
United States of America. (Washington, DC: 2017), 2 https://www.whitehouse.gov/wp-content/uploads/2017/12/NSS-Final-12-18-2017-0905-2.pdf.
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    The Secretary has determined that to remove the threat of 
impairment to national security, it is necessary to reduce imports of 
uranium to a level that enables U.S. uranium producers to return to an 
economically competitive and financially viable position. This will 
allow the industry to sustain production capacity, hire and maintain a 
skilled workforce, make needed capital expenditures, and perform 
necessary research and development activities. A modest reduction of 
uranium imports will allow for the revival of U.S. uranium mining and 
milling, the restart of the sole U.S. uranium converter, and a 
reduction in import challenges to fuel fabricators, while also 
recognizing the market and pricing challenges confronting the U.S. 
nuclear power utilities.

Recommendation

    Due to the threat to the national security, as defined in Section 
232, from excessive uranium imports, the Secretary recommends that the 
President take immediate action by adjusting the level of these imports 
through the implementation of an import waiver to achieve a phased-in 
reduction of uranium imports. The reduction in imports of uranium 
should be sufficient to enable U.S. producers to recapture and sustain 
a market share of U.S. uranium consumption that will allow for 
financial viability, and would enable the maintenance of a skilled 
workforce and the production capacity and uranium output needed for 
national defense and critical infrastructure requirements. The 
reduction imposed should be sufficient to enable U.S. producers to 
eventually supply 25 percent of U.S. utilities' uranium needs based on 
2018 U.S. U308 concentrate annual consumption requirements.
    Based on the survey responses, the Department has determined that 
U.S. uranium producers require an amount equivalent to 25 percent of 
U.S. nuclear power utilities' 2018 annual U308 concentrate consumption 
to ensure financial viability. Based on the Department's analysis, if 
U.S.-mined uranium supplied 25 percent of U.S. nuclear power utilities' 
annual U308 concentrate consumption, U.S. uranium prices will increase 
to approximately $55 per pound (see Figure 1A). The current spot price 
is low due to distortions from SOEs.

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[GRAPHIC] [TIFF OMITTED] TN02AU21.002

    The $55 per pound price will increase mine capacity to the point 
where U.S. uranium mines can supply approximately 6 million pounds of 
uranium concentrate per year, which is approximately 25 percent of U.S. 
nuclear power utilities' consumption for U308 concentrate in any given 
year.
    The Secretary recommends that the import reduction be phased in 
over a five-year period. This will allow U.S. uranium mines, mills, and 
converters to reopen or expand closed or idled facilities; hire, train 
and maintain a skilled workforce; and make necessary investments in new 
capacity. This phased-in approach will also allow U.S. nuclear power 
utilities time to adjust and diversify their fuel procurement contracts 
to reintroduce U.S. uranium into their supply chains.
    The Secretary recommends that either a targeted or global quota be 
used to adjust the level of imports and that such quota should be in 
effect for a duration sufficient to allow the necessary time needed to 
stabilize and revitalize the U.S. uranium industry. According to survey 
responses, the average time to restart an idle uranium production 
facility is two to five years, and several additional years are needed 
to add new capacity. Market certainty, which can be provided by long-
term contracts with U.S. nuclear power utilities, is needed to build 
cash flow, pay down debt, and raise capital for site modernization; 
workforce recruitment; and to conduct environmental and regulatory 
reviews.

Option 1--Targeted Zero Quota

    This targeted zero quota option would prohibit imports of uranium 
from Kazakhstan, Uzbekistan, and China (the ``SOE countries'') to 
enable U.S. uranium producers to supply approximately 25 percent of 
U.S. nuclear power utility consumption. A U.S. nuclear power utility or 
other domestic user would be eligible for a waiver that allows the 
import of uranium from the SOE countries, with any import of uranium 
from Russia subject to the Russian Suspension Agreement, after such 
utility or user files appropriate documentation with the Department. In 
the case of a U.S. nuclear power utility, the documentation must show 
that such utility has a contract or contracts to purchase for their 
consumption on an annual basis not less than the percentage of U.S. 
produced uranium U308 concentrate shown in the phase-in table below.

               Percent of Annual U308 Concentrate Consumption Required To Be Sourced From the U.S.
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                                                                                                        2024 and
                               Year                                  2020     2021     2022     2023     beyond
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Percent of Annual U308 Concentrate Consumption Required to be            5       10       15       20         25
 Sourced from the U.S............................................
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    Phased-in incrementally over five years, this option will help 
facilitate the reopening and expansion of U.S. uranium mining, milling, 
and conversion facilities, and will ensure that U.S. uranium producers 
can make investments required for future financial viability without 
causing unintentional harm to other market economy uranium producers. 
This option avoids undue financial harm to U.S. nuclear power utilities 
by affording them sufficient time to adjust their fuel procurement 
strategies.
    The zero quota on uranium imports from SOE countries would not 
apply to

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uranium imports from SOE countries for use by U.S. milling, conversion, 
enrichment, and fuel fabrication services that produce uranium products 
for export from the United States. A U.S. milling, conversion, 
enrichment, or fuel fabricator seeking to import uranium from an SOE 
country for use to produce uranium products for export would need to 
file appropriate documentation with the Department to obtain a waiver 
for the import of such uranium for export.
    The Secretary believes that this option to impose a zero quota for 
imports of uranium from SOE countries, while continuing to allow 
unrestricted importation of uranium from Canada, Australia, and EURATOM 
\13\ member countries based on their security and economic 
relationships with the United States, should address the threatened 
impairment of U.S. national security. This would be accomplished by 
promoting the economic revival of the U.S. uranium industry, so long as 
there is not significant transshipment or reprocessing of SOE country 
uranium through these unrestricted countries.
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    \13\ As of April 2019, EURATOM includes all 28 members of the 
European Union. The United Kingdom will cease to be a member of 
EURATOM if and when it leaves the European Union. Should the United 
Kingdom cease to be a member of EURATOM, the same preferential 
treatment given to EURATOM members will also be applied to the 
United Kingdom.
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    The Department will monitor these unrestricted imports to ensure 
there is not significant transshipment, reprocessing, or book transfers 
from SOE countries to unrestricted countries in an attempt to 
circumvent and undermine the U.S. uranium producers' ability to provide 
25 percent of U.S. annual U308 concentrate consumption. Many companies 
in unrestricted countries supply uranium sourced from SOE countries. 
Consequently, up to one-third of the materials delivered to U.S. 
nuclear power utilities, at this time, is not sourced directly from the 
country of import.
    Imports of uranium from Russia under a waiver would also be 
subjected to the Russian Suspension Agreement. This option assumes that 
such agreement will continue to be in effect over the relevant time 
period and would apply to any Russian uranium imports by U.S. nuclear 
power utilities, thus holding Russian uranium imports to their current 
level of approximately 20 percent of U.S. enrichment demand. In the 
event that the Russian Suspension Agreement is not extended and 
terminates, then the Secretary recommends that a quota on uranium 
imports under a waiver of Russian Uranium Products (as defined in the 
Russian Suspension Agreement) of up to 15 percent of U.S. enrichment 
demand be imposed. If adopted this quota would be administered by the 
Department in the same manner as the Russian Suspension Agreement is 
presently administered.
    The adjustment of imports proposed under this option would be in 
addition to any applicable antidumping or countervailing duties 
collections.
    To complement the proposed trade action, the Secretary recommends 
that the Federal Energy Regulatory Commission (FERC) should act 
promptly to ensure that regulated wholesale power market regulations 
adequately compensate nuclear and other fuel-secure generation 
resources. Specifically, FERC should determine whether current market 
rules, which discriminate against secure nuclear fuel generation 
resources in favor of intermittent resources, such as natural gas, 
solar, and wind, result in unjust, unreasonable, and unduly 
discriminatory rates that distort energy markets, harm consumers, and 
undermine electric reliability. If so, FERC should consider taking 
appropriate action to ensure that rates are just and reasonable.
    The Department of Commerce, in consultation with other appropriate 
departments and agencies, will monitor the status of the U.S. uranium 
industry and the effectiveness of this remedy and will make 
recommendations to the President regarding whether it should be 
modified, extended, or terminated.

Option 2--Global Zero Quota

    This option would establish a zero quota on imports of uranium from 
all countries until specific conditions are met to enable U.S. 
producers to supply 25 percent of U.S. nuclear power utilities' annual 
consumption of uranium U308 concentrate. A U.S. nuclear power utility 
or other domestic user would be eligible for a waiver to import uranium 
from any country after submitting appropriate documentation to the 
Department. In the case of a U.S. nuclear power utility, the 
documentation must show that such utility has a contract or contracts 
to purchase for their consumption on an annual basis not less than the 
percentage of U.S. produced uranium U308 concentrate shown in the 
phase-in table below.

               Percent of Annual U308 Concentrate Consumption Required To Be Sourced From the U.S.
----------------------------------------------------------------------------------------------------------------
                                                                                                        2024 and
                           Year                               2020       2021       2022       2023      beyond
----------------------------------------------------------------------------------------------------------------
Percent of Annual U308 Concentrate Consumption Required            5         10         15         20         25
 to be Sourced from the U.S..............................
----------------------------------------------------------------------------------------------------------------

    Phased-in incrementally over five years, this option will help 
facilitate the reopening and expansion of U.S. uranium mining, milling, 
and conversion facilities, and will ensure that U.S. uranium producers 
can make investments required for future financial viability. This 
option avoids undue financial harm to U.S. nuclear power utilities by 
affording them sufficient time to adjust their fuel procurement 
strategies.
    The zero quota on uranium imports would not apply to uranium 
imports for use by U.S. milling, conversion, enrichment, and fuel 
fabrication services that produce uranium products for export from the 
United States. A U.S. milling, conversion, enrichment, or fuel 
fabricator seeking to import uranium for use to produce uranium 
products for export would need to file appropriate documentation with 
the Department to obtain a waiver for the import of uranium.
    The Department will provide adequate time for U.S. industry to 
receive a waiver prior to a zero quota being implemented globally. 
Based on information received during the investigation, the Department 
believes that this option will not cause undue burdens.
    The Secretary believes that this option to impose a zero quota for 
imports of uranium will address the threatened impairment of U.S. 
national security by promoting the economic revival of the U.S. uranium 
industry. This option also prevents the possibility of transshipment of 
SOE overproduction through third countries and avoids

[[Page 41546]]

undue harm to U.S. enrichment and fuel fabrication export operations. 
These domestic export operations rely on an ability to access working 
uranium stock regardless of the specific mining origin of a given 
uranium-based material.
    Tennessee Valley Authority (TVA) purchases of Canadian 
UO<INF>3</INF> natural uranium diluent in its execution of the National 
Nuclear Security Administration's current highly-enriched uranium (HEU) 
down-blending campaign would be excluded from the zero quota on imports 
of uranium. In addition, any transfer pursuant to a Mutual Defense 
Agreement that references special nuclear material would be excluded 
from the zero quota on imports of uranium.
    Imports of uranium from Russia under a waiver would also be 
governed by the Russian Suspension Agreement. This option assumes that 
such agreement will continue to be in effect over the relevant time 
period and would apply to any Russian uranium imports by U.S. nuclear 
power utilities, thus holding Russian uranium imports to their current 
level of approximately 20 percent of U.S. enrichment demand. In the 
event that the Russian Suspension Agreement is not extended and 
terminates, then the Secretary recommends that a quota on uranium 
imports under a waiver of Russian Uranium Products (as defined in the 
Russian Suspension Agreement) of up to 15 percent of U.S. enrichment 
demand be imposed. If adopted, this quota would be administered by the 
Department in the same manner as the Russian Suspension Agreement is 
presently administered.
    The adjustment of imports proposed under this option would be in 
addition to any applicable antidumping or countervailing duties 
collections.
    To complement the proposed trade action, the Secretary recommends 
that the Federal Energy Regulatory Commission (FERC) should act 
promptly to ensure that regulated wholesale power market regulations 
adequately compensate nuclear and other fuel-secure generation 
resources. Specifically, FERC should determine whether current market 
rules, which discriminate against secure nuclear fuel generation 
resources in favor of intermittent resources, such as natural gas, 
solar, and wind, result in unjust, unreasonable, and unduly 
discriminatory rates that distort energy markets, harm consumers, and 
undermine electric reliability. If so, FERC should consider taking 
appropriate action to ensure that rates are just and reasonable.
    The Department of Commerce, in consultation with other appropriate 
departments and agencies, will monitor the status of the U.S. uranium 
industry and the effectiveness of this remedy to determine if it should 
be modified, extended, or terminated.

Option 3--Alternative Action

    Should the President determine that the threatened impairment of 
national security does not warrant immediate adjustment of uranium 
imports at this time but that alternative action should be taken to 
improve the condition of the U.S. uranium industry to enable the U.S. 
industry to supply 25 percent of U.S nuclear power utilities annual 
consumption of uranium U308 concentrate, the President could direct the 
Department of Defense (DOD) and the Department of Energy (DOE) to 
report to the President within 90 days on options for increasing the 
economic viability of the domestic uranium mining industry. The report 
should include, but not be limited to, recommendations for: (1) The 
elimination of regulatory constraints on domestic producers; (2) 
incentives for increasing investment; and (3) ways to work with 
likeminded allies to address unfair trade practices by SOE countries, 
including through trade remedy actions and the negotiation of new rules 
and best practices. The President could also direct the United States 
Trade Representative to enter into negotiations with the SOE countries 
to address the causes of excess uranium imports that threaten the 
national security.
    To complement the proposed alternative action, the Secretary 
recommends that the Federal Energy Regulatory Commission (FERC) should 
act promptly to ensure that regulated wholesale power market 
regulations adequately compensate nuclear and other fuel-secure 
generation resources. Specifically, FERC should determine whether 
current market rules, which discriminate against secure nuclear fuel 
generation resources in favor of intermittent resources, such as 
natural gas, solar, and wind, result in unjust, unreasonable, and 
unduly discriminatory rates that distort energy markets, harm 
consumers, and undermine electric reliability. If so, FERC should 
consider taking appropriate action to ensure that rates are just and 
reasonable.
    The Department of Commerce, in consultation with other appropriate 
departments and agencies, will monitor the status of the U.S. uranium 
industry and the effectiveness of this remedy and recommend to the 
President if any additional measures are needed. Alternatively, the 
Secretary may initiate another investigation under Section 232.
    The Secretary also makes public policy recommendations for 
additional measures that complement these three options.

II. Legal Framework

A. Section 232 Requirements

    Section 232 provides the Secretary with the authority to conduct 
investigations to determine the effect on the national security of the 
United States of imports of any article. It authorizes the Secretary to 
conduct an investigation if requested by the head of any department or 
agency, upon application of an interested party, or upon his own 
motion. See 19 U.S.C. 1862(b)(1)(A).
    Section 232 directs the Secretary to submit to the President a 
report with recommendations for ``action or inaction under this 
section'' and requires the Secretary to advise the President if any 
article ``is being imported into the United States in such quantities 
or under such circumstances as to threaten to impair the national 
security.'' See 19 U.S.C. 1862(b)(3)(A).
    Section 232(d) directs the Secretary and the President to, in light 
of the requirements of national security and without excluding other 
relevant factors, give consideration to the domestic production needed 
for projected national defense requirements and the capacity of the 
United States to meet national security requirements. See 19 U.S.C. 
1862(d).
    Section 232(d) also directs the Secretary and the President to 
``recognize the close relation of the economic welfare of the Nation to 
our national security, and . . . take into consideration the impact of 
foreign competition on the economic welfare of individual domestic 
industries'' by examining whether any substantial unemployment, 
decrease in revenues of government, loss of skills or investment, or 
other serious effects resulting from the displacement of any domestic 
products by excessive imports, or other factors, results in a 
``weakening of our internal economy'' that may impair the national 
security.\14\ See 19 U.S.C. 1862(d).
---------------------------------------------------------------------------

    \14\ An investigation under Section 232 looks at excessive 
imports for their threat to the national security, rather than 
looking at unfair trade practices as in an antidumping 
investigation.
---------------------------------------------------------------------------

    Once an investigation has been initiated, Section 232 mandates that 
the Secretary provide notice to the Secretary of Defense that such an 
investigation has been initiated. Section 232 also

[[Page 41547]]

requires the Secretary to do the following:
    (1) ``Consult with the Secretary of Defense regarding the 
methodological and policy questions raised in [the] investigation;''
    (2) ``Seek information and advice from, and consult with, 
appropriate officers of the United States;'' and
    (3) ``If it is appropriate and after reasonable notice, hold public 
hearings or otherwise afford interested parties an opportunity to 
present information and advice relevant to such investigation.'' \15\ 
See 19 U.S.C. 1862(b)(2)(A)(i)-(iii).
---------------------------------------------------------------------------

    \15\ Department regulations (i) set forth additional authority 
and specific procedures for such input from interested parties, see 
15 CFR 705.7 and 705.8, and (ii) provide that the Secretary may vary 
or dispense with those procedures ``in emergency situations, or when 
in the judgment of the Department, national security interests 
require it.'' Id., 705.9.
---------------------------------------------------------------------------

    As detailed in the report, all of the requirements set forth above 
have been satisfied.
    In conducting the investigation, Section 232 permits the Secretary 
to request that the Secretary of Defense provide an assessment of the 
defense requirements of the article that is the subject of the 
investigation. See 19 U.S.C. 1862(b)(2)(B).
    Upon completion of a Section 232 investigation, the Secretary is 
required to submit a report to the President no later than 270 days 
after the date on which the investigation was initiated. See 19 U.S.C. 
1862(b)(3)(A). The report must:
    (1) Set forth ``the findings of such investigation with respect to 
the effect of the importation of such article in such quantities or 
under such circumstances upon the national security;''
    (2) Set forth, ``based on such findings, the recommendations of the 
Secretary for action or inaction under this section;'' and
    (3) ``If the Secretary finds that such article is being imported 
into the United States in such quantities or under such circumstances 
as to threaten to impair the national security . . . so advise the 
President . . . See 19 U.S.C. 1862(b)(3)(A).
    All unclassified and non-proprietary portions of the report 
submitted by the Secretary to the President must be published.
    Within 90 days after receiving a report in which the Secretary 
finds that an article is being imported into the United States in such 
quantities or under such circumstances as to threaten to impair the 
national security, the President shall:
    (1) ``Determine whether the President concurs with the finding of 
the Secretary''; and
    (2) ``If the President concurs, determine the nature and duration 
of the action that, in the judgment of the President, must be taken to 
adjust the imports of the article and its derivatives so that such 
imports will not threaten to impair the national security'' (see 19 
U.S.C. 1862(c)(1)(A)).

B. Discussion

    While Section 232 does not specifically define ``national 
security,'' both Section 232, and the implementing regulations at 15 
CFR part 705, contain non-exclusive lists of factors that the Secretary 
must consider in evaluating the effect of imports on the national 
security. Congress in Section 232 explicitly determined that ``national 
security'' includes, but is not limited to, ``national defense'' 
requirements. See 19 U.S.C. 1862(d)).
    The Department in 2001 determined that ``national defense'' 
includes both defense of the United States directly and the ``ability 
to project military capabilities globally.'' \16\ The Department also 
concluded in 2001 that, ``In addition to the satisfaction of national 
defense requirements, the term ``national security'' can be interpreted 
more broadly to include the general security and welfare of certain 
industries, beyond those necessary to satisfy national defense 
requirements, which are critical to the minimum operations of the 
economy and government.'' The Department called these ``critical 
industries.'' \17\ This report once again uses these reasonable 
interpretations of `national defense'' and ``national security.'' 
However, this report uses the more recent 16 critical infrastructure 
sectors identified in Presidential Policy Directive 21 \18\ instead of 
the 28 industry sectors used by the Bureau of Export Administration in 
the 2001 Report.\19\
---------------------------------------------------------------------------

    \16\ Department of Commerce, Bureau of Export Administration; 
The Effects of Imports of Iron Ore and Semi-Finished Steel on the 
National Security; Oct. 2001 (``2001 Iron and Steel Report'') at 5.
    \17\ Id.
    \18\ Presidential Policy Directive 21; Critical Infrastructure 
Security and Resilience; February 12, 2013 (``PPD-21'').
    \19\ See Op. Cit. at 16.
---------------------------------------------------------------------------

    Section 232 directs the Secretary to determine whether imports of 
any article are being made ``in such quantities'' or ``under such 
circumstances'' that those imports ``threaten to impair the national 
security.'' See 19 U.S.C. 1862(b)(3)(A). The statutory construction 
makes clear that either the quantities or the circumstances, standing 
alone, may be sufficient to support an affirmative finding. They may 
also be considered together, particularly where the circumstances act 
to prolong or magnify the impact of the quantities being imported.
    The statute does not define a threshold for when ``such 
quantities'' of imports are sufficient to threaten to impair the 
national security, nor does it define the ``circumstances'' that might 
qualify.
    Likewise, the statute does not require a finding that the 
quantities or circumstances are impairing the national security. 
Instead, the threshold question under Section 232 is whether those 
quantities or circumstances ``threaten to impair the national 
security.'' See 19 U.S.C. 1862(b)(3)(A). This makes evident that 
Congress expected an affirmative finding under Section 232 before an 
actual impairment of the national security. \20\
---------------------------------------------------------------------------

    \20\ The 2001 Iron and Steel Report used the phrase 
``fundamentally threaten to impair'' when discussing how imports may 
threaten to impair national security. See 2001 Iron and Steel Report 
at 7 and 37. Because the term ``fundamentally'' is not included in 
the statutory text and could be perceived as establishing a higher 
threshold, the Secretary expressly does not use the qualifier in 
this report. The statutory threshold in Section 232(b)(3)(A) is 
unambiguously ``threaten to impair'' and the Secretary adopts that 
threshold without qualification. 19 U.S.C. 1862(b)(3)(A).
---------------------------------------------------------------------------

    Section 232(d) contains a list of factors for the Secretary to 
consider in determining if imports ``threaten to impair the national 
security''\21\ of the United States, and this list is mirrored in the 
implementing regulations. See 19 U.S.C. 1862(d) and 15 CFR 705.4. 
Congress was careful to note twice in Section 232(d) that the list 
provided, while mandatory, is not exclusive.\22\ Congress' illustrative 
list is focused on the ability of the United States to maintain the 
domestic capacity to provide the articles in question as needed to 
maintain the national security of the United States.\23\ Congress broke

[[Page 41548]]

the list of factors into two equal parts using two separate sentences. 
The first sentence focuses directly on ``national defense'' 
requirements, thus making clear that ``national defense'' is a subset 
of the broader term ``national security.'' The second sentence focuses 
on the broader economy and expressly directs that the Secretary and the 
President ``shall recognize the close relation of the economic welfare 
of the Nation to our national security.'' \24\ See 19 U.S.C. 1862(d).
---------------------------------------------------------------------------

    \21\ 19 U.S.C. 1862(b)(3)(A).
    \22\ See 19 U.S.C. 1862(d) (``the Secretary and the President 
shall, in light of the requirements of national security and without 
excluding other relevant factors . . .'' and ``serious effects 
resulting from the displacement of any domestic products by 
excessive imports shall be considered, without excluding other 
factors . . .'').
    \23\ This reading is supported by Congressional findings in 
other statutes. See, e.g., 15 U.S.C. 271(a)(1)(``The future well-
being of the United States economy depends on a strong manufacturing 
base . . . '') and 50 U.S.C. 4502(a)(``Congress finds that--(1) the 
security of the United States is dependent on the ability of the 
domestic industrial base to supply materials and services . . . 
(2)(C) to provide for the protection and restoration of domestic 
critical infrastructure operations under emergency conditions . . . 
(3) . . . the national defense preparedness effort of the United 
States government requires--(C) the development of domestic 
productive capacity to meet--(ii) unique technological requirements 
. . . (7) much of the industrial capacity that is relied upon by the 
United States Government for military production and other national 
defense purposes is deeply and directly influenced by--(A) the 
overall competitiveness of the industrial economy of the United 
States; and (B) the ability of industries in the United States, in 
general, to produce internationally competitive products and operate 
profitably while maintaining adequate research and development to 
preserve competitiveness with respect to military and civilian 
production; and (8) the inability of industries in the United 
States, especially smaller subcontractors and suppliers, to provide 
vital parts and components and other materials would impair the 
ability to sustain the Armed Forces of the United States in combat 
for longer than a short period.'').
    \24\ Accord 50 U.S.C. 4502(a).
---------------------------------------------------------------------------

    In addition to ``national defense'' requirements, two of the 
factors listed in the second sentence of Section 232(d) are 
particularly relevant in this investigation. Both are directed at how 
``such quantities'' of imports threaten to impair national security See 
19 U.S.C. 1862(b)(3)(A). In administering Section 232, the Secretary 
and the President are required to ``take into consideration the impact 
of foreign competition on the economic welfare of individual domestic 
industries'' and any ``serious effects resulting from the displacement 
of any domestic products by excessive imports'' in ``determining 
whether such weakening of our internal economy may impair the national 
security.'' See 19 U.S.C. 1862(d).
    Another factor, not on the list, that the Secretary found to be 
relevant is the presence of global excess supply of uranium. This 
excess supply results in uranium imports occurring ``under such 
circumstances'' that they threaten to impair the national security. See 
19 U.S.C. 1862(b)(3)(A). The Secretary considers excess global uranium 
supply as a relevant circumstance because state-owned enterprises have 
maintained or increased uranium production, and reduced prices, 
notwithstanding declining market conditions. At the same time, market 
producers, including U.S. producers, have decreased production under 
these market conditions. This excess supply means that U.S. uranium 
producers, for the foreseeable future, face increasing competition from 
state-owned uranium producers as well as foreign market-based 
competitors.
    After careful examination of the facts in this investigation, the 
Secretary has concluded that excessive imports of uranium in the 
present circumstances are weakening our internal economy and threaten 
to impair the national security as defined in Section 232. Several 
important factors support this conclusion, including the global excess 
uranium supply due to non-market based production by state-owned 
enterprises, the resulting near total dependence of U.S. nuclear power 
production on uranium imports, and the impact that the loss of a 
domestic U.S. uranium production capacity and workforce would have on 
the nation's ability to respond to potential national emergencies.

III. Investigation Process

A. Initiation of Investigation

    On January 16, 2018, Energy Fuel Resources (US) Inc. and UR-Energy 
USA Inc. (hereafter ``Petitioners'') petitioned the Secretary to 
conduct an investigation under Section 232 of the Trade Expansion Act 
of 1962, as amended (19 U.S.C. 1862), to determine the effect of 
imports of uranium on the national security.
    Upon receipt of the petition, the Department carefully reviewed the 
material facts outlined in the petition. Initial discussions were held 
with other bureaus within the Department of Commerce as well as with 
other interested parties at the Departments of Defense and Energy. 
Legal counsel at the Department also carefully reviewed the petition to 
ensure it met the requirements of the Section 232 statute and the 
implementing regulations. Subsequently, on July 18, 2018, the 
Department accepted the petition and initiated the investigation. 
Pursuant to Section 232(b)(1)(b), the Department notified the U.S. 
Department of Defense with a July 18, 2018 letter from Secretary Ross 
to the Secretary of Defense, James Mattis (see Appendix A).
    On July 25, 2018, the Department published a Federal Register 
Notice (see Appendix B--Federal Register, Vol. 83, No. 143, 35,204-
35,205) announcing the initiation of an investigation to determine the 
effect of imports of uranium on the national security. The notice also 
announced the opening of the public comment period.

B. Public Comments

    On July 25, 2018, the Department invited interested parties to 
submit written comments, opinions, data, information, or advice 
relevant to the criteria listed in Section 705.4 of the National 
Security Industrial Base Regulations (15 CFR 705.4) as they affect the 
requirements of national security, including the following:
    (a) Quantity of the articles subject to the investigation and other 
circumstances related to the importation of such articles;
    (b) Domestic production capacity needed for these articles to meet 
projected national defense requirements;
    (c) The capacity of domestic industries to meet projected national 
defense requirements;
    (d) Existing and anticipated availability of human resources, 
products, raw materials, production equipment, facilities, and other 
supplies and services essential to the national defense;
    (e) Growth requirements of domestic industries needed to meet 
national defense requirements and the supplies and services including 
the investment, exploration and development necessary to assure such 
growth;
    (f) The impact of foreign competition on the economic welfare of 
any domestic industry essential to our national security;
    (g) The displacement of any domestic products causing substantial 
unemployment, decrease in the revenues of government, loss of 
investment or specialized skills and productive capacity, or other 
serious effects;
    (h) Relevant factors that are causing or will cause a weakening of 
our national economy; and
    (i) Any other relevant factors.
    The public comment period was originally scheduled to end on 
September 10, 2018. Following requests from the general public, the 
Department extended the deadline from September 10 to September 25 (see 
Appendix B--Federal Register Vol. 83, No. 175, 45,595-45,596). The 
Department received 1,019 written submissions concerning this 
investigation. Representative samples were grouped together then 837 
comments were posted on Regulations.gov for public review. Parties who 
submitted comments included firms representing all parts of the nuclear 
fuel cycle, representatives of U.S. federal, state and local 
governments, foreign governments, as well as other concerned 
organizations. All public comments were carefully reviewed and factored 
into the investigative process. The public comments of key stakeholders 
are summarized in Appendix C, along

[[Page 41549]]

with a link to the docket (BIS-2018-0011) where all public comments can 
be viewed in full on Regulations.gov.
    Due to the limited number of firms engaged in the U.S. uranium 
industry and in nuclear power generation, it was determined that a 
public hearing was not necessary in order to conduct a comprehensive 
investigation. In lieu of holding a public hearing on this 
investigation, the Department issued two separate mandatory surveys 
(see Appendix D and Appendix E) to participants in the U.S. front-end 
uranium industry and the U.S. nuclear power generation sector, which 
collected both qualitative and quantitative information. The front-end 
survey was sent to 34 companies engaged in uranium mining and milling, 
uranium concentrate production, uranium enrichment, and nuclear fuel 
fabrication. The nuclear power generation survey was sent to all 24 
operators of U.S. nuclear power plants and covered 98 reactors.
    The surveys provided an opportunity for organizations to disclose 
confidential and non-public information needed by the Department to 
conduct a thorough investigation. These mandatory surveys were 
conducted using statutory authority pursuant to Section 705 of the 
Defense Production Act of 1950, as amended (50 U.S.C. 4555), and 
collected detailed information concerning factors such as imports/
exports, production, capacity utilization, employment, operating 
status, global competition, and financial information. The resulting 
aggregate data provided the Department with detailed industry 
information that was otherwise not publicly available and was needed to 
effectively conduct analysis for this investigation.
    Responses to the Department's surveys were required by law (50 
U.S.C. 4555). Information furnished in the survey responses is deemed 
confidential and will not be published or disclosed except in 
accordance with Section 705 of the DPA. Section 705 of the DPA 
prohibits the publication or disclosure of this information unless the 
President determines that the withholding of such information is 
contrary to the interest of the national defense. Information will not 
be shared with any non-government entity other than in aggregate form.

C. Site Visits and Information Gathering Activities

    To obtain additional information on the U.S. uranium industry and 
the U.S. nuclear power generation sector, the Department conducted site 
visits to several uranium and nuclear power generation facilities:
    1) Calvert Cliffs Nuclear Power Plant in Lusby, Maryland. This is a 
double reactor facility.
    2) Three uranium mines: La Sal (Utah--Conventional Mine), Nichols 
Ranch (Wyoming--In Situ facility), and Lost Creek (Wyoming--In Situ 
facility).
    (3) White Mesa Mill in Blanding, Utah. This facility is the only 
fully-licensed and operating conventional uranium mill in the U.S.
    In order to gain insights into the U.S. uranium industry's 
challenges, information gathering activities and meetings were held 
with representatives of domestic and international uranium producers, 
associations, power generators, foreign governments, and others 
interested parties.

D. Interagency Consultation

    The Department consulted with the Department of Defense including 
the Office of Industrial Base, Defense Logistics Agency, and the 
Department of the Navy regarding methodological and policy questions 
that arose during the investigation.
    The Department also consulted with other U.S. Government agencies 
with expertise and information regarding the uranium industry including 
the Department of Energy, the Energy Information Administration, the 
National Nuclear Security Administration, the International Trade 
Administration, the Department of State, the Office of the United 
States Trade Representative, the Nuclear Regulatory Commission, the 
U.S. Geological Survey, and the Federal Energy Regulatory Commission.

E. Review of the Department of Commerce 1989 Section 232 Investigation 
on Uranium Imports

    The Department reviewed the previous Section 232 Investigation on 
the Effect of Uranium Imports on National Security from September 1989. 
This investigation, requested by the Secretary of Energy, determined 
that U.S. utilities imported a significant share of their uranium 
requirements. In 1987, U.S. utilities imported approximately 51.1 
percent of their requirements, and the investigation projected that 
this level would reach 70.8 percent by 1993.\25\ The 1989 investigation 
also found that U.S. uranium producers faced strong foreign 
competition, particularly from the Soviet Union. It further reported 
that employment in the domestic industry was steadily decreasing.\26\
---------------------------------------------------------------------------

    \25\ 1989 Report, Letter Requesting 232 Investigation, also III-
21.
    \26\ 1989 Report, III-2, III-25.
---------------------------------------------------------------------------

    [TEXT REDACTED]\27\ Consequently, the Secretary concluded that 
uranium was not being imported into the United States under such 
quantities or circumstances that threatened to impair the national 
security.
---------------------------------------------------------------------------

    \27\ Ibid., V-4 to V-5.
---------------------------------------------------------------------------

    The Department took note of the methodologies and analytic 
approaches used to conduct the 1989 investigation and evaluated its 
findings and conclusion in light of the current state of the U.S. 
uranium industry. Further discussion of the September 1989 Section 232 
Investigation is in Appendix G.

IV. Product Scope of the Investigation

    The scope of this investigation defined uranium products at the 
Harmonized Tariff Schedule of the United States (HTS) 10-digit level. 
The eight product categories and related HTS codes covered by this 
report (see Figure 1B) are produced by U.S. uranium companies engaged 
in the nuclear fuel cycle, and are imported for use by U.S. nuclear 
power operators. Detailed information was collected in the Department's 
survey responses from U.S. uranium producers and U.S. nuclear power 
operators regarding products covered by the HTS codes. These products 
are used in, or otherwise support, various national defense and 
critical infrastructure applications.

[[Page 41550]]



          Figure 1B: Uranium Product Scope of the Investigation
------------------------------------------------------------------------
          Heading/subheading/product               10 Digit HTS code
------------------------------------------------------------------------
Imports of uranium ores and concentrates,      .........................
 natural uranium compounds, and all forms of
 enriched uranium:
    <bullet> Uranium Ore and Concentrates....  2612.10.00.00
    <bullet> Uranium Compounds (Oxide,         Oxide 2844.10.20.10
     Hexafluoride, and Other).                 Hexafluoride
                                                2844.10.20.25
                                               Other 2844.10.20.55
    <bullet> Uranium enriched in U235 and its  Oxide 2844.20.00.10
     compounds; alloys, dispersions            Hexafluoride
     (including cermets), ceramic products      2844.20.00.20
     and mixtures containing uranium enriched  Other 2844.20.00.30
     in U235.
Imports of natural uranium metal and forms of  .........................
 natural uranium other than compounds:
    <bullet> Uranium Metal...................  2844.10.10.00
    <bullet> Other...........................  2844.10.50.00
Uranium depleted in U235 and its compounds;    .........................
 thorium and its compounds; alloys,
 dispersions (including cermets), ceramic
 products and mixtures containing uranium
 depleted in U235, thorium, or compounds of
 these products:
    <bullet> Uranium Compounds (Depleted)....  Oxide 2844.30.20.10
                                               Fluorides 2844.30.20.20
                                               Other 2844.30.20.50
    <bullet> Other (Depleted)................  Uranium Metal
                                                2844.30.50.10
Nuclear reactors; fuel elements (cartridges),  .........................
 non-irradiated, for nuclear reactors;
 machinery and apparatus for isotopic
 separation; parts thereof:
    <bullet> Fuel elements (cartridges), non-  8401.30.00.00
     irradiated, and parts thereof.
------------------------------------------------------------------------
Source: United States International Trade Commission and U.S. Department
  of Commerce, Bureau of Industry and Security.

    In addition to the uranium products identified in Figure 1, this 
report examines the provision of three services in the nuclear fuel 
cycle: Conversion,\28\ enrichment,\29\ and fuel fabrication.\30\ 
Transactions for these services are examined separately from 
transactions involving uranium hexafluoride (UF6), enriched uranium 
product (EUP) and finished fuel assemblies (fuel for nuclear power 
plants). The Department made this distinction because U.S. nuclear 
power operators, the end-consumer of most uranium products in the U.S., 
purchase services and finished products for UF6, EUP, and finished fuel 
assemblies.
---------------------------------------------------------------------------

    \28\ Conversion is defined as the conversion of uranium 
concentrate (U3O8) to uranium hexafluoride (UF6).
    \29\ Enrichment is defined as the process that increases the 
concentration of Uranium-235 isotopes within a quantity of natural 
uranium.
    \30\ Fuel fabrication is defined as the process by which 
enriched uranium is converted to uranium dioxide powder that is then 
pressed into pellets and placed in fuel rods. Bundles of these fuel 
rods become fuel assemblies that are placed in nuclear reactors.
---------------------------------------------------------------------------

    A U.S. utility, for example, may opt to buy a specified amount of 
UF6, EUP, or finished fuel assemblies directly from a producer. 
Alternatively, it may directly contract for conversion, enrichment, or 
fuel fabrication services using material owned by the utility. These 
services are regularly procured both inside and outside the United 
States.
    The Department determined that assessing U.S. utilities' 
procurement of UF6 or EUP through conversion, enrichment, and fuel 
fabrication services was critical to understanding the effects of 
imports of uranium products on U.S. national security. Information 
regarding conversion, enrichment, and fuel fabrication services was 
collected and incorporated into the investigation via the front-end 
uranium industry survey.
    This report also examines the state of the U.S. nuclear power 
generation sector. The Department is aware that the principal customers 
of uranium are nuclear power reactor operators, thus examination of the 
U.S. nuclear power generation industry through a comprehensive 
Department survey was necessary to ensure a complete analysis of the 
effect of uranium imports on the national security. The Secretary's 
recommendations consider the interdependence of the U.S. uranium 
industry and the U.S. nuclear power generation sector.

V. Background on the U.S. Nuclear Industry

A. Summary of the U.S. Uranium Fuel Cycle

    The processes that prepare uranium for use in nuclear power 
generation constitute the front-end of the nuclear fuel cycle. In the 
United States, these front-end processes consist of uranium mining, 
milling, conversion, enrichment, and nuclear fuel fabrication. The 
nuclear fuel cycle and its products at each stage are shown in Figure 
2.

[[Page 41551]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.003

    Uranium mining is the first step of the cycle. Several techniques 
are used for uranium mining including open pit, underground, and in-
situ recovery (ISR). The ISR technique, used by all active U.S. uranium 
mining operations today, involves pumping a slightly acidic solution 
into ore bodies to dissolve uranium ore in preparation for 
extraction.\31\
---------------------------------------------------------------------------

    \31\ ``Nuclear Explained: The Nuclear Fuel Cycle.'' U.S. Energy 
Information Administration. https://www.eia.gov/energyexplained/index.php?page=nuclear_fuel_cycle.
---------------------------------------------------------------------------

    The ore-bearing solution recovered from uranium mining is then 
transferred to a facility for processing into tri-uranium octoxide 
concentrate (U3O8), commonly referred to as uranium concentrate. For 
open pit and underground mines, uranium milling involves crushing ore 
and treating it with chemicals in order to produce U3O8.\32\
---------------------------------------------------------------------------

    \32\ ``Conventional Uranium Mills.'' United States Nuclear 
Regulatory Commission. https://www.nrc.gov/materials/uranium-recovery/extraction-methods/conventional-mills.html.
---------------------------------------------------------------------------

    In 2018, all domestic uranium concentrate was produced by five ISR 
facilities located in Nebraska and Wyoming, and one milling operation 
located in Utah.\33\ These facilities were the only operating uranium 
mines and mill in the U.S. in 2018, thus no uranium concentrate was 
produced by conventional underground or open-pit mines during the same 
year. Another five mines are currently licensed, but idled (see Figures 
3 and 4).\34\
---------------------------------------------------------------------------

    \33\ U.S. Energy Information Administration. 2017 Domestic 
Uranium Production Report. (Washington, DC: 2017) https://www.eia.gov/uranium/production/annual/pdf/dupr.pdf.
    \34\ ``Locations of Uranium Recovery Facilities.'' United States 
Nuclear Regulatory Commission. https://www.nrc.gov/info-finder/materials/uranium/.

                                   Figure 3: U.S. Fuel Cycle Facilities--Mines
                                               [In Situ Recovery]
----------------------------------------------------------------------------------------------------------------
           Project name                Company name             Location                 [TEXT REDACTED]
----------------------------------------------------------------------------------------------------------------
Crow Butte Operation.............  Cameco..............  Nebraska.............  [TEXT REDACTED].
Lost Creek Project...............  Ur-Energy (Lost       Wyoming..............  [TEXT REDACTED].
                                    Creek ISR LLC).
Smith Ranch-Highland Operation...  Power Resource Inc.,  Wyoming..............  [TEXT REDACTED].
                                    dba Cameco
                                    Resources.
Ross CPP.........................  Strata Energy Inc...  Wyoming..............  [TEXT REDACTED].
Nichols Ranch ISR Project........  Energy Fuels          Wyoming..............  [TEXT REDACTED].
                                    Resources Corp.
                                    (Uranerz Energy
                                    Corporation).
Willow Creek Project (Christenson  Uranium One USA, Inc  Wyoming..............  [TEXT REDACTED].
 Ranch & Irigaray).
Alta Mesa Project................  Energy Fuels          Texas................  [TEXT REDACTED].
                                    Resources Corp
                                    (Mestena Uranium
                                    LLC).
Hobson ISR Plant.................  South Texas Mining    Texas................  [TEXT REDACTED].
                                    Venture.
La Palangana.....................  South Texas Mining    Texas................  [TEXT REDACTED].
                                    Venture.

[[Page 41552]]

 
Goliad ISR Uranium Project.......  Uranium Energy Corp.  Texas................  [TEXT REDACTED].
----------------------------------------------------------------------------------------------------------------
Source: [TEXT REDACTED]; U.S. Energy Information Administration--Annual Domestic Uranium Production Report
  (2018).
[TEXT REDACTED].


                                Figure 4: U.S. Fuel Cycle Facilities--Mills, 2018
----------------------------------------------------------------------------------------------------------------
           Project name                Company name             Location                 [TEXT REDACTED]
----------------------------------------------------------------------------------------------------------------
White Mesa Mill..................  EFR White Mesa LLC..  Utah.................  [TEXT REDACTED].
Shootaring Canyon Uranium Mill...  Anfield Resources...  Utah.................  [TEXT REDACTED].
Sweetwater Uranium Project.......  Kennecott Uranium     Wyoming..............  [TEXT REDACTED].
                                    Company.
Pinon Ridge Mill.................  Western Uranium/      Colorado.............  [TEXT REDACTED].
                                    Pinon Ridge
                                    Resources
                                    Corporation.
Sheep Mountain...................  Energy Fuels Wyoming  Wyoming..............  [TEXT REDACTED].
                                    Inc.
----------------------------------------------------------------------------------------------------------------
Source: [TEXT REDACTED] U.S. Energy Information Administration--Annual Domestic Uranium Production Report
  (2018).
[TEXT REDACTED].

    U.S.-based mining and milling facilities have dramatically declined 
over recent years, falling from eighteen mines and four mills in 2009 
to five operating mines and one operating mill in 2018. These 
facilities have shut down or idled for several reasons, including 
competition from subsidized foreign imports, low spot prices, as well 
as costs and delays associated with the U.S. permitting process.
    Similarly, production of uranium concentrate (U308) in the United 
States has declined, dropping 95 percent from 43.7 million pounds in 
1980 \35\ to 1.97 million in 2018. Kazakhstan, Canada, and Australia 
were the top suppliers in 2017, producing roughly 46.8, 26.2, and 11.8 
million pounds of uranium concentrate, respectively.\36\
---------------------------------------------------------------------------

    \35\ ``Annual Energy Review 2011.'' U.S. Energy Information 
Administration (Washington, DC: 2012). https://www.eia.gov/totalenergy/data/annual/showtext.php?t=ptb0903.
    \36\ ``Uranium Production Figures, 2008-2017.'' World Nuclear 
Association. http://www.world-nuclear.org/information-library/facts-and-figures/uranium-production-figures.aspx.
---------------------------------------------------------------------------

    The third step in the fuel cycle is conversion, where a gas is used 
to facilitate enrichment of the U-235 isotope in uranium concentrate 
into natural uranium (UF6). ConverDyn, the sole U.S. uranium conversion 
facility, is currently in standby/idled (see Figure 5).

                             Figure 5: U.S. Fuel Cycle Facilities--Conversion, 2018
----------------------------------------------------------------------------------------------------------------
           Project name                 Company name               Location                Operating status
----------------------------------------------------------------------------------------------------------------
ConverDyn Metropolis Works........  Honeywell Energy/     Metropolis, IL............  Standby/Idle.
                                     ConverDyn.
----------------------------------------------------------------------------------------------------------------
Source: [TEXT REDACTED] U.S. Nuclear Regulatory Commission.

    ConverDyn began producing UF6 for commercial use in the 1960s and 
supplied commercial conversion services to the U.S. and global uranium 
market, competing against suppliers in Canada, Russia, France, and 
China.\37\ However, it announced a suspension of operations in late 
2017 related to ongoing challenges facing the nuclear fuel 
industry.\38\ [TEXT REDACTED] Furthermore, the Russians, Chinese, and 
French bundle conversion services as part of their nuclear fuel sales. 
[TEXT REDACTED] \39\
---------------------------------------------------------------------------

    \37\ ``Conversion and Deconversion.'' World Nuclear Association. 
http://www.world-nuclear.org/information-library/nuclear-fuel-cycle/conversion-enrichment-and-fabrication/conversion-and-deconversion.aspx.
    \38\ U.S. Energy Information Administration. 2017 Domestic 
Uranium Production Report. (Washington, DC: 2017) https://www.eia.gov/uranium/production/annual/pdf/dupr.pdf.
    \39\ [TEXT REDACTED].
---------------------------------------------------------------------------

    Uranium enrichment, the fourth stage in the fuel cycle, produces 
material to be used in the operation of nuclear reactors. Natural 
uranium (UF6) consists of three distinct isotopes: U-234, U-235, and U-
238. The enrichment process alters the isotopic makeup in order to 
increase the prevalence of the U-235 isotope. The U-235 isotope must be 
enriched so that fission, or splitting of the U-235 atoms, can occur to 
produce energy.<SUP>40 41</SUP> Gaseous centrifuges are the industry 
standard for uranium enrichment into low-enriched uranium (LEU) or 
high-enriched uranium (HEU). LEU is used by commercial power reactors 
as fuel where the U-235 is enriched to between three and five percent. 
HEU is used in naval ships, submarines, nuclear weapons, and some 
research reactors,<SUP>42 43</SUP> with enrichment at 20 percent.
---------------------------------------------------------------------------

    \40\ ``Uranium Enrichment.'' United States Nuclear Regulatory 
Commission. https://www.nrc.gov/materials/fuel-cycle-fac/ur-enrichment.html.
    \41\ ``Uranium Enrichment.'' World Nuclear Association. http://www.world-nuclear.org/information-library/nuclear-fuel-cycle/conversion-enrichment-and-fabrication/uranium-enrichment.aspx.
    \42\ ``Uranium Downblending.'' WISE Uranium Project. http://www.wise-uranium.org/eudb.html.
    \43\ Highly Enriched Uranium (HEU) is uranium with U-235 content 
of at least 20 percent. Naval reactors and weapons applications 
utilize HEU enriched to more than 90 percent U-235.

---------------------------------------------------------------------------

[[Page 41553]]

    The United States first used gaseous diffusion uranium enrichment 
plants in the 1940s during the Second World War. Additional plants were 
built in the 1950s for defense needs and later opened for commercial 
enrichment use. These plants are located in Paducah, Kentucky and 
Piketon, Ohio, but both closed by 2013.\44\ Today, URENCO USA (UUSA) is 
the only uranium enrichment company operating in the United States, 
serving the commercial power reactor market. UUSA is a subsidiary of 
URENCO Group, a consortium owned by the governments of the United 
Kingdom and the Netherlands, as well as two German utilities (see 
Figure 6). UUSA employs gas centrifuge enrichment at its Louisiana 
Energy Services (LES) plant in Eunice, New Mexico to produce LEU for 
nuclear reactor fuel.\45\ Per the 1992 Washington Agreement governing 
the LES facility's construction and operation, the plant cannot be used 
to produce enriched uranium for U.S. defense purposes. However, in 
January 2019, DOE announced plans to reopen the Piketon facility to 
demonstrate a U.S.-origin centrifuge technology for production of High-
Assay Low Enriched Uranium (HALEU) in support of advanced reactor 
development efforts.\46\
---------------------------------------------------------------------------

    \44\ ``Nuclear Power in the USA.'' World Nuclear Association. 
http://www.world-nuclear.org/information-library/country-profiles/countries-t-z/usa-nuclear-power.aspx.
    \45\ ``Uranium Enrichment.'' United States Nuclear Regulatory 
Commission. https://www.nrc.gov/materials/fuel-cycle-fac/ur-enrichment.html.
    \46\ ``DOE Plans $115M Investment in Uranium Enrichment 
Project.'' U.S. News & World Report, January 8, 2019. https://www.usnews.com/news/best-states/ohio/articles/2019-01-08/doe-plans-115m-investment-in-uranium-enrichment-project.

                                                    Figure 6: U.S. Fuel Cycle Facilities--Enrichment
--------------------------------------------------------------------------------------------------------------------------------------------------------
          Project name                Company name          Ownership            Enrichment type              Location              Operating status
--------------------------------------------------------------------------------------------------------------------------------------------------------
Louisiana Energy Services (LES).  URENCO USA.........  United Kingdom, the  Gas Centrifuge..........  New Mexico..............  Operating.
                                                        Netherlands,
                                                        Germany.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: U.S. Nuclear Regulatory Commission.

    The fifth and final step in the front-end nuclear fuel cycle is 
fuel fabrication, where enriched uranium is formed into pellets and 
then fabricated into fuel rods for fuel assemblies. Three active fuel 
fabrication plants in the U.S. are licensed to transform low-enriched 
uranium into fuel assemblies for commercial power reactors: 
Westinghouse, GE, and Framatome (see Figure 7).
    Naval reactors require HEU fuel and their fuel assemblies come from 
a different supply base. All uranium used in the manufacture of naval 
fuel assemblies is from the Department of Energy's stockpile and is not 
currently purchased on the commercial market. The naval fuel is 
manufactured by BWX Technologies (BWXT) at its Nuclear Fuel Services 
(NFS) facility in Tennessee. Additionally, BWXT downblends high-
enriched uranium (HEU) to produce low-enriched uranium (LEU), which is 
needed to produce the tritium required for nuclear weapons.\47\
---------------------------------------------------------------------------

    \47\ ``Nuclear Fuel Fabrication--Current Issues (USA).'' WISE 
Uranium Project.

                          Figure 7: U.S. Fuel Cycle Facilities--Fuel Fabrication, 2018
----------------------------------------------------------------------------------------------------------------
          Company name                 Ownership         NRC category          Location        Operating status
----------------------------------------------------------------------------------------------------------------
BWXT Nuclear Operations Group...  United States.....  Category 1........  Virginia..........  Operating.
Nuclear Fuel Services, Inc......  United States.....  Category 1........  Tennessee.........  Operating.
Framatome, Inc..................  France............  Category 3........  Washington........  Operating.
Global Nuclear Fuel--Americas     United States.....  Category 3........  North Carolina....  Operating.
 LLC (General Electric).
Westinghouse....................  United States.....  Category 3........  South Carolina....  Operating.
----------------------------------------------------------------------------------------------------------------
Category 1: High Strategic Significance.
Category 3: Low Strategic Significance (commercial services).
Source: U.S. Nuclear Regulatory Commission.

B. Summary of U.S. Nuclear Power Generation Industry

    The first U.S. commercial nuclear reactor came online in 1958, and 
most active U.S. reactors were built between 1967 and 1990. Originally 
certified for 40 years of operation, the lifespans of 85 reactors have 
been extended by the Nuclear Regulatory Commission (NRC) for an 
additional 20 years. These certifications followed assessments 
confirming that they were safe to continue operating well after the end 
of their original design life.
    As of October 2018, 98 reactors were located at 58 different 
facilities in 28 states across the country \48\ (see Figure 8). The two 
main commercial reactor designs used for power generation are 
pressurized-water reactors (PWR) and boiling-water reactors (BWR), with 
65 and 33 operating in the U.S., respectively. These reactors have 
varying designs, dimensions, and numbers of fuel rods in each fuel 
assembly based on the six commercial power reactor manufacturers in the 
United States: Allis-Chalmers, Babcock & Wilcox, Combustion 
Engineering, General Atomics, General Electric, and Westinghouse.\49\
---------------------------------------------------------------------------

    \48\ ``Monthly Energy Review March 2019.'' U.S. Energy 
Information Administration. https://www.eia.gov/totalenergy/data/monthly/pdf/sec7_5.pdf.
    \49\ ``Fuel Fabrication.'' United States Nuclear Regulatory 
Commission. https://www.nrc.gov/materials/fuel-cycle-fac/fuel-fab.html.

---------------------------------------------------------------------------

[[Page 41554]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.004

    These reactors are important to produce steady-state baseload power 
to the U.S., in contrast to hydro, solar, and wind, which have 
fluctuating generating capabilities.<SUP>50 51</SUP> Despite providing 
a significant portion of the nation's electricity (more than 19 
percent), a number of U.S. utilities have prematurely retired their 
nuclear power reactors due to cost pressures resulting from distortions 
in wholesale electricity market pricing mechanisms, subsidized 
renewable energy, and lower natural gas prices. Since 2013, U.S. 
electric utilities have permanently closed six nuclear power plants. 
Another eight reactors are slated to be retired between 2019 and 
2025.\52\ However, two new reactors are scheduled to come online by 
2022. The domestic uranium industry is challenged by this shrinking 
customer demand for their product in the United States (see Figures 9 
and 10).
---------------------------------------------------------------------------

    \50\ ``Frequently Asked Questions.'' U.S. Energy Information 
Administration. https://www.eia.gov/tools/faqs/faq.php?id=207&t=3.
    \51\ ``Nuclear Power in the USA.'' World Nuclear Association. 
http://www.world-nuclear.org/information-library/country-profiles/countries-t-z/usa-nuclear-power.aspx.
    \52\ U.S. Energy Information Administration. ``America's oldest 
operating nuclear power plant to retire on Monday'' (September 14, 
2018), https://www.eia.gov/todayinenergy/detail.php?id=37055.

---------------------------------------------------------------------------

[[Page 41555]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.005


----------------------------------------------------------------------------------------------------------------
                                                 [TEXT REDACTED]
-----------------------------------------------------------------------------------------------------------------
   [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]
----------------------------------------------------------------------------------------------------------------
[TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]
[TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]
[TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]
[TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]
[TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]
[TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]        [TEXT REDACTED]
----------------------------------------------------------------------------------------------------------------
Source: [TEXT REDACTED].
[TEXT REDACTED].

    The majority of the plants shut down due to cost-driven factors, 
including competition from alternative generation sources such as 
natural gas, solar, and wind, as well as additional capital 
expenditures needed to meet NRC regulatory requirements. [TEXT 
REDACTED]
    Only one new reactor has been completed in the United States since 
1996--Tennessee Valley Authority's Watts Bar 2 plant, which began 
operating in 2016. Construction started on two commercial PWR reactors 
in Georgia in 2013 and those are scheduled to begin operation in 2021. 
In South Carolina, construction of two commercial reactors began in 
2013, but cost overruns caused the projects to be abandoned in 
2017.<SUP>53 54</SUP> While the U.S. nuclear power industry is 
declining, global demand for nuclear power plants is rising with no 
less than 50 new reactors under construction in 15 countries. A 
majority of the new builds are in Russia, China, India, the United Arab 
Emirates, and South Korea.\55\
---------------------------------------------------------------------------

    \53\ ``Nuclear Power in the USA.'' World Nuclear Association. 
http://www.world-nuclear.org/information-library/country-profiles/countries-t-z/usa-nuclear-power.aspx.
    \54\ Stelloh, Tim. ``Construction Halted at South Carolina 
Nuclear Power Plant.'' NBC News, July 31, 2017. https://www.nbcnews.com/news/us-news/construction-halted-south-carolina-nuclear-power-reactors-n788331.
    \55\ ``Plans for New Reactors Worldwide.'' World Nuclear. http://www.world-nuclear.org/information-library/current-and-future-generation/plans-for-new-reactors-worldwide.aspx.
---------------------------------------------------------------------------

VI. Global Uranium Market Conditions

A. Summary of the Global Uranium Market

    Uranium, in various forms (``uranium''), is a globally-traded 
commodity supplied primarily through privately negotiated contracts 
with varying durations. Short-term contracts usually span less than two 
years, mid-term contracts run between two to five years, and long-term 
contracts can be in force for five years or more. Additionally, uranium 
can be bought on ``spot,'' which are contracts with a one-time uranium 
delivery (usually) for the entire contract, where the delivery occurs 
within one year of contract execution. The spot market can be lower or 
higher than the contract market. Since 2011, the number of spot, mid-
term, and long-term contracts for all front-end industry participants 
has varied (see Figure 11). Of note, long-term contracts have declined 
from 35 to just 19, and no short-term contracts were reported.

[[Page 41556]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.006

    The spot market price of a pound of uranium averaged only $28.27 in 
the last three months of 2018, and dropped even further to $25.75 in 
April 2019. This is a 74 percent reduction since the recent price high 
of $99.24 per pound in 2007.
    According to Department survey respondents, the main factor causing 
the current low spot market price of uranium is global excess uranium 
supply, much of which is attributed to continued production of uranium 
from state-owned enterprises in the aftermath of the Fukushima 
incident. Low spot prices have significantly impacted the viability of 
U.S. uranium producers. Mining companies operating in the U.S. have 
been forced to idle operations due to low spot prices, and since 2009, 
four companies have closed 10 mines with the intention to permanently 
halt operations.
    Additionally, the U.S. has approximately 1.28 million metric tons 
of uranium in prognosticated uranium resources (the largest reserves in 
the world \56\), much of which has not been developed specifically due 
to low spot prices (see Figure 12).
---------------------------------------------------------------------------

    \56\ Susan Hall and Margaret Coleman, U.S. Geological Survey, 
Critical Analysis of World Uranium Resources, (2013) pp. 26-27.
---------------------------------------------------------------------------

BILLING CODE 3510-33-P

[[Page 41557]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.007

    Nuclear fuel prices are, however, impacted by more than just the 
uranium spot market price. On the supply side, uranium prices are 
affected by mine closures and the release of existing inventory for 
sale. On the demand side, price is impacted by new reactor startups and 
reactor closures (see Figure 13).
[GRAPHIC] [TIFF OMITTED] TN02AU21.008


[[Page 41558]]


    Additionally, converters, enrichers, and fuel fabricators 
experience specific market pressures, resulting in uranium products 
that have slightly different price considerations. Department survey 
data indicates that, on average, aggregate fuel acquisition accounts 
for 25 percent of total facility operating costs. When looking at fuel 
acquisition as a percentage of a nuclear power utilities' total 
facility operating costs, the contribution of each stage of the front-
end nuclear fuel cycle is relatively small: Mining/milling and uranium 
concentrate acquisition (10 percent), enrichment (8 percent), fuel 
fabrication (5 percent), and conversion (2 percent) (see Figure 14).
[GRAPHIC] [TIFF OMITTED] TN02AU21.009

B. Uranium Transactions: Book Transfers and Flag Swaps

    Unlike many commodities, exchanges of uranium between suppliers and 
customers often take place without physical movement of material. This 
occurs through book transfers and flag swaps.
Book Transfer
    For the purposes of this investigation, a book transfer is defined 
as a ``change of ownership of two quantities of material with all other 
characteristics of the material being unchanged.'' \57\ Book transfers 
are used to exchange material between two customers at a third-party 
producer without having to physically ship or otherwise move material 
(see Figure 15).
---------------------------------------------------------------------------

    \57\ Swaps in the International Fuel Market, 7. World Nuclear 
Association. http://www.world-nuclear.org/uploadedFiles/org/WNA/Publications/Working_Group_Reports/swaps-report-2015.pdf, 7.

---------------------------------------------------------------------------

[[Page 41559]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.010

    Book transfers also can be used to convey payment for conversion or 
enrichment services (see Figure 16).\58\
---------------------------------------------------------------------------

    \58\ Ibid.
    [GRAPHIC] [TIFF OMITTED] TN02AU21.011
    
Flag Swap
    In certain cases, utilities and uranium industry producers may find 
it necessary to conduct ``obligation swaps'' of material, a practice 
commonly known as ``flag swapping.'' \59\ In the uranium industry, 
obligations are defined as conditions assigned by a particular 
country's government to a specific set of nuclear material. These 
conditions control the use of nuclear material, including uranium, and 
may restrict where it is shipped. For example, if such material has a 
United States obligation, the material can only be used in accordance 
with conditions established by the United States government.\60\
---------------------------------------------------------------------------

    \59\ ``Swaps in the International Fuel Market.'' World Nuclear 
Association. (2015). http://www.world-nuclear.org/uploadedFiles/org/WNA/Publications/Working_Group_Reports/swaps-report-2015.pdf
    \60\ In this example, the United States obligations associated 
with material are established in U.S. peaceful nuclear cooperation 
agreements, also known as 123 agreements. Section 123 of the Atomic 
Energy Act of 1954 generally requires the entry into force of a 
peaceful nuclear cooperation agreement prior to significant exports 
of U.S. nuclear material or equipment. As of 2019, the United States 
has in force approximately 23 of these agreements with foreign 
partners. Congressional Research Service. Nuclear Cooperation with 
Other Countries: A Primer, 1. (Washington, DC: 2019). https://crsreports.congress.gov/product/pdf/RS/RS22937
---------------------------------------------------------------------------

    Depending on the parties involved in the uranium exchange, it is 
possible for a given quantity and type of uranium to acquire multiple 
obligations. If material is mined in Canada, converted in the United 
States, enriched in Germany,

[[Page 41560]]

and fabricated into nuclear fuel in Japan, then the uranium would then 
acquire obligations from Canada, the United States, the European Atomic 
Energy Community (EURATOM), and Japan. The uranium can only be used in 
accordance with regulations imposed by the above countries and EURATOM. 
Customers and producers engage in obligation swaps to ease 
administrative burdens on the maintenance of material. By exchanging in 
obligation swaps, customers and producers can minimize the number of 
obligations that must be adhered to for the tracking and ultimate use 
of uranium materials (see Figures 17 and 18).
    Note that the exchange of obligations does not change the origin. 
Although origin swaps are usually not permitted by regulatory 
authorities, it is possible to de facto origin swap through a change of 
obligation and ownership. These combination obligation/ownership swaps 
have in the past been used to circumvent uranium import restrictions, 
as previously encountered with South African and Soviet-origin uranium 
in the late 1980s.\61\
---------------------------------------------------------------------------

    \61\ In these cases, South African and Soviet producers used 
third-party brokers to facilitate origin swaps that would circumvent 
restrictions on imports of these materials. DOC 1989 investigation, 
also, Written Question by Mr. Paul Saes (V) to the Commission of the 
European Communities, 26 February 1990, http://publications.europa.eu/resource/cellar/a6838643-4b6d-4f39-aebb-d538ff795091.0004.01/DOC_1.
[GRAPHIC] [TIFF OMITTED] TN02AU21.012

[GRAPHIC] [TIFF OMITTED] TN02AU21.013

    Book transfers and flag swaps are also advantageous because of the 
specialized nature of the nuclear fuel cycle. Nuclear fuel facilities 
are concentrated in only a few countries: five nations have uranium 
conversion facilities (the United States, Canada, China, France, and 
Russia) and eight enrichment facilities \62\ (the aforementioned 
countries as well as Germany, the United Kingdom, and the Netherlands). 
Consequently, book transfer and flag swaps ensure that converters and 
enrichers can quickly process customer orders.
---------------------------------------------------------------------------

    \62\ Ibid.
---------------------------------------------------------------------------

    Furthermore, the nature of the uranium industry's manufacturing 
processes mean that an individual

[[Page 41561]]

company's inventories of material are not kept separately at their 
facilities. Instead, materials are stored at converters, enrichers, and 
fuel fabricators (see Figures 19 and 20).\63\ At these facilities, 
customers are assigned a particular share of the facility's product 
proportional to the amount specified in their contract. In this sense, 
uranium industry transactions function in the same way as banking 
transactions. An individual bank customer withdrawing $100 from an ATM 
does not receive the same physical $100 that he or she deposited at an 
earlier point. Similarly, a utility customer does not receive an end 
product--whether UF6, SWU, or fabricated fuel assemblies--to be the 
source material that the utility supplied to the producer.
---------------------------------------------------------------------------

    \63\ Ibid.
    [GRAPHIC] [TIFF OMITTED] TN02AU21.014
    
BILLING CODE 3510-33-C
    The Department incorporated its understanding of book transfers and 
flag swaps to its survey instrument and interpretation of responses. 
The Department is particularly cognizant of the reality that many 
imports of uranium into the United States do not necessarily occur 
through physical transportation of materials into the country. As 
described above, U.S. uranium producers and U.S. utilities can acquire 
and exchange materials without them ever entering the country. 
Consequently, the Department accounts for these types of transfers in 
assessing the overall impact of imported uranium on the national 
security.

C. The Effect of the Fukushima Daiichi Incident on U.S. and Global 
Uranium Demand

    Reduction in global uranium demand in recent years can be traced to 
several factors including the impacts of Japan's T[omacr]hoku 
earthquake and the subsequent meltdown at the Fukushima Daiichi Nuclear 
Power Plant. This event profoundly affected the economics of the 
nuclear industry by reducing global demand for uranium. Some 
governments in the developed world reacted to the Fukushima incident by 
closing existing reactors and cancelling plans for new construction. 
Japan cancelled plans for 14 new reactors and shut down all 50 operable 
reactors by 2012 to reassess safety standards. Since then, only nine 
have restarted.\64\ Germany decided to shut down all 17 of its reactors 
by 2022 \65\ and France announced plans to shut down 14 reactors by 
2035.\66\ As of 2019, Germany has closed 10 reactors, while France has 
not yet closed any.\67\ Consequently, the global uranium market was 
flooded with uranium products after a significant reduction in nuclear 
power plants operating worldwide.
---------------------------------------------------------------------------

    \64\ ``Nuclear Power in Japan.'' World Nuclear Association. 
http://www.world-nuclear.org/information-library/country-profiles/countries-g-n/japan-nuclear-power.aspx.
    \65\ Annika Breidthart, ``German government wants nuclear exit 
by 2022 at latest'', Reuters (May 30, 2011), https://uk.reuters.com/article/idINIndia-57371820110530.
    \66\ ``Nuclear Power in France.'' World Nuclear Association. 
http://www.world-nuclear.org/information-library/country-profiles/countries-a-f/france.aspx.
    \67\ ``Nuclear Power in Germany.'' World Nuclear Association. 
http://www.world-nuclear.org/information-library/country-profiles/countries-g-n/germany.aspx.

---------------------------------------------------------------------------

[[Page 41562]]

    Twelve projects primed for construction in the United States, 
encompassing seventeen new nuclear reactors, were canceled/postponed 
following the post-Fukushima upgrades mandated by the Nuclear 
Regulatory Commission. The new NRC requirements, coupled with the 
resurgence in public opposition to nuclear power, have been deterrents 
to future construction. Intense competition from other energy 
generation methods, paired difficulties in securing financing, also 
increased costs of new construction (see Figure 21). The number of 
active nuclear power plants worldwide reached a low in 2014 of 435 
operating reactors. Although the number of reactors has since increased 
to 453 in 2018, the oversupply of uranium that remains in the market 
has continued to depress global prices.

                                Figure 21: Cancelled Nuclear Projects Since 2009
----------------------------------------------------------------------------------------------------------------
                                                             Projected
                                                             generation                            Reason for
         Facility name                   Location             capacity   Date of cancellation     cancellation
                                                                (MW)
----------------------------------------------------------------------------------------------------------------
Bellefonte 2-4................  Hollywood, AL.............        3,435  August 2009.........  Unfavorable
                                                                                                market
                                                                                                conditions.
Victoria County Station.......  Victoria, TX..............        3,070  August 2012.........  Unfavorable
                                                                                                market
                                                                                                conditions,
                                                                                                competition from
                                                                                                natural gas.
Shearon Harris 2-3............  New Hill, NC..............        2,017  May 2013............  Regulatory
                                                                                                concerns,
                                                                                                unfavorable
                                                                                                market
                                                                                                conditions.
Comanche Peak 3-4.............  Glen Rose, TX.............        3,400  November 2013.......  Delay in reactor
                                                                                                design review.
Nine Mile Point 3.............  Scriba, NY................        1,600  November 2013.......  Unfavorable
                                                                                                market
                                                                                                conditions.
Calvert Cliffs 3..............  Lusby, MD.................        1,600  July 2015...........  Unfavorable
                                                                                                market
                                                                                                conditions,
                                                                                                inability to
                                                                                                secure
                                                                                                financing.
Callaway 2....................  Steedman, MO..............        1,600  August 2015.........  Regulatory
                                                                                                concerns,
                                                                                                unfavorable
                                                                                                market
                                                                                                conditions.
Grand Gulf 3..................  Port Gibson, MS...........        1,520  September 2015......  Unfavorable
                                                                                                market
                                                                                                conditions.
River Bend 3..................  St. Francisville, LA......        1,520  December 2015.......  Unfavorable
                                                                                                market
                                                                                                conditions.
Bell Bend 1...................  Salem Twp., PA............        1,600  August 2016.........  Suspension of
                                                                                                reactor design
                                                                                                certification.
Bellefonte 1..................  Hollywood, AL.............        1,100  May 2016............  Unfavorable
                                                                                                market
                                                                                                conditions.
V.C. Sumner 2-3...............  Jenkinsville, SC..........        2,500  July 2017...........  Unfavorable
                                                                                                market
                                                                                                conditions, cost
                                                                                                overruns.
Levy County Nuclear Power       Levy County, FL...........        2,234  August 2017.........  Unfavorable
 Plant.                                                                                         market
                                                                                                conditions,
                                                                                                public
                                                                                                opposition.
----------------------------------------------------------------------------------------------------------------
Source: U.S. Nuclear Regulatory Commission.

D. The Effect of State-Owned Enterprises on Global Uranium Supply

    The business practices of state-owned enterprises (SOEs) cause 
significant challenges for U.S. uranium producers. SOEs are insulated 
from market pressures in which the U.S. and other market producers, 
namely those in Australia and Canada, must contend. Specifically, a 
steep drop in uranium spot market prices can adversely affect miners' 
ability to cover their operating costs. In contrast, SOEs often produce 
uranium regardless of price because state support enables SOEs to make 
business decisions insensitive to market conditions. For example, 
although global uranium production declined by six percent between 2012 
and 2014, Kazakhstan's production of uranium increased by seven percent 
over the same time period.\68\ In Kazakhstan's case, state support 
includes state-financed exploration services \69\ and employee 
training, as well as currency devaluation to artificially depress 
prices of all exports, including uranium.\70\ State-owned suppliers 
dominate the list of leading global uranium producers (see Figure 22).
---------------------------------------------------------------------------

    \68\ IAEA Red Book, 102, 2016.
    \69\ Global Business Reports, ``Kazakhstan's mining industry: 
Steppe by Steppe'', Engineering and Mining Journal (September 2015), 
p. 83, https://www.gbreports.com/wp-content/uploads/2015/09/Kazakhstan_Mining2015.pdf.
    \70\ In August 20, 2015 the National Bank of Kazakhstan allowed 
the national currency--the tenge--to float freely. Immediately, the 
tenge fell in value. Before the transition, the tenge had limited 
ability to move within a range determined by the national bank, 
resting at 185.7 KZT per USD. With the introduction of a free 
floating exchange rate, the currency has been consistently devaluing 
and resides at 380.1 KZT per USD (Department of Treasury). The 
switch to a free floating exchange rate was motivated in part to an 
effort to prop-up Kazak oil and resource sectors. The transition has 
successfully boosted growth in mining and resource markets. For 
more, consult Andrew E. Kramer, ``Kazakhstan's Currency Plunges'', 
New York Times (August 20, 2015) https://www.nytimes.com/2015/08/21/business/international/kazakhstans-currency-plunges.html.

                                   Figure 22: Leading Global Uranium Producers
----------------------------------------------------------------------------------------------------------------
                                                                                      Uranium
                    Company                                 Ownership             production (in   Global market
                                                                                    tons of MT)      share (%)
----------------------------------------------------------------------------------------------------------------
KazAtomProm...................................  Kazakhstan......................          12,093              20
Cameco........................................  Private.........................           9,155              15
Orano.........................................  France..........................           8,031              13
Uranium One...................................  Russia..........................           5,102               9
CNNC & CGN....................................  China...........................           3,897               7
ARMZ..........................................  Russia..........................           2,917               5
Rio Tinto.....................................  Private.........................           2,558               4
Navoi.........................................  Uzbekistan......................           2,404               4
BHP Billiton..................................  Private.........................           2,381               4

[[Page 41563]]

 
Energy Asia...................................  Private.........................           2,218               4
General Atomics/Quasar........................  Private.........................           1,556               3
Sopamin.......................................  Niger...........................           1,118               2
Paladin.......................................  Private.........................             970               2
----------------------------------------------------------------------------------------------------------------
Italicized = State Ownership.
Not Italicized = Private Ownership.
Source: World Nuclear Association--World Uranium Mining Production, 2017.

    The leading global uranium producers account for about 92 percent 
of current world uranium production. Of these, SOEs in the former 
Soviet Union and China control about 45 percent of the global market. 
These companies are insulated from market and regulatory pressures 
experienced by market producers, placing U.S. uranium mines at a 
distinct disadvantage.
    Uranium-related SOEs, however, have broader roles than sales of 
uranium products. Many countries leverage their SOEs' integration of 
the nuclear fuel cycle and nuclear power generation to further 
geopolitical ambitions. Rosatom, a Russian state-owned enterprise that 
participates in every step of the nuclear fuel cycle, including power 
generation, uses this leverage. With virtually complete control over 
the Russian nuclear industry, Rosatom can offer prices for nuclear 
plant construction and fuel services that are significantly below that 
of market-based suppliers. Generous financing packages, usually 
consisting of low-cost loans underwritten by the Russian government, 
also incentivize deals with Rosatom.\71\ China emulates Rosatom's model 
of pairing subsidized nuclear construction with state-supported 
financing, as seen with its construction of reactors in Pakistan and 
Romania. Summaries of individual countries' non-market economy nuclear 
activities are discussed more in Appendix I.
---------------------------------------------------------------------------

    \71\ Russia has recently finished construction of Iran's only 
operating nuclear reactor at Bushehr, and Rosatom is the sole fuel 
supplier for the plant. Rosatom is also actively constructing the 
Akkuyu nuclear plant in Turkey, and is pursuing projects in Finland, 
Hungary, Bangladesh, Egypt and Belarus. http://www.world-nuclear.org/information-library/current-and-future-generation/plans-for-new-reactors-worldwide.aspx.
---------------------------------------------------------------------------

    Uranium-related SOEs also have a deleterious impact on U.S. 
nonproliferation objectives. U.S. exports of nuclear technologies and 
supplies, including uranium products, are generally governed by Section 
123 agreements.\72\ These agreements, which include peaceful use 
restrictions and other nonproliferation requirements, ensure that the 
U.S. nuclear industry can play a role in the global nuclear fuels trade 
without contributing to nuclear weapons development. However, if the 
U.S. uranium industry cannot compete with SOEs, particularly Russia and 
China, the U.S. contribution to global nuclear nonproliferation regimes 
will substantially diminish. As former Secretary of Energy Enest Moniz 
remarked in July 2017:
---------------------------------------------------------------------------

    \72\ ``Nuclear Cooperation with Other Countries: A Primer.'' 
Congressional Research Service. (January 15, 2019). https://fas.org/sgp/crs/nuke/RS22937.pdf.

    ``A world in which Russia and China come to have dominant 
positions in the global nuclear supply chain will almost certainly 
see a weakening of requirements, just as nuclear technology and 
materials spread to many countries.'' \73\
---------------------------------------------------------------------------

    \73\ Ernest J. Moniz, ``The National Security Imperative for 
U.S. Civilian Nuclear Energy Policy'', Energy Futures Initiative 
(July 12, 2017), https://energyfuturesinitiative.org/news/2017/7/12/moniz-the-national-security-imperative-for-us-civilian-nuclear-energy-policy.

    U.S. utilities contract with uranium-related SOEs in Russia, 
Kazakhstan, Uzbekistan, and China primarily because of concerns with 
price and diversity of supply. These utilities believe that with the 
limited number of worldwide uranium producers, particularly in the 
conversion and enrichment stages, any additional competition is 
welcome. Most of the 24 utility respondents indicated that price and 
reliability of delivery considerations were the chief drivers of their 
fuel procurement policies; only [TEXT REDACTED] alluded to geopolitical 
considerations as a significant factor. Domestic utilities' desire to 
cut costs includes support for increased market penetration by China. 
[TEXT REDACTED]
    Utilities' emphasis on diversity of supply also underpins their 
rationale for purchasing Russian uranium. [TEXT REDACTED] \74\ Several 
utilities suggested that if current restrictions on Russian imports 
were eliminated, they would purchase more Russian material.\75\
---------------------------------------------------------------------------

    \74\ [TEXT REDACTED].
    \75\ Commerce Department Survey of U.S. Nuclear Power Generation 
Sector, 2019.
---------------------------------------------------------------------------

France
    Respondents have also raised concerns about the activities of 
French state-owned enterprises. There are two principal French 
companies participating in the nuclear fuel cycle: Orano and Framatome. 
Orano, previously a part of Areva SA, is minority-owned by the French 
state and has direct ownership of uranium mines in Niger, Kazakhstan, 
and Canada. It also owns and operates all uranium enrichment and 
conversion facilities in France. Framatome, which is majority owned by 
the French government's electric utility [Eacute]lectricit[eacute] de 
France, operates fuel fabrication and reactor construction businesses.
    U.S. producers acknowledge that state support gives Orano and 
Framatome a competitive edge over U.S. and other European firms. [TEXT 
REDACTED] expressed concerns that, if U.S. anti-dumping duties on 
French enriched uranium were lifted, Orano's state backing would allow 
it to sell to utilities below-market cost.
    The U.S. International Trade Commission has previously concluded 
that French state-owned enterprises have undersold U.S. producers of 
enriched uranium (see Chapter VII). Unlike SOEs in Russia, Kazakhstan, 
Uzbekistan, and China, French nuclear entities are partially owned by 
private companies and are somewhat subject to market pressures. 
Furthermore, the French nuclear market is not closed off to the U.S. or 
other uranium producers, and U.S. companies reported sales to France 
between 2014 and 2018. In contrast, U.S. uranium producers cannot sell 
into the Russian or Chinese markets, as these countries are served only 
by their state-owned enterprises.

[[Page 41564]]

E. Market Uranium Producers: Canada and Australia

    Market uranium producers in Canada and Australia have historically 
performed better than their U.S. counterparts. Between 2014 and 2016, 
Canada and Australia increased their production of uranium by 59 
percent and 26 percent, respectively.\76\ In 2014, Canada opened the 
Cigar Lake mine and Australia opened the Four Mile mine,\77\ both 
increasing overall production numbers.
---------------------------------------------------------------------------

    \76\ Nuclear Energy Agency & International Atomic Energy Agency. 
Uranium 2018--Resources, Production and Demand, 55. 2018. http://www.oecd-nea.org/ndd/pubs/2018/7413-uranium-2018.pdf.
    \77\ Ibid.
---------------------------------------------------------------------------

    These mines also exhibit positive geologic factors. Cigar Lake has 
an average ore grade of 14.5 percent uranium, one of the highest in the 
world. Higher ore grades require less processing to recover uranium 
from the ore, reducing overall production costs. Australia's largest 
mine, Olympic Dam, is also a significant producer of copper, gold, and 
silver.\78\ Production of these commodities can therefore support 
continued uranium extraction even in the face of lower global spot 
prices.
---------------------------------------------------------------------------

    \78\ Ibid., 134.
---------------------------------------------------------------------------

    Despite these geologic advantages, Canadian and Australian 
producers are also subject to the same market pressures caused by SOEs' 
overproduction. For example, McArthur River, estimated to have the 
world's largest deposit of high-grade uranium,\79\ was idled in 
November 2017 by Cameco Resources due to poor economic conditions.\80\ 
Australian mines have also cut production in response to poor market 
conditions between 2016 and 2018, most notably Olympic Dam cut 
production by eight percent and the Ranger mine by 10 percent.\81\ As a 
result, between 2014 and 2018, 24.2 percent of uranium concentrate 
provided by Australian and Canadian companies to U.S. nuclear power 
generators came from Kazakhstan and Uzbekistan.\82\
---------------------------------------------------------------------------

    \79\ Ibid., 159.
    \80\ ``Cameco: uranium prices too low to restart McArthur River 
mine operation.'' MRO Magazine, August 3, 2019. https://www.mromagazine.com/2018/08/03/cameco-uranium-prices-too-low-to-restart-mcarthur-river-mine-operation/.
    \81\ ``Australia's Uranium Mines.'' World Nuclear Association. 
http://www.world-nuclear.org/information-library/country-profiles/countries-a-f/appendices/australia-s-uranium-mines.aspx.
    \82\ U.S. Department of Commerce, Bureau of Industry and 
Security, Nuclear Power Generator Survey, Question 9.
---------------------------------------------------------------------------

    Like their U.S. counterparts, Canadian and Australian producers 
cannot produce without regard for spot market price. SOEs' continued 
price-insensitive production therefore threatens all market uranium 
producers, including the U.S., Canada, and Australia.

VII. Findings

A. Uranium Is Important to U.S. National Security

    As discussed in Part II, ``national security'' under Section 232 
includes both (1) national defense and (2) critical infrastructure 
needs.
1. Uranium Is Needed for National Defense Systems
    An assured supply of U.S.-origin uranium is critical to national 
defense for the purpose of nuclear weapons and the naval fleet. Nuclear 
reactors provide propulsion and electricity for key elements of the 
nation's naval fleet: 11 aircraft carriers and 70 submarines. Uranium 
is also vital for producing tritium, a radioactive gas used in U.S. 
nuclear weapons.
    Many international nuclear cooperation agreements to which the 
United States is a party, including Section 123 agreements on civil 
nuclear cooperation, restrict the use of nuclear material imported 
under those agreements to peaceful uses. The United States requires 
U.S.-origin uranium and nuclear technologies for use in the production 
of uranium-based products for U.S. defense systems, with no foreign 
obligations that restrict the uses of such nuclear material.\83\ At 
this time, there is only one functional enrichment facility in the 
United States. Located in Eunice, New Mexico and operated by the 
British-German-Dutch consortium URENCO, this enrichment facility may 
only enrich uranium for civil purposes; the material it produces may 
not be used for U.S. nuclear weapons or naval reactors.\84\
---------------------------------------------------------------------------

    \83\ U.S. Department of Energy. Tritium And Enriched Uranium 
Management Plan Through 2060, iv. Report to Congress. (Washington 
DC: 2015) http://fissilematrials.org/library/doe15b.pdf.
    \84\ Agreement Between the Three Governments of the United 
Kingdom of Great Britain and Northern Ireland, the Federal Republic 
of Germany and the Kingdom of the Netherlands and the Government of 
the United States of America Regarding the Establishment, 
Construction and Operation of an Uranium Enrichment Installation in 
the United States, Washington, 24 July 1992, Treaty Series No 133 
(2000).
---------------------------------------------------------------------------

    However, the U.S. has three defense systems that require highly-
enriched uranium (HEU) (see Figure 23). The Department of Energy 
currently meets requirements for HEU by drawing on its stockpile. DOE 
also satisfies its ongoing need for HEU by recycling components from 
retired nuclear weapons. DOE is estimated to have approximately 575 
tons of HEU and 80.8 tons of plutonium. Russia, in contrast, has an 
estimated 679 tons of HEU and 128 tons of plutonium.\85\
---------------------------------------------------------------------------

    \85\ U.S. Department of Energy. Tritium And Enriched Uranium 
Management Plan Through 2060. Report to Congress. (Washington DC: 
2015) http://fissilematrials.org/library/doe15b.pdf.
---------------------------------------------------------------------------

    Furthermore, U.S.-origin uranium with no foreign obligation is 
required for the manufacture of tritium for defense purposes (see 
Figure 24). Tritium, a hydrogen isotope, is used in nuclear warheads to 
boost explosive yield. Tritium must be continually replenished in 
warheads because it has a short half-life of 12.3 years, decaying at a 
rate of 5.5 percent per year. The Department of Energy has an 
Interagency Agreement with the Tennessee Valley Authority (TVA) for 
production of tritium using the TVA's Watts Bar 1 commercial power 
reactor. TVA's Watts Bar 2 commercial power reactor will soon be used 
for tritium production as well.\86\
---------------------------------------------------------------------------

    \86\ February 2019 discussion between U.S. Department of Energy, 
National Nuclear Security Administration, Office of Major 
Modernization Programs and the U.S. Department of Commerce, Bureau 
of Industry and Security.

                     Figure 23: Defense Requirements for U.S.-Origin Uranium-Based Products
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Submarines (70)--HEU Fuel..................  Nuclear-Powered Aircraft Carriers  Tritium Nuclear Weapons 3,800 +/-
                                              (11)--HEU Fuel.                     *.
----------------------------------------------------------------------------------------------------------------
* Includes 1,700 warheads on missiles and strategic bombers; 2,100 warheads in reserve; 150 warheads in Europe.
  An additional 2,500 warheads are slated for dismantlement.
Sources: U.S. Navy, International Panel on Fissile Materials (www.fissilematerials.org).
See Appendix J for entire chart.


[[Page 41565]]


                            Figure 24: Uranium Requirements for U.S. National Defense
----------------------------------------------------------------------------------------------------------------
                  Material                          Defense application                 Other application
----------------------------------------------------------------------------------------------------------------
Natural Uranium (NU).......................  Enrichment.......................  Materials Research Reactors.
Low Enriched Uranium (LEU).................  Tritium Production for Nuclear     Medical Isotope Production.
                                              Weapons.
Highly Enriched Uranium....................  Reactor Fuel for Aircraft          U.S. High Performance Research
                                              Carriers and Submarines.           Reactors.
Depleted Uranium U-235.....................  Munitions--Kinetic Energy          Mixed-Oxide Reactor Fuel.
                                              Penetrators.
                                             Munitions--Armor.................  Triuranium Octoxide (U3O8).
                                             Radiation Shielding..............  Uranium Hexafluoride (UF6).
                                             Targets for Pu-239 Production....  Aircraft Parts.
----------------------------------------------------------------------------------------------------------------
Source: U.S. Department of Commerce, Bureau of Industry and Security; U.S. Department of Energy, February 2019.

    Low-enriched uranium (LEU) \87\ is used to produce tritium and to 
supply fuel to U.S. research reactors. DOE meets some of its internal 
demands for LEU by downblending HEU into LEU.\88\ DOE uses a bartering 
program of uranium derived from HEU as payment for services to defray 
cleanup costs at the Portsmouth Gaseous Diffusion Plant in Piketon, 
Ohio.\89\ The downblending practice also provides high assay low-
enriched uranium (HALEU),\90\ which is used in research reactors and 
medical isotope production reactors.
---------------------------------------------------------------------------

    \87\ Low-enriched uranium (LEU) is uranium enriched to less than 
20% U-235. (Uranium used in power reactors is usually 3.5-5.0% U-
235). High-enriched uranium (HEU) is uranium enriched to 20% U-235 
or more. (Uranium used in weapons is about 90% enriched U-235.)
    \88\ For the purposes of this 232 investigation, downblending is 
the reduction of uranium enrichment levels to less than 20 percent, 
a low enriched uranium (LEU), which cannot be used in weapons, but 
is suitable for use as fuel in nuclear power plants and naval 
nuclear reactors.
    \89\ U.S. Government Accountability Office. Nuclear Weapons: 
NNSA Should Clarify Long-Term Uranium Enrichment Mission needs and 
Improve Technology Cost Estimates, Report to Congressional 
Committees. 14. [GAO-18-126], February 2018. https://www.gao.gov/products/GAO-18-126.
    \90\ High assay low-enriched uranium (HALEU)--Low-enriched U-235 
uranium product that has enrichment levels higher than the 3.5-5%. 
HALEU U-235 uranium product can have enrichment levels approaching 
20%, depending on the application.
---------------------------------------------------------------------------

    Lastly, DOE's downblending program for production of LEU fuel used 
in TVA reactors requires a supply of natural uranium trioxide (UO3) to 
be used as a diluent in the downblending process. As of 2019, there is 
no U.S. production of UO3; consequently, TVA has to import it from 
Canada and swaps unobligated flags from DOE stocks of natural uranium 
in other physical forms. DOE does not maintain a stockpile of 
unprocessed uranium of any type. Furthermore, the stockpile of HEU 
allocated to production of HALEU is expected to be depleted by 2060 
\91\ and DOE's supply of LEU will be exhausted around 2041. The 
Department anticipates that its HEU stockpile, at current projected 
rates of consumption for naval reactor operations, will be depleted 
between 2050 and 2059.\92\
---------------------------------------------------------------------------

    \91\ U.S. Department of Energy, National Nuclear Security 
Administration, Office of Major Modernization Programs, February 
2019 discussion with the U.S. Department of Commerce, Bureau of 
Industry and Security.
    \92\ ``Estimate of Global HEU Inventories as of January 2017.'' 
International Panel on Fissile Materials. http://fissilematerials.org.
---------------------------------------------------------------------------

    The National Nuclear Security Administration maintains the American 
Assured Fuel Supply (AFS), which is a stock of low-enriched uranium for 
use by U.S. and foreign utilities during a serious fuel supply 
disruption.\93\ The AFS contains 230 tons of LEU that was downblended 
from DOE's HEU stockpile.\94\ This stock is not available for use by 
DOE/NNSA. Only civilian nuclear power plant operators may use the AFS.
---------------------------------------------------------------------------

    \93\ In 2005, the U.S. Department of Energy set up the American 
Assured Fuel Supply (formerly Reliable Fuel Supply) with $49.5 
million in funding from Congress. This entity supports the 
International Atomic Energy Agency's International Fuel Bank 
initiative--a back-up source of uranium for global supply 
disruptions.
    \94\ U.S. Department of Energy. Notice of Availability: American 
Assured Fuel Supply, Federal Register 76 no. 160, August 18, 2011, 
51358.
---------------------------------------------------------------------------

    U.S. national security relies on credible nuclear deterrence. A 
shortage of HEU to fuel aircraft carriers and submarines and LEU to 
support tritium production would undermine U.S. defense operations and 
readiness. Likewise, an inability to supply HALEU to research reactors 
and medical isotope manufacturers would be detrimental to several 
critical infrastructure sectors.\95\ The supply of U.S.-mined uranium 
will be critical as a feedstock for producing LEU and HEU in an 
enrichment facility that is planned to serve national defense needs. 
Without economically viable uranium mining operations in the United 
States, the enrichment of nuclear materials for DOE defense missions 
will not be possible under present law and policies. Defense needs for 
uranium are not enough to financially sustain the U.S. front-end 
uranium industry.
---------------------------------------------------------------------------

    \95\ U.S. Department of Energy. National Nuclear Security 
Administration. Report to Congress: Fiscal Year 2019 Stockpile 
Stewardship and Management Plan--Biennial Plan Summary. (Washington, 
DC: 2018). https://www.energy.gov/sites/prod/files/2018/10/f57/FY2019%20SSMP.pdf.
---------------------------------------------------------------------------

Future Defense Needs: Microreactors
    DoD is pursuing the deployment of small modular reactors and 
microreactors that will require HALEU fuel as early as 2027. DoD 
microreactors may require fuel that is free from peaceful use 
restrictions, including the peaceful use restrictions that are 
generally applied by foreign suppliers of nuclear material to the 
United States. The 2019 National Defense Authorization Act requires the 
Secretary of Defense to issue requirements for a pilot program to 
design, test, and operate micro-reactors by December 31, 2027.\96\
---------------------------------------------------------------------------

    \96\ For this report, micro-reactors are defined as reactors 
generating no more than 50 megawatts (MWe) Section 327, John S. 
McCain National Defense Authorization Act 2019 (Pub. L. 115-233), 
https://www.congress.gov/bill/115th-congress/house-bill/5515/text?format=txt.
---------------------------------------------------------------------------

    DoD's need for microreactors stems from its facilities' reliance on 
commercial electric power. At present, DoD installations consume 21 
percent of total federal energy consumption in the United States, at a 
cost of approximately $3.7 billion per year. Fifty-three percent of all 
energy consumed by DoD is delivered as electricity, 99 percent of which 
is provided via the commercial grid.\97\
---------------------------------------------------------------------------

    \97\ Defense Science Board. Department of Defense. ``Report of 
the Defense Science Board Task Force on DoD Energy Strategy, More 
Fight--Less Fuel,'' 2. (Washington, DC: 2008). https://www.acq.osd.mil/dsb/reports/2000s/ADA477619.pdf.
---------------------------------------------------------------------------

    In the event of a power outage, many DoD installations have only 
diesel generators and a limited supply of on-site diesel fuel. An 
extended grid failure could severely limit DoD's ability to carry out 
domestic and foreign operations.\98\ Microreactors would be expected to 
operate 24 hours per day without disruption and do not require frequent 
refueling. DoD installations could therefore continue normal operations 
in the event of an extended commercial grid disruption.
---------------------------------------------------------------------------

    \98\ Ibid.

---------------------------------------------------------------------------

[[Page 41566]]

    DoD aims to deploy microreactors in 2027, or shortly thereafter. 
This timeline assumes that there are no major technical hurdles to 
overcome. In addition, there are environmental and reactor siting 
reviews to address. Should microreactors become viable on a commercial 
scale, large-scale adoption of microreactors will require significant 
amounts of HALEU. DoD currently can only supply its HALEU needs through 
DOE's downblending of highly-enriched uranium, the supply of which is 
limited.\99\ Future deployment of micro-reactors for defense purposes 
will increase national defense requirements for uranium and emphasizes 
the need for a viable U.S. commercial uranium industry.
---------------------------------------------------------------------------

    \99\ Roadmap for the Deployment of Micro-Reactors for U.S. 
Department of Defense Domestic Installations.'' Nuclear Energy 
Institute. October 4, 2018. https://www.nei.org/CorporateSite/media/filefolder/resources/reports-and-briefs/Road-map-micro-reactors-department-defense-201810.pdf.
---------------------------------------------------------------------------

    A healthy U.S. commercial uranium industry is essential for defense 
needs. As DoD does not anticipate requiring newly-mined uranium for 
some years, it is impractical to suggest that a privately-owned mine 
could afford to operate on standby awaiting future DoD purchases. DoD 
analysts have noted that it ``can be difficult to reconstitute a 
material capability if all expertise and market share is lost,'' as 
most recently seen with U.S. rare earth mineral producers. U.S. uranium 
producers must be able to attract sufficient commercial (i.e. nuclear 
power generator) business in the present market to ensure their 
availability for defense requirements in the future.
Future Defense Needs: Proposed Nuclear Submarine Production
    The Department of the Navy recently submitted its Fiscal Year 2020 
President's Budget, recommending the construction of 55 new battle 
force ships over the next five years.\100\ Fourteen of these are 
nuclear-powered: Eleven Virginia-class submarines, two Columbia-class 
submarines, and one Gerald R. Ford-class aircraft carrier.
---------------------------------------------------------------------------

    \100\ ``Report to Congress on the Annual Long-Range Plan for 
Construction of Naval Vessels for Fiscal Year 2020.'' Office of the 
Chief of Naval Operations. March 2019. https://www.secnav.navy.mil/fmc/fmb/Documents/20pres/PB20%2030-year%20Shipbuilding%20Plan%20Final.pdf.
---------------------------------------------------------------------------

    The Virginia-class and Columbia-class submarines both house 
reactors which contain enough fuel to last the life of the ship, 
roughly 33 and 40 years respectively, unlike previous models which 
required refueling and overhaul.\101\ The Ford-class aircraft carrier 
requires refueling, but at a significantly lower rate than the Nimitz-
class aircraft carriers it will replace. DOE's current projection of 
HEU stockpile consumption for naval reactors does not take into account 
the addition of these 14 new nuclear-powered vessels. If these vessels 
are built, the total naval demand for HEU fuel will increase beyond 
what NNSA has anticipated, thus accelerating the date by which the HEU 
stockpile will be depleted.
---------------------------------------------------------------------------

    \101\ S9G Nuclear Reactors: http://www.world-nuclear.org/information-library/non-power-nuclear-applications/transport/nuclear-powered-ships.aspx.
---------------------------------------------------------------------------

The Role of National Security in Nuclear Regulation
    Since Congress passed the Atomic Energy Act in 1946, all 
legislation governing the nation's uranium and nuclear power generation 
industries has been written with an emphasis on national security 
functions. As envisioned by Congress, regulation of the U.S. uranium 
and nuclear power generation industries is to be conducted in support 
of national security objectives. Consequently, Congress has empowered 
federal agencies to intervene in support of continued domestic U.S. 
uranium production capacity on several occasions. A brief history of 
this legislation can be found in Appendix H.
2. Uranium Is Required for Critical Infrastructure
    Uranium is also required to satisfy requirements associated with 
the 16 critical infrastructure sectors identified by the U.S. 
Government in the 2013 Presidential Policy Directive 21 (PPD-21) \102\ 
(see Figure 25). Critical infrastructure, as defined by PPD-21, 
provides the ``essential services that underpin American society'' and 
``are vital to public confidence and the Nation's safety, prosperity, 
and well-being.'' \103\
---------------------------------------------------------------------------

    \102\ U.S. White House. Office of the Press Secretary. Critical 
Infrastructure Security and Resilience. Presidential Policy 
Directive 21. (Washington, DC: 2013) https://obamawhitehouse.archives.gov/the-press-office/2013/02/12/presidential-policy-directive-critical-infrastructure-security-and-resil.
    \103\ Ibid.

               Figure 25: Critical Infrastructure Sectors
------------------------------------------------------------------------
           Chemical              Commercial facilities   Communications
------------------------------------------------------------------------
Critical Manufacturing........  Dams..................  Defense
                                                         Industrial
                                                         Base.
Emergency Services............  Energy (Including       Financial
                                 Electric Power Grid).   Services.
Food and Agriculture..........  Government Facilities.  Healthcare and
                                                         Public Health.
Information Technology........  Nuclear Reactors,       Transportation
                                 Materials, and Waste.   Systems.
Water and Wastewater Systems..  ......................  ................
------------------------------------------------------------------------
Source: PPD-21; Department of Homeland Security.

    U.S. nuclear power generators are specifically included in the 
Nuclear Reactors, Materials, and Waste sector. Additionally, as U.S. 
nuclear power generators are integral to the nation's commercial 
electric grid, they are also part of the Energy sector. PPD-21 
specifically notes that the Energy sector supports all other sectors 
because of its ``enabling function.'' \104\ Consequently, as all 
critical infrastructure sectors are dependent on reliable supplies of 
electricity, 19 percent of which is provided by the nation's 98 nuclear 
reactors. Thus, uranium is needed to support all U.S. critical 
infrastructure sectors.
---------------------------------------------------------------------------

    \104\ Ibid.
---------------------------------------------------------------------------

Changing Electricity Generation Markets Affect U.S. Nuclear Generators
    One of the primary challenges to the viability of the U.S. uranium 
industry is the closure of U.S. nuclear power plants. The front-end 
U.S. uranium industry relies on nuclear power plant operators for 
approximately 98 percent of its business. Consequently, the uranium 
industry cannot survive without a healthy U.S. nuclear power generation 
sector. Between January 2013 and September 2018, U.S. utilities retired 
seven reactors at six nuclear power facilities--a loss of more than 
5,000 megawatts (MW) of generation capacity. Another 12 reactors with a 
combined generation capacity of 11.7

[[Page 41567]]

gigawatts (GW) are scheduled to close within the next seven years.\105\
---------------------------------------------------------------------------

    \105\ ``America's oldest operating nuclear power plant to retire 
on Monday.'' U.S. Energy Information Administration. September 14, 
2018. https://www.eia.gov/todayinenergy/detail.php?id=37055.
---------------------------------------------------------------------------

    A majority of the current nuclear fleet was constructed in the 
1970s and 1980s when large-scale bulk power generators, including 
nuclear plants, were considered the most cost-effective means of 
providing reliable electricity. Although these plants required 
significant capital expenditures for construction, low fuel and 
operating costs made them practical to operate on a near-constant 
basis.\106\ Energy planners particularly recognized that large scale 
plants were well equipped to provide baseload generation capacity.\107\
---------------------------------------------------------------------------

    \106\ ``Advancing Past ``Baseload'' to a Flexible Grid- How Grid 
Planners and Power Markets Are Better Defining System Needs to 
Achieve a Cost-Effective and Reliable Supply Mix,'' 1. The Brattle 
Group. June 26, 2017. http://files.brattle.com/system/publications/pdfs/000/005/456/original/advancing_past_baseload_to_a_flexible_grid.pdf?1498246224.
    \107\ Roughly defined, baseload generation capacity refers to 
generation capacity that can provide ``relatively low-cost 
electricity production to meet around-the-clock electricity loads''. 
Ibid., 5.
---------------------------------------------------------------------------

    However, lower-than-projected electrical consumption growth rates, 
combined with aggressive energy conservation efforts, prevented many 
utilities from operating the baseload nuclear power plants at optimal 
levels. Distorted electricity markets caused by current FERC-approved 
market rules and increased adoption of renewable energy resources, such 
as solar and wind, which are subsidized through Federal and state tax 
incentives, are resulting in increased cost sensitivity within the 
nuclear power industry and premature retirements of nuclear power 
generation units.\108\
---------------------------------------------------------------------------

    \108\ The Federal Energy Regulatory Commission (FERC or the 
Commission) has recognized that there are deficiencies in the way 
the regulated wholesale power markets price power (``price 
formation,'' i.e., energy, capacity, and ancillary services) and has 
developed an extensive record on price formation in the Commission-
approved ISOs and RTOs.
---------------------------------------------------------------------------

    [TEXT REDACTED] In this decreased demand environment, wind 
generators were able to compete through the Production Tax Credit (PTC) 
that allows them to produce at negative cost. Nuclear generators, in 
contrast, generally do not receive similar subsidies.

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----------------------------------------------------------------------------------------------------------------

    In addition to renewables, the introduction of highly efficient 
turbine gas generators and the wide availability of low cost natural 
gas, has changed the competitive landscape. Ten survey respondents 
indicated that their nuclear facilities faced significant challenges to 
their viability from natural gas-fired generators. Under current 
wholesale electricity pricing mechanisms, natural gas-fired generators 
are able to sell their electricity to the grid at lower costs than 
nuclear operators. This is partially due to the intermittent nature of 
natural-gas fired generation; natural gas-fired generators can be 
activated and deactivated as needed, whereas nuclear power generators 
have less operational flexibility. Similarly, subsidized renewable 
sources, such as solar and wind, are intermittent operators (e.g., 
during daytime hours for solar, and favorable wind conditions for wind) 
and can be sold at a lower cost than constantly-running nuclear 
generators.
    These factors create a situation that substantially disadvantages 
nuclear power generators. A 2017 IHS Markit study observed that, 
``generating resources providing security of supply receive negative 
market-clearing prices because distorted market conditions drive rival 
subsidized suppliers to bid against each other to avoid the loss of 
output-based subsidy payments.'' \109\ FERC, recognizing challenges 
faced by nuclear and other baseload generators, opened a proceeding in 
January 2018 to examine the relationship between grid reliability and 
wholesale market rules.\110\ The proceeding will examine grid 
resilience pricing and consider how valuation deficiencies lead to 
premature retirements of fuel-secure generation, including nuclear. 
FERC, has not yet taken action to address the inequities of the markets 
that threaten the resilience of the Nation's electricity system.
---------------------------------------------------------------------------

    \109\ ``Ensuring Resilient and Efficient Electricity Generation: 
The Value of the current diverse US power supply portfolio.'' IHS 
Markit. April 2018. [hereinafter IHS Ensuring Resilient and 
Effective Electricity Generation].
    \110\ FERC acknowledges that that there are deficiencies in the 
way the regulated wholesale power markets price power (``price 
formation,'' i.e., energy, capacity, and ancillary services) and has 
developed an extensive record on price formation in the Commission-
approved ISOs and RTOs. FERC ``Grid Resilience in Regional 
Transmission Organizations and Independent System Operators,'' 
Docket No. AD18-7-000 (January 2018)
---------------------------------------------------------------------------

    Increased state energy efficiency standards and the predominance of 
the service sector in the economy, which does not consume as much 
energy as other sectors such as manufacturing, have slowed electricity 
demand growth. In 2017, the North American Electric Reliability 
Corporation (NERC) reported that the annual growth rate of peak demand 
reached record lows of 0.61 percent in summer and 0.59 percent in 
winter.\111\ Slower growth in electricity demand places increased 
economic pressures on large-scale generators, including nuclear power 
plants.\112\
---------------------------------------------------------------------------

    \111\ ``Long Term Reliability Assessment,'' 12. North American 
Reliability Electric Reliability Corporation. December 2018. https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2018_12202018.pdf.
    \112\ In 1990, the compound annual growth rate in demand for 
both summer and winter exceeded 2%. Ibid.
---------------------------------------------------------------------------

    The increased presence of natural gas-fired and renewable power 
plants in the nation's electric generation grid does not obviate the 
need for nuclear power baseload generators. In fact, there is a 
continued role for nuclear power plants because they can provide a 
constant

[[Page 41568]]

flow of electricity to the grid and do not require constant deliveries 
of fuel from external sources. Nuclear power plants can produce at 
near-full capacity when solar and wind generation facilities cannot 
produce electricity.
    Similarly, natural gas plants are reliant on ``just-in-time'' 
deliveries of natural gas, and natural gas storage capacity in the U.S. 
is severely limited in many regions.\113\ A North American Electric 
Reliability Corporation (NERC) report noted that only 27 percent of 
U.S. natural gas-fired generation capacity installed since 1997 is 
capable of dual fuel usage, which uses alternative fuel such as diesel 
to maintain generation.\114\ Natural gas pipelines are also vulnerable 
to cyberattack, which can disable pipeline operations and cut off gas 
supply.\115\
---------------------------------------------------------------------------

    \113\ ``Special Reliability Assessment: Potential Bulk Power 
System Impacts Due to Severe Disruptions on the Natural Gas 
System,'' 10. North American Electric Reliability Corporation. 
November 2017. https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_SPOD_11142017_Final.pdf.
    \114\ Ibid.
    \115\ Blake Sobczak, Hannah Northey, and Peter Behr, ``Cyber 
raises threat against America's energy backbone'', E&E News (May 23, 
2017), https://www.eenews.net/stories/1060054924/.
---------------------------------------------------------------------------

    In contrast, nuclear generators are not subject to similar 
potential disruptions or energy storage limitations since they have 
long refueling cycles between 18 and 24 months, and do not require 
constant fuel deliveries. These refueling operations are planned well 
in advance, allowing both plant and transmission system operators to 
make arrangements for alternative generation capacity. All survey 
respondents indicated that they could maintain normal generation 
operations even with a missed delivery of uranium concentrate, uranium 
hexafluoride, or enriched uranium. Respondents indicated that they 
maintain sufficient inventory of the above products and have layered 
contracts with multiple suppliers. Any single missed delivery could 
therefore be addressed with existing inventory.
    Respondents identified missed deliveries of fabricated fuel prior 
to a scheduled refueling as the greatest threat to continue operation. 
[TEXT REDACTED]
    Based on the nature of the nuclear supply chain, nuclear power 
generators are comparatively more resilient than other power generation 
sources that require constant fuel deliveries. As presented in Chapter 
VII, U.S. nuclear power generators can use U.S.-sourced uranium to meet 
their power needs, potentially avoiding situations where U.S. utilities 
would be reliant on last-minute imports of natural gas or other 
materials to address shortfalls.\116\ Leveraging the unique operational 
characteristics of nuclear power generators and the unused capacity of 
the U.S. uranium industry can ensure greater grid reliability.
---------------------------------------------------------------------------

    \116\ During extreme cold temperatures in January 2018, 
Distrigas of Massachusetts had to import liquefied natural gas from 
Russia to address a gas shortage in the region.
    Chesto, Jon. ``Russian LNG Is Unloaded in Everett; the Supplier 
(but Not Gas) Faces US Sanctions.'' Boston Globe, January 30, 2018. 
https://www.bostonglobe.com/business/2018/01/29/tanker-unloads-lng-everett-terminal-that-contains-russian-gas/rewj1wKjajaKtLp79irzTI/story.html.
---------------------------------------------------------------------------

B. Imports of Uranium in Such Quantities as Are Presently Found 
Adversely Impact the Economic Welfare of the U.S. Uranium Industry

1. U.S. Utilities' Reliance on Imports of Uranium in 1989
    In September 1989, the Secretary completed a Section 232 
investigation on the effect of uranium imports on the national 
security. The investigation, requested by the Secretary of Energy, 
determined that U.S. utilities imported a significant share of their 
uranium requirements. At the time, imports of uranium concentrate 
accounted for roughly 51 percent of domestic utility demand.\117\ The 
1989 investigation also found that U.S. uranium producers faced strong 
foreign competition, particularly from the Soviet Union. It further 
reported that employment in the industry was steadily decreasing.\118\
---------------------------------------------------------------------------

    \117\ 1989 Report, I-2.
    \118\ Id. III-10 and III-27.
---------------------------------------------------------------------------

    [TEXT REDACTED] \119\
---------------------------------------------------------------------------

    \119\ Ibid., V-4 to V-5.
---------------------------------------------------------------------------

    Consequently, the Secretary concluded that uranium was not being 
imported into the United States under such quantities or circumstances 
that threatened to impair the national security. For more discussion of 
the 1989 Section 232 investigation, refer to Appendix G.
2. U.S. Utilities' Reliance on Imports of Uranium Continue To Rise
    U.S. utilities' reliance on foreign suppliers to meet their uranium 
product and service requirements have continued to increase since the 
1989 uranium 232 investigation. In 2018, U.S. nuclear utility operators 
relied on foreign suppliers for 93.3 percent of their uranium 
concentrate requirements, 85.5 percent of their uranium hexafluoride 
requirements, and 97.6 percent of their enriched uranium hexafluoride 
(UF6) requirements. As for uranium service requirements, U.S. nuclear 
utility operators relied on foreign suppliers for 42.3 percent of their 
conversion service requirements and 61.5 percent of their enrichment 
service requirements from 2014 to 2018 (see Figure 27).
BILLING CODE 3510-33-P

[[Page 41569]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.015

    In 2018, U.S. imports of uranium products reached a 10-year low in 
terms of both total quantity and aggregate value. Imports peaked in 
both terms in 2011, when 40 million pounds of uranium products were 
imported, at a total value of $5.3 billion USD.\120\ However, the 
Fukushima incident occurred in the same year, and both figures have 
since declined, reaching a total of just over 19 million pounds in 2018 
(a 52 percent decrease), for a combined value of $2.2 billion USD (a 58 
percent decrease) \121\ (see Figures 28 and 29).
---------------------------------------------------------------------------

    \120\ USITC Dataweb.
    \121\ USITC Dataweb.
---------------------------------------------------------------------------

BILLING CODE 3510-33-P

[[Page 41570]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.016

BILLING CODE 3510-33-C
    The HTS codes that represent uranium products are broken out by 
materials that represent the different stages of the fuel cycle that 
uranium ore goes through to become a nuclear fuel assembly. The total 
composition of 2018 imports of uranium products was comprised of a 
little over half (56.4

[[Page 41571]]

percent) of uranium compounds (oxide, hexafluoride, and other) and 
about one-third (29.5 percent) of enriched uranium (see Figure 30). 
Fuel assemblies are not listed in Figure 30 due to the fact that from 
2014 to 2018, no fuel assemblies imported into the U.S. were for actual 
use by U.S. nuclear electric power operators. During this time period 
imported fuel assemblies where either test assemblies or products that 
were being returned to the original manufacture.\122\
---------------------------------------------------------------------------

    \122\ Department of Energy, Nuclear Security Administration, 
Nuclear Materials Management and Safeguard System.
[GRAPHIC] [TIFF OMITTED] TN02AU21.017

3. High Import to Export Ratio
    U.S. imports of uranium products, which displace demand for 
domestic uranium and lower production at U.S. mines, reached 2.7 times 
the level of exports of U.S. uranium products in 2013 (see Figure 31). 
In 2018, U.S. import levels were 2.2 times the level of exports of U.S. 
uranium products. Uranium production from state owned enterprises 
continues to depress world uranium spot prices, making it increasingly 
difficult for U.S. companies to export their uranium products. In 2018, 
98 percent of U.S. uranium exports were made up of ``uranium compounds, 
uranium metal, and other forms of natural uranium,'' 1.8 percent was 
``enriched uranium'', and 0.2 percent was ``depleted uranium'' (see 
Figure 32).
BILLING CODE 3510-33-P

[[Page 41572]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.018

BILLING CODE 3510-33-C
4. Uranium Prices
    The Department's 1989 uranium 232 investigation identified several 
trends responsible for the decline in global uranium prices, including 
increased production from lower-cost ore bodies in Canada, Australia, 
and South Africa; dumping of Russian, Kazakh, and Uzbek material on the 
global enriched uranium market; and cancellations of proposed reactors 
in the U.S. and other Western nations.\123\
---------------------------------------------------------------------------

    \123\ 1989 Report. III-12 to III-14 and III-26 to III-27.
---------------------------------------------------------------------------

    Many of these trends persisted well after 1989, and following the 
dissolution of the Soviet Union, uranium sales from Russia, Kazakhstan, 
and Uzbekistan continued to influence both the U.S. and global uranium 
markets. As detailed in the end of this section, the U.S. Government 
addressed the impact of these sales of subsidized uranium through anti-
dumping investigations and the imposition of suspension agreements.

[[Page 41573]]

    At the same time, other imports from the former Soviet Union 
continued to depress uranium prices. Under the 1993 Megatons to 
Megawatts program \124\ (officially the ``Agreement Between the 
Government of the United States of America and the Government of the 
Russian Federation Concerning the Disposition of Highly Enriched 
Uranium Purchase Agreement''), the U.S. and Russian governments agreed 
to the conversion of 500 metric tons of HEU from dismantled ex-Soviet 
nuclear weapons into LEU, which was ultimately sold to U.S. utilities. 
Between 1993 and 2013, this program resulted in the introduction of 
14,000 metric tons of LEU into the U.S. nuclear fuel market, directly 
competing with U.S. uranium production.
---------------------------------------------------------------------------

    \124\ ``Megatons to Megawatts program will conclude at the end 
of 2013.'' U.S. Energy Information Administration. (Washington, DC: 
2013). https://www.eia.gov/todayinenergy/detail.php?id=13091.
---------------------------------------------------------------------------

    Demand in the United States for nuclear power also stagnated after 
1989. The Tennessee Valley Authority's Watts Bar 1, which came online 
in 1996, was the only nuclear reactor completed in the United States 
between 1989 and 2016. Between 1989 and 2000, nine reactors were 
decommissioned and no new reactors were authorized. Lack of domestic 
demand, spurred in part by competition from other generation sources 
and public opposition to new nuclear power projects after the Three 
Mile Island and Chernobyl incidents, were factors that contributed to 
low uranium prices during this period. By November 2000, uranium spot 
market prices had fallen to $7.13 per pound; a 56 percent decrease from 
the July 1996 high of $16.50 and a 39 percent decrease from the January 
1989 price of $11.60.
    Uranium prices then began to climb beginning in fall 2001, and by 
November 2001, the spot price reached $9.43. The price then climbed 
exponentially thereafter, reaching $13.18 in November 2003, $33.55 in 
November 2005, and a record $136.22 in June 2007--a 1,810 percent 
increase on the November 2000 price. The principal driver of this price 
increase was a trend widely referred to as the ``nuclear renaissance,'' 
which anticipated the construction of dozens of reactors worldwide.
    Influenced, in part, by increasing oil and natural gas prices, as 
well as, public concern about carbon emissions, many Western 
governments adopted policies intended to promote the construction of 
new nuclear power generators. In the United States, the Energy Policy 
Act of 2005 provided financial incentives for the construction of new 
nuclear plants, including a production tax credit and guarantees for 
construction loans.\125\ U.S. utilities took advantage of these policy 
changes and applied for construction and operating licenses for 25 new 
reactors between 2007 and 2009.\126\
---------------------------------------------------------------------------

    \125\ ``Nuclear Power in the USA.'' World Nuclear Association. 
http://world-nuclear.org/information-library/country-profiles/countries-t-z/usa-nuclear-power.aspx.
    \126\ Rascoe, Ayesha. ``U.S. Approves First New Nuclear Plant in 
a Generation.'' Reuters, February 9, 2012. https://www.reuters.com/article/us-usa-nuclear-nrc/u-s-approves-first-new-nuclear-plant-in-a-generation-idUSTRE8182J720120209.
---------------------------------------------------------------------------

    Most of these reactors, however, were not built. As discussed 
earlier, the March 2011 Fukushima incident prompted a groundswell of 
public opposition to new nuclear power generation. Additionally, 
competition from low-cost gas fired turbine generators made plans for 
many nuclear plants economically unfeasible. Of the 25 reactor 
applications submitted between 2007 and 2009, only three will be 
completed by 2022. The remaining reactor plans were cancelled due to a 
variety of factors, including public reaction to the Fukushima incident 
and falling electricity prices.
    The Fukushima incident and subsequent cancellation of proposed new 
reactors created a global uranium oversupply. The uranium spot market 
price fell from $63.50 in March 2011 to $42.28 by March 2013. By March 
2017, the price had fallen to $24.55--a 61 percent decline from the 
March 2011 price (see Figure 33).
[GRAPHIC] [TIFF OMITTED] TN02AU21.019


[[Page 41574]]


    In the years following the Fukushima incident, U.S. uranium 
producers closed or idled 22 facilities, including mining, milling, 
conversion, enrichment, fuel fabrication, and R&D operations. As U.S. 
uranium producers ceased production due to poor market conditions, 
state-owned uranium enterprises increased output. According to 
available data, Kazakh and Chinese output had strong increases during 
the 2011 to 2016 period, even when global spot market prices were 
decreasing post-Fukushima incident (see Figure 34).
[GRAPHIC] [TIFF OMITTED] TN02AU21.020

    Between 2011 and 2016, Kazakhstan's uranium production increased by 
26 percent.\127\ Similarly, China increased domestic uranium production 
by 83 percent during the same period.\128\ These increases in 
production during a 61 percent decline in global uranium spot market 
prices further increased imports into the U.S., and highlights the 
ability of state-owned uranium enterprises to distort markets and 
disadvantage U.S. producers.
---------------------------------------------------------------------------

    \127\ ``Uranium and Nuclear Power in Kazakhstan.'' World Nuclear 
Association. http://www.world-nuclear.org/information-library/country-profiles/countries-g-n/kazakhstan.aspx.
    \128\ ``Uranium Production Figures, 2008-2017.'' World Nuclear 
Association. http://www.world-nuclear.org/information-library/facts-and-figures/uranium-production-figures.aspx.
---------------------------------------------------------------------------

5. Declining Employment Trends
    Employment in the U.S. front-end uranium industry has experienced 
steady declines over the surveyed years of 2014 to 2018. Data regarding 
employment in 2009 was collected in order to observe the levels of 
employment pre-Fukushima and post-Fukushima. As anticipated, between 
2009 and 2018, miners, millers, converters, and enrichers experienced 
drastic decreases in workforce numbers. Overall employment in the 
front-end uranium industry declined by 45.8 percent over this period 
(see Figure 35).

[[Page 41575]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.021

U.S. Front-End Uranium Industry Employment
    For uranium miners, the decline in employment has been evident 
since the 1989 uranium 232 investigation. Indeed, the peak of uranium 
mining employment was 21,951 workers in 1979, but by 1989, employment 
had fallen 91 percent to just 2,002 workers.\129\ Survey data shows 
that employment has further decreased since the 1989 uranium 232 
investigation and steadily declined by 54.6 percent between 2009 and 
2018, with further declines projected for 2019 (see Figure 36).
---------------------------------------------------------------------------

    \129\ 1989 Report. III-10.
---------------------------------------------------------------------------

BILLING CODE 3510-33-P

[[Page 41576]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.022

    Events in the nuclear electric utility sector over the past 40 
years have adversely affected uranium mining industry employment 
levels. Notably, the 1979 Three Mile Island accident and the 2011 
Fukushima incident prompted significant downturns in the industry and 
caused steep declines in mining employment.
    Mining employment is also affected by spot market prices. High spot 
market prices correspond with higher employment, while lower prices 
cause mines to idle and increased unemployment. The combined 
repercussions of the Fukushima incident and low spot market prices can 
be seen in the U.S. front-end uranium industry, as companies continue 
to cut workforce numbers and idle production.

[TEXT REDACTED]
[TEXT REDACTED]
[TEXT REDACTED] \130\
---------------------------------------------------------------------------

    \130\ [TEXT REDACTED].
    [GRAPHIC] [TIFF OMITTED] TN02AU21.023
    

[[Page 41577]]


[GRAPHIC] [TIFF OMITTED] TN02AU21.024

    Fuel fabricators have seen a 19.8 percent decrease in workforce 
numbers since 2009. This moderate decrease is expected, as the vast 
majority of fabrication of fuel assemblies is still produced 
domestically due to the highly engineered nature of the final products. 
Decreases in domestic demand and poor market conditions have affected 
domestic fuel fabricators, and workforce cuts were made in response to 
financial difficulties and reported bankruptcies (see Figure 39).
[GRAPHIC] [TIFF OMITTED] TN02AU21.025

    The substantial decreases observed in the front-end domestic 
uranium industry can have adverse effects on competitiveness and long-
term production in the industry. The entirety of the front-end uranium 
industry

[[Page 41578]]

requires a specialized workforce which consists of a wide range of 
expertise and education levels. Some skillsets within the industry are 
transferable to other applications. However, an aging workforce can 
mean the loss of knowledge and skillsets specific to the uranium 
industry as workers continue to transfer industries and retire. 
According to the Department's 2019 survey data, the average age of 
specialized workers in the front-end industry is roughly 50 years old. 
Should workforce numbers continue to decrease, specialized workers will 
become increasingly difficult to hire or re-hire in the event of a 
market upswing due to both retirement and competition from other 
industries. Department survey data indicates various difficulties in 
hiring and retaining workers in the front-end uranium industry (see 
Figure 40).
    Front-end uranium companies may be able to fill vacancies should 
production resume or increase, but difficulties in obtaining skilled 
employees will take time and investment. A lack of available skilled 
employees will require training new hires, thus adding additional 
costs. [TEXT REDACTED]
    Efforts to recruit personnel are also complicated by the remote 
location of many uranium mines. Over half of the mining/milling 
respondents indicated that their facilities' rural location imposed a 
significant barrier to recruitment and retention. [TEXT REDACTED]
[GRAPHIC] [TIFF OMITTED] TN02AU21.026

    In the event of a major production increase, current employment 
levels and the trending decline in employment in all industries 
associated with the front-end uranium industry indicate that production 
needs would not be met by the current workforce, and significant 
additional hiring would be required (see Figure 41).

[[Page 41579]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.027

6. Loss of Domestic Long Term Contracts Due to Imported Uranium
    Front-end uranium industry companies in the U.S. have experienced a 
decline in new or renewed contracts over the last decade. From 2010 to 
2018, the number of active contracts for domestic front-end uranium 
industry companies, including miners, millers, converters, enrichers, 
and fuel fabricators, declined by 46.7 percent (see Figure 42).
[GRAPHIC] [TIFF OMITTED] TN02AU21.028


[[Page 41580]]


    These expiring contracts are not being offset by new contracts. 
From 2010 to 2018, the total number of new contracts extended to front-
end companies fell by 76.2 percent. [TEXT REDACTED] This is evident by 
the decline in newly formed long-term contracts. Long-term contracts 
have fallen by 92.3 percent since 2010 and only one contract was signed 
in 2018.
    In particular, long-term contracts for U.S. miners and millers fell 
by 71.4 percent, with just two active long-term contracts in 2018 (see 
Figure 43). The number of contracts that front-end companies retain is 
likely to fall further, as long-term contracts from previous years are 
set to expire. [TEXT REDACTED]
[GRAPHIC] [TIFF OMITTED] TN02AU21.029

7. Financial Distress
    The 1989 uranium 232 investigation found that the front-end uranium 
industry was not financially viable during the period of the 
investigation.\131\ Since these findings, increasing volumes of 
imported uranium have further crippled the financial health of the 
domestic front-end uranium industry. Uranium miners, converters, and 
enrichers have all felt the detrimental effects of decreasing market 
shares due to drastically increasing levels of imports. According to 
survey data, key points in the front-end uranium industry experienced 
increasing debt ratios and critically low profit margins during the 
2014 to 2018 period. An assessment of financial risk for all surveyed 
uranium miners, converters, enrichers, and fuel fabricators is shown in 
Figures 44a and 44b.\132\
---------------------------------------------------------------------------

    \131\ 1989 Report. I-2.
    \132\ Financial risk is evaluated based on survey data including 
balance sheets and income statements. Many of the companies 
classified as Low/Neutral Risk provided no information or do not 
incur many costs due to being idled, shutdown or having undeveloped 
deposits. Low/Neutral Risk is not necessarily an indication that 
they are not financially struggling but indicates in the near term 
they are unlikely to go out of business.

---------------------------------------------------------------------------

[[Page 41581]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.030

[TEXT REDACTED] Uranium Miners
    The financial health of uranium mining companies has deteriorated 
to even more unsustainable levels than at the time of the 1989 uranium 
232 investigation.\133\ As a result of the consolidation and 
homogenization of the industry in the past 30 years, financial 
struggles during market downturns have been magnified. U.S. uranium 
mining companies continue to struggle to compete in a market with low 
spot market prices that do not cover production costs, increasing 
imports from SOEs, and static/declining domestic demand. Should current 
market conditions continue, U.S. uranium miners will not be able to 
sustain operations for much longer.
---------------------------------------------------------------------------

    \133\ 1989 Report III-1 to III-2.
---------------------------------------------------------------------------

    The 1989 Uranium 232 Investigation found that a, ``characteristic 
of the uranium mining industry is that few companies are exclusively 
dependent on the production and sale of the ore. Uranium production is 
usually a relatively small part or byproduct of other major activities 
of the firm.'' \134\ This is a material difference between the state of 
uranium mining during the 1989 uranium 232 investigation and the 
uranium mining industry today. According to Department survey data, a 
majority of the 20 companies in today's domestic uranium mining 
industry depend exclusively on uranium mining for financial viability, 
and do not have the support of diverse business lines that would offset 
losses in their uranium mining activities.
---------------------------------------------------------------------------

    \134\ 1989 Report. III-2.
---------------------------------------------------------------------------

    The trend in industry debt ratios for the 2014 to 2018 period is 
worsening (see Figure 45). The increasing average and stable median for 
approximately half of the companies surveyed implies poor performance 
in managing debt. [TEXT REDACTED] The increase in debt

[[Page 41582]]

ratios one observes can reasonably be attributed to companies actively 
engaged in unprofitable uranium mining operations.
[GRAPHIC] [TIFF OMITTED] TN02AU21.031

    Average quick ratios and average current ratios indicate whether, 
on average, companies are able to cover near term liabilities in the 
short term. Values greater than one indicate that a company's assets 
can cover their near term liabilities, but it does not ensure that a 
company is able to cover long term liabilities with assets (see Figure 
46).
[GRAPHIC] [TIFF OMITTED] TN02AU21.032

    Uranium miners have also suffered from low profit margins (see 
Figure 47) and persistently negative net income (see Figure 48). The 
average gross profit margin for the surveyed companies is strongly 
negative and when paired with the average net income it shows that 
miners are losing money on operations at an alarming rate.

[[Page 41583]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.033

[GRAPHIC] [TIFF OMITTED] TN02AU21.034

    Both gross profit margin and net income should be interpreted in 
the context of the few actively operating companies currently suffering 
the largest losses. Many of the idled companies reported negative net 
income due to the cost of maintaining permits and machinery. [TEXT 
REDACTED] \135\ This is in fact the case with other miners as well. In 
order to fulfill contracts, miners have purchased off the spot market 
to mitigate the financial losses from producing themselves or 
fulfilling contracts with their

[[Page 41584]]

inventories. [TEXT REDACTED] \136\ To this end financial statements do 
not fully capture the cost cutting implementations being made to remain 
solvent.
---------------------------------------------------------------------------

    \135\ [TEXT REDACTED].
    \136\ [TEXT REDACTED].
---------------------------------------------------------------------------

    Without a decrease in imports and an increase in prices and demand, 
mining operations will continue to have surmounting financial 
struggles. If current market conditions continue to exist, mining 
companies will begin to exit the market and this vital component of the 
fuel cycle will be lost.
Uranium Converters
    There is only one location in the U.S. that has conversion 
services. This is an integral point in the fuel cycle, yet it is not 
immune to financial struggles faced by the miners. [TEXT REDACTED] 
\137\
---------------------------------------------------------------------------

    \137\ [TEXT REDACTED].
    [GRAPHIC] [TIFF OMITTED] TN02AU21.035
    

[[Page 41585]]


[GRAPHIC] [TIFF OMITTED] TN02AU21.036

Uranium Enrichers
    Urenco USA and Centrus Energy are the only uranium enrichers in the 
U.S., though only Urenco currently operates in that capacity. [TEXT 
REDACTED] \138\
---------------------------------------------------------------------------

    \138\ [TEXT REDACTED].
---------------------------------------------------------------------------

    [TEXT REDACTED]

[[Page 41586]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.037

[GRAPHIC] [TIFF OMITTED] TN02AU21.038


[[Page 41587]]


    Enrichment is a key part of the nuclear fuel cycle and these two 
companies represent the entire U.S. capability to commercially enrich 
nuclear material. Retaining their vital capabilities is necessary to 
preserve the domestic fuel cycle, as their financial struggles are 
driven by the current state of the market.
Fuel Fabricators
    The fuel fabricators are largely unaffected by financial struggles 
in other sectors of the industry. Debt ratios show that most cover the 
majority of their liabilities (see Figure 53).
[GRAPHIC] [TIFF OMITTED] TN02AU21.039

    [TEXT REDACTED]
    [GRAPHIC] [TIFF OMITTED] TN02AU21.040
    
    [TEXT REDACTED] Over the longer term, the fuel fabricators are 
concerned that Russia and Chinese SOEs will sell fabricated fuel 
directly to the nuclear electric power operators, bypassing the need 
for U.S. domestic fuel fabricators.

[[Page 41588]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.041

8. Research and Development Expenditures
    Research and development (R&D) is critical to the future 
competitiveness of the U.S. uranium industry. Across all sectors, from 
initial mining through final fuel fabrication, consistent R&D 
expenditures are needed to devise and implement new manufacturing 
techniques and improved processes. R&D is particularly critical for 
uranium enrichment and fuel fabrication, as their uranium products are 
highly engineered and tailored to individual utility customers' 
specifications.
    The oversupplied global uranium market has impacted the industry's 
ability to support continued R&D and expenditures have been 
consistently declining over the 2014 to 2018 period (see Figure 56).
[GRAPHIC] [TIFF OMITTED] TN02AU21.042

    [TEXT REDACTED] Other mining company respondents, including both 
existing mining companies and those owning deposits for future 
development, have limited available working capital. These firms 
prioritize the maintenance of existing sites and development costs 
(particularly permitting) for future sites, and have no

[[Page 41589]]

ability to spend on R&D. The lack of R&D spending by mining companies, 
caused by poor uranium market conditions, will negatively affect their 
long-term competitiveness. These firms will not be able to develop new 
production methods and techniques- for example, [TEXT REDACTED]
    [TEXT REDACTED] noted that poor economic conditions caused them to 
significantly cut R&D expenditures. [TEXT REDACTED]
    Although U.S. uranium firms are currently able to fund a small 
amount of R&D, their limited ability to invest in this area will 
constrain future growth. Depressed uranium prices, caused by 
artificially low-priced imports, oblige U.S. firms to cut costs 
wherever possible, particularly in R&D. Low R&D expenditures will, in 
turn, inhibit U.S. firms from being competitive on a global level.
9. Capital Expenditures
    All sectors of the U.S. uranium industry are capital-intensive. 
Mining companies hold significant capital investments in their deposits 
and the associated mining equipment; converters and enrichers hold 
significant investments in their proprietary conversion and enrichment 
processes; and fuel fabricators also have significant investments in 
the equipment and facilities needed to make fuel assemblies. Capital 
investment in the industry, however, has been hampered by poor uranium 
market conditions, with capital expenditures across the U.S. uranium 
industry falling by 60.2 percent from $330.8 million in 2014 to $131.7 
million in 2018 (see Figure 57).
[GRAPHIC] [TIFF OMITTED] TN02AU21.043

    Global uranium market conditions have had various impacts on 
different stages of the fuel cycle. [TEXT REDACTED]
    [TEXT REDACTED] Both of these firms are representative of the 
effect of global import trends on U.S. uranium mining as well as U.S. 
uranium enrichment. Excess global supply of uranium concentrate, as 
well as excess global capacity to produce enriched material, places 
pressure on domestic U.S. producers, thus impacting their ability to 
invest in expanding productive capacity.
    In contrast, however, U.S. fuel fabricators reported an increase in 
capital expenditures over the 2014 to 2018 period. [TEXT REDACTED] 
These increases indicate the comparatively strong state of the U.S. 
fuel fabrication sector. Due to prohibitive tariffs and reporting 
requirements associated with imported fuel assemblies, U.S. nuclear 
power generators opt to have their assemblies produced in the United 
States. U.S. fuel fabricators do not experience the same market 
pressures as do U.S. producers of uranium concentrate and enriched 
uranium.
    However, should demand for nuclear fuel in the U.S. drop due to 
continued or accelerated reactor retirements, these firms will likely 
experience financial pressures that will force them to cut capital 
expenditures. In addition, long-term Russian and Chinese efforts to 
sell fuel directly to U.S. nuclear electric power utilities will also 
negatively impact domestic fuel fabricators.
    A viable U.S. uranium industry must be able to make adequate 
capital expenditures to maintain existing production levels and prepare 
for future expansion. However, in the current depressed uranium market, 
it is not possible for U.S. firms to do so.

C. Trade Actions: Anti-Dumping and Countervailing Duties

    The U.S. Government has taken action against artificially low-
priced uranium imports. Several anti-dumping investigations conducted 
by the

[[Page 41590]]

Department and the U.S. International Trade Commission (USITC) affirm 
that many sources of imported uranium have engaged in dumping and other 
anti-competitive practices to the detriment of U.S. producers. Figure 
58 lists USITC investigations into uranium imports since 1991:
U.S.S.R. Less Than Fair Value Sales

                     Figure 58: U.S. International Trade Commission Uranium Cases Since 1991
----------------------------------------------------------------------------------------------------------------
                  Country                                   Date                             Finding
----------------------------------------------------------------------------------------------------------------
Union of Soviet Socialist Republics         December 23, 1991..................  Affirmative.
 (U.S.S.R.).
Russia, Belarus, Ukraine, Moldova,          June 3, 1992.......................  Affirmative.
 Georgia, Armenia, Azerbaijan, Kazakhstan,
 Kyrgyzstan, Uzbekistan, Tajikistan,
 Turkmenistan *.
Tajikistan................................  July 8, 1993.......................  Negative.
Ukraine...................................  July 8, 1993.......................  Affirmative.
Kazakhstan................................  July 13, 1999......................  Negative.
Ukraine...................................  August 22, 2000....................  Negative.
Russia (First Review of 1992                August 22, 2000....................  Affirmative.
 Determination).
France, Germany, the Netherlands, and the   February 4, 2002...................  Affirmative.
 United Kingdom.
Russia (Second Review of 1992               August 2006........................  Affirmative.
 Determination).
France (First Review of 2002                December 2007......................  Affirmative.
 Determination).
Russia (Third Review of 1992                February 2012......................  Affirmative.
 Determination).
Russia (Fourth Review of 1992               September 2017.....................  Affirmative.
 Determination).
France (Third Review of 2002                November 2018......................  Negative.
 Determination).
----------------------------------------------------------------------------------------------------------------
* The cases determined on June 3, 1992 were a continuation of the December 23, 1991 anti-dumping case against
  the U.S.S.R. As the U.S.S.R. was dissolved December 25, 1991; the International Trade Commission opened cases
  against the twelve former Soviet republics.
Source: USITC.

    In December 1991, the Department and the USITC determined that 
imports of uranium from the U.S.S.R., including natural and enriched 
uranium, were sold in the U.S. at less than fair value and threatened 
material injury to the U.S. uranium industry.\139\ Following the 
dissolution of the U.S.S.R. in the same month, the single investigation 
was then transformed into twelve separate investigations, which covered 
most former Soviet republics.\140\ In June 1992, the Department and 
USITC found that uranium imports from each of these republics were sold 
at less than fair value and threatened to materially injure U.S. 
producers. Subsequently, six of the republics--Russia, Kazakhstan, 
Kyrgyzstan, Tajikistan, Ukraine, and Uzbekistan--signed agreements with 
the U.S. government to suspend the underlying antidumping duty 
investigations. These suspension agreements permitted the countries in 
question to import defined amounts of uranium into the United States, 
thereby avoiding the imposition of antidumping duty orders and the 
resulting duties.
---------------------------------------------------------------------------

    \139\ U.S. International Trade Commission. Uranium from the 
U.S.S.R.'' Investigation No. 731-TA-539 (Preliminary). (Washington, 
DC: 1991). https://www.usitc.gov/publications/701_731/pub2471.pdf.
    \140\ ``Uranium from Russia: Investigation No. 731-TA-539-C 
(Fourth Review).'' USITC. (September 2017).
---------------------------------------------------------------------------

    After 1992, most of the antidumping duty orders and suspension 
agreements had been terminated pursuant to proceedings; the Department 
and USITC determined that imports of uranium from most of the Soviet 
republics were not materially injuring, or threatening to materially 
injure, U.S. industry. By 2000, only the agreement with Russia remained 
in force. In its 2000, 2006, 2012, and 2017 reviews of the Russian 
Suspension Agreement (RSA), USITC reaffirmed that imports of Russian 
uranium beyond the quantities permitted in the RSA would lead to a 
``recurrence of material injury'' to the U.S. uranium industry.\141\
---------------------------------------------------------------------------

    \141\ Ibid. 1.
---------------------------------------------------------------------------

France, Germany, the Netherlands, and the United Kingdom
    In December 2000, United States Enrichment Corporation (now Centrus 
Energy Corp.) filed a petition with the Department and USITC concerning 
imports of low-enriched uranium (LEU) from France, Germany, the 
Netherlands, and the United Kingdom. In February 2002, USITC concluded 
that LEU imports from these countries were sold inside the U.S. at less 
than fair value and had a ``significant adverse impact'' on domestic 
U.S. LEU production.\142\ Commerce accordingly imposed countervailing 
duties on LEU imports from all of the above countries as well as anti-
dumping duties on French imports.
---------------------------------------------------------------------------

    \142\ U.S. International Trade Commission. Low Enriched Uranium 
from France, Germany, the Netherlands, and the United Kingdom, 18. 
Investigation Nos. 701-TA-409-412 and 731-TA-909, Final. 
(Washington, DC: 2002). https://www.usitc.gov/publications/701_731/pub3486.pdf.
---------------------------------------------------------------------------

    Subsequent actions by the Department revoked all of the 
countervailing duties by May 2007. However, the anti-dumping duties on 
French LEU remained in place. Further USITC reviews in December 2007 
and December 2013 affirmed that the anti-dumping duties were needed to 
deter less than fair value sales of French LEU. Following a final 
review in November 2018 and a lack of domestic interested parties, the 
Department revoked the anti-dumping duties on French LEU on March 15, 
2019.\143\
---------------------------------------------------------------------------

    \143\ Low-Enriched Uranium from France: Final Results of Sunset 
Review and Revocation of Antidumping Duty Order, Federal Register 84 
FR 9493, (March 15, 2019), https://www.federalregister.gov/documents/2019/03/15/2019-04882/low-enriched-uranium-from-france-final-results-of-sunset-review-and-revocation-of-antidumping-duty.
---------------------------------------------------------------------------

    Prior actions by USITC and the Department support the U.S. 
Government's broader concern about the viability of the domestic 
uranium industry as well as the clear impact of anticompetitive 
practices by non-U.S. suppliers on U.S. producers.

D. Displacement of Domestic Uranium by Excessive Quantities of Imports 
Has the Serious Effect of Weakening Our Internal Economy

1. U.S. Production Is Well Below Demand and Utilization Rates Are Well 
Below Economically Viable Levels
    Based on the Department's 2019 survey data, U.S. uranium production 
is well below U.S. demand even though adequate capabilities and 
resources exist. In 2018, U.S. utility requirements were about 51.9 
million pounds of U308 to run all reactors at full capacity, and total 
U.S. licensed and operating uranium production capacity was about 226 
million pounds of U308. However, U.S. uranium production in 2018 was

[[Page 41591]]

less than two million pounds of U308 (see Figure 59).
[GRAPHIC] [TIFF OMITTED] TN02AU21.044

    The average projected utility requirements of U308 for 2019 to 2025 
are 280 million pounds. These variations are due to the 2019 
decommissioning of two reactors with potentially eleven more reactors 
closing by 2025. In addition, four new reactors will be coming online 
by 2020.\144\ Despite this demand, the prognosis for the U.S. uranium 
industry worsens with only 331,000 pounds of U308 production in 2019, 
which is 53 percent lower than 2018 and is only six percent of 2014 
levels.
---------------------------------------------------------------------------

    \144\ U.S. Nuclear Regulatory Commission.
---------------------------------------------------------------------------

    This decline is largely due to unfavorable market conditions. For 
example, the 25 mines that are currently idled/in standby said the 
primary factor prohibiting restart is low uranium spot prices. An 
additional two mines are completely shut down due to low uranium spot 
prices. Total production by U.S. mines and mills of uranium ore and 
concentrates continues to decrease drastically as global uranium market 
conditions continue to decline (see Figure 60).
[GRAPHIC] [TIFF OMITTED] TN02AU21.045


[[Page 41592]]


    The low uranium spot price also contributes to utilization rates 
that are well below economically viable levels. According to BIS survey 
data, front-end U.S. uranium producers indicated widely varying 
capacity utilization rates needed to remain profitable, with the lowest 
recorded at 25 percent, and the highest recorded at 100 percent. The 
industry average capacity utilization rate U.S. uranium producers need 
to remain profitable is roughly 56 percent. In the recent past, the 
utilization rate has been 3/10 of one percent (0.3 percent) of 
licensed/operating capacity. The industry cannot sustain at these 
unprofitable rates.
    However, once market conditions improve, U.S. uranium producers can 
justify restarting operations and/or starting new operations. Most U.S. 
uranium miners and millers are unable to produce at a viable level at 
the current low spot prices, but are ready to produce when economic 
conditions are more favorable (see Figure 61).
[GRAPHIC] [TIFF OMITTED] TN02AU21.046

BILLING CODE 3510-33-P
    Of the uranium mining projects in idling/standby status, many 
indicated that it would take about one year to restart production, with 
a maximum time period estimated at four years and the minimum estimated 
at 30 days. The cost to fully restart production varied more widely 
with the maximum being $100 million, the minimum being $200 thousand, 
and the average being $12.8 million.
    Furthermore, uranium deposits in the U.S. are vast (approximately 
1.2 billion pounds of U308) and can be extracted when the price reaches 
a level for production to be economically viable (see Figures 62 and 
63).

[[Page 41593]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.047

BILLING CODE 3510-33-C
2. Domestic Uranium Production Is Severely Weakened and Concentrated
    As the U.S. uranium industry contracts and shuts down due to the 
imports adversely impacting its economic welfare and viability, 
domestic uranium production is severely weakened and concentrated. 
Since imports as a percentage of U.S. utilities' annual uranium 
consumption have increased to upwards of 94 percent, U.S. production of 
uranium concentrate has declined from 12.3 million pounds in 1989 to 
just 331,000 pounds of uranium concentrate projected for 2019. 
Consequently, the mills which process uranium ore are near to 
shuttering operations.

[TEXT REDACTED]

[[Page 41594]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.048

3. Reduction of Uranium Production Facilities Limits Capacity Available 
for a National Emergency and Threatens To Impair National Security
    Key factors in this investigation include growth requirements of 
domestic industries to meet national defense requirements; however, 
reduction of uranium production facilities limits the capacity 
available in the event of a national emergency. The United States 
cannot be subject and should not be subject to foreign dependence in 
the face of potential uranium needs in an emergency scenario. The 
decline of the U.S. uranium production industry limits availability and 
puts the U.S. at risk, impairing national security. On the miners side, 
sales and export data show that U.S. producers are selling more product 
than they are producing, indicating that contracts are being fulfilled 
with either inventory, spot market purchases, or other. U.S. mines have 
resorted to buying spot market uranium in order to fulfill contracts 
since it is cheaper than producing themselves.
[GRAPHIC] [TIFF OMITTED] TN02AU21.049

    The U.S. uranium industry's low production levels force U.S. 
nuclear power generators into heavy dependence on foreign uranium 
supplies. Of the 98 active U.S. nuclear reactors, only four have annual 
requirements less than 331,000 pounds U3O8 per year, which is the total 
U.S.

[[Page 41595]]

production expected for 2019 (see Figure 65).
    Projected 2019 U.S. uranium production would be sufficient to fuel 
only one of these reactors. [TEXT REDACTED] Low U.S. production levels 
denote that a sudden loss of access to foreign uranium supplies has the 
potential to severely disrupt the nuclear power plants that provide 
almost one-fifth of the nation's electricity.
    [TEXT REDACTED] Therefore, a remedy to resolve the inhibiting 
factors to production must be implemented so that U.S. miners are once 
again reliable suppliers of uranium, and with additional U.S. 
capability to convert and enrich the mined uranium, U.S. utilities are 
able to fulfill their need of domestic uranium for national security or 
national emergency use.
    As previously discussed, the stockpile maintained by DOE is 
anticipated to satisfy needs for LEU and HEU through 2041 and 2060 
respectively. However, U.S. nuclear electric power utilities only 
maintain enough inventory of uranium to fuel their reactors for an 
average of [TEXT REDACTED] (see Figure 66). The compounded effects of 
both minimal inventory and minimal U.S. production highlights the 
national security threat imposed by U.S. nuclear electric utilities' 
near complete dependence on imports of uranium to fuel their reactors. 
In the event of a supply disruption, U.S. utilities' would be unable to 
supply the 19 percent of U.S. electricity consumption they usually 
provide after [TEXT REDACTED]. The continued loss in U.S. production 
capabilities ensures that a disruption in supply to the nation's 98 
reactors would be catastrophic to U.S. critical infrastructure.
[GRAPHIC] [TIFF OMITTED] TN02AU21.050

E. Uranium Market Distortion by State-Owned Enterprises Is a 
Circumstance That Contributes to the Weakening of the Domestic Economy

1. Excess Russian, Kazakh, and Uzbek Production Adversely Affects 
Global Markets and Creates a Dangerous U.S. Dependence on Uranium From 
These Countries
    Although global uranium production increased by 42 percent between 
2008 and 2016, the subsequent supply glut following the Fukushima 
disaster and reactor retirements has begun to affect production.\145\ 
As the potential for new reactor construction increased, new mines came 
online to meet potential demand. In 2008, the world's uranium mines 
produced enough uranium to fulfill 70 percent of existing world demand. 
By 2016, global uranium production filled 98 percent of world demand.
---------------------------------------------------------------------------

    \145\ ``World Uranium Mining Production.'' World Nuclear 
Association. http://www.world-nuclear.org/information-library/nuclear-fuel-cycle/mining-of-uranium/world-uranium-mining-production.aspx.
---------------------------------------------------------------------------

    However, the increasing pace of reactor retirements, cancellation 
of proposed new reactors, and excess supply caused by the shutdown of 
German and Japanese reactors all impacted the global uranium market. 
Accordingly, between 2016 and 2017, global uranium production dropped 
by 4.7 percent--remaining production could satisfy 93 percent of 2017 
demand. As more reactors come online in certain regions, particularly 
in Asia, the Middle East, and Africa, global demand is expected to grow 
once more.
    By 2025, the International Atomic Energy Agency estimates that 
global uranium demand could be as high as 68,920 metric tons--a 10 
percent increase on 2016 levels. However, current poor market 
conditions, exacerbated by artificially low-priced SOE producers, have 
forced many producers in the U.S. and other countries to idle 
production or close mines entirely. U.S. and other market producers may 
therefore not be present in the market to take advantage of higher 
future demand.
    Thus, while U.S. production declined by 16 percent between 2016 and 
2017, Russian and Kazakh production declined only by 5.1 and 2.9 
percent respectively (see Figure 67). Uzbek production remained 
constant. Even Canada and Australia, which have historically produced 
more than the U.S., cut their production to a greater degree than did 
Russia, Kazakhstan, and Uzbekistan.

                               Figure 67: Changes in Uranium Production, 2016-2017
----------------------------------------------------------------------------------------------------------------
                                                          2016 Production    2017 Production       Change in
                        Country                             (metric tons       (metric tons        production
                                                              uranium)           uranium)         (percentage)
----------------------------------------------------------------------------------------------------------------
United States..........................................              1,125                940              -16.4
Canada.................................................             14,039             13,116              -6.55
Australia..............................................              6,315              5,882              -6.86
Russia.................................................              3,004              2,917              -2.89
Kazakhstan.............................................             24,586             23,321              -5.14
Uzbekistan.............................................               2404               2404                  0
China..................................................               1616               1885               16.6
----------------------------------------------------------------------------------------------------------------
Source: World Nuclear Association, March 2019, 2018 data has not been released.


[[Page 41596]]

    Russia's Rosatom, Kazakhstan's Kazatomprom, and Uzbekistan's Navoi 
are able to maintain higher production levels than most producers 
despite unfavorable global markets because they are state-owned 
enterprises. Should global market trends persist and uranium prices 
remain low, U.S. producers will not be able to compete with price-
insensitive production in these countries.
    As U.S. and other market production declines and Russian, Kazakh, 
and Uzbek production remains stable, U.S. utilities are purchasing 
increasing amounts of uranium products from these countries. Figure 68 
shows the extent to which U.S. utilities rely on Russia, Kazakhstan, 
and Uzbekistan for a significant share of their uranium needs.
[GRAPHIC] [TIFF OMITTED] TN02AU21.051

    Between 2014 and 2018, U.S. utilities relied on material from 
Russia, Kazakhstan, and Uzbekistan for 25 percent of their uranium 
concentrate, 32 percent of their uranium hexafluoride, 14 percent of 
their conversion services, and 20 percent of their enrichment services. 
Consequently, U.S. utilities are dependent on imports from these 
countries to maintain normal operations at their nuclear generators. As 
U.S. and other market producers cut or cease uranium production due to 
unfavorable market conditions, it is likely that U.S. utilities will 
increase purchases of uranium from price-insensitive Russian, Kazakh, 
and Uzbek producers.
    Continued high levels of Russian, Kazakh, and Uzbek production is 
also affecting U.S. allies. As described in Chapter VI, Canadian and 
Australian producers have had to idle production at their own mines due 
to poor market conditions. Furthermore, to fulfill contracts with U.S. 
utilities, Canadian, Australian, and French producers have procured 
material from state-owned suppliers. Figure 69 shows that Canadian, 
Australian, and French producers used Russian, Kazakh, and

[[Page 41597]]

Uzbek uranium to fulfill many 2018 contracts with U.S. utilities.
[GRAPHIC] [TIFF OMITTED] TN02AU21.052

BILLING CODE 3510-33-C
    Continued excess production of artificially low-priced uranium by 
Russia, Kazakhstan, and Uzbekistan will make U.S. and foreign market 
producers noncompetitive on global markets. As U.S. and other allied 
nations decrease their production due to poor market conditions, U.S. 
nuclear power generators will purchase increasing amounts of Russian, 
Kazakh, and Uzbek uranium to meet their needs.
    Dependence on such imports raises a distinct national security 
concern. The Office of the Director of National Intelligence's 2019 
Worldwide Threat Assessment identifies Russia's ambitions to expand its 
``global military, commercial, and energy footprint'' as an integral 
part of its strategy to ``undermine the international order.'' \146\
---------------------------------------------------------------------------

    \146\ Coats, Daniel. Director of National Intelligence, Senate 
Select Committee on Intelligence. Statement for the Record: 
Worldwide Threat Assessment of the US Intelligence Community, 37. 
January 29, 2019. https://www.dni.gov/files/ODNI/documents/2019-ATA-SFR-SSCI.pdf.
---------------------------------------------------------------------------

    U.S. utilities' direct dependence on Russian enriched uranium for 
20 percent of their annual supply gives the Kremlin significant 
economic leverage. Moscow exercises further leverage through its de 
facto control of uranium exports from Kazakhstan and Uzbekistan. 
Although Kazakh and Uzbek SOEs are controlled by their respective 
governments and not Russia, a significant majority of uranium shipments 
from Kazakhstan and Uzbekistan transit through Russia on their way to 
U.S. customers.

[TEXT REDACTED]

[[Page 41598]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.053

    In the event of increased political or potential military tensions, 
Russia could choose to ban uranium exports to the United States; 
denying U.S. utilities a significant share of their enriched uranium. 
Russia further possesses the military means to deny U.S. and U.S.-
aligned countries access to Kazakh and Uzbek uranium exported through 
Russian ports, principally on the Baltic Sea.\147\ In either of these 
circumstances, U.S. utilities would conceivably be denied a significant 
percentage of their uranium requirements and could face critical fuel 
shortages.
---------------------------------------------------------------------------

    \147\ Since the Russian annexation of Crimea and intervention in 
eastern Ukraine in 2014, Russia has steadily built up its military 
assets in the Baltic Sea region. Russia therefore could close Baltic 
Sea shipping lanes with comparative ease. Oder, Tobias. ``The 
Dimensions of Russian Sea Denial in the Baltic Sea.'' Center for 
International Maritime Security, January 04, 2018. http://cimsec.org/dimensions-russian-sea-denial-baltic-sea/35157.
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2. The Increasing Presence of China in the Global Uranium Market Will 
Further Weaken U.S. and Other Market Uranium Producers
    Although China's uranium industry has been developed primarily to 
serve the country's growing fleet of nuclear reactors, China is 
increasing its involvement in the global nuclear fuel industry.\148\ 
China's involvement in the global nuclear fuel industry is an outgrowth 
of its domestic uranium procurement strategy. As China has only limited 
domestic uranium reserves, it has also acquired interests in uranium 
deposits outside China. This ``two markets, two resources'' \149\ 
policy has led Chinese firms to acquire significant shares of mines in 
Kazakhstan and Namibia, with prospective developments in Niger and 
Canada.\150\ China's activity in Namibia is of particular 
interest.\151\ Namibia has two active uranium mines--Husab and Rossing. 
Chinese firms have a majority stake in Husab and purchased a majority 
stake in Rossing. However, the Rossing transaction is under review by 
the Namibia Competition Commission. A Chinese firm does have a 25 
percent stake in the Langer Heinrich mine, but that mine was placed in 
care and maintenance in 2018 and thus cannot be characterized as 
active. These mines' production costs exceed current global uranium 
prices, and so cannot support commercial production. However, cost 
recovery is seemingly not a concern for Chinese-state owned producers.
---------------------------------------------------------------------------

    \148\ ``China's Nuclear Fuel Cycle.'' World Nuclear Association. 
http://www.world-nuclear.org/information-library/country-profiles/countries-a-f/china-nuclear-fuel-cycle.aspx.
    \149\ Pascale Massot and Zhan-Ming Chen. ``China and the Global 
Uranium Market: Prospects for Peaceful Coexistence.'' The Scientific 
World Journal, 2013. https://www.hindawi.com/journals/tswj/2013/672060/.
    \150\ ``China's Nuclear Fuel Cycle.'' World Nuclear Association. 
http://www.world-nuclear.org/information-library/country-profiles/countries-a-f/china-nuclear-fuel-cycle.aspx.
    \151\ ``Rio Tinto to sell R[ouml]ssing stake.'' World Nuclear 
News, November 26, 2018. http://www.world-nuclear-news.org/Articles/Rio-Tinto-to-sell-Rossing-stake.
---------------------------------------------------------------------------

    Between 2014 and 2018, U.S. utilities purchased approximately 
347,781 pounds of uranium concentrate, 2.33 million pounds of U3O8 
equivalent of conversion services, and 1.4 million separative work 
units (SWU) of enrichment services--enough to supply 16 average 
reactors per year--from Chinese producers. U.S. utilities also have 
contracts with Chinese producers for at least 130,000 SWU between 2019 
and 2023, indicating an interest in continued relationships with 
Chinese producers. U.S. utilities have also contracted with CGN Global 
Uranium Ltd., the trading arm of Chinese SOE China General Nuclear, for 
certain uranium purchases. Between 2014 and 2018, U.S. utilities 
purchased 800,000 pounds of uranium concentrate from CGN Global.
    As the bulk of China's uranium concentrate production is consumed 
by domestic nuclear power generators, most Chinese exports of uranium 
will likely be in the form of enrichment services. Domestic Chinese 
enrichment capacity is increasing faster than domestic demand: By 2020, 
the country's enrichment centrifuges will have a total capacity of 12 
million SWU, compared to domestic demand of 9 million SWU.\152\ Chinese 
producers intend to use this excess capacity to increase the country's 
presence in the nuclear fuels trade. A China National Nuclear 
Corporation (CNNC) executive remarked in 2013: ``On the basis of 
securing its domestic supply [of SWU], CNNC will gradually expand its 
foreign markets and make China's fuel industry internationally 
competitive.'' \153\ China's increasing control of global uranium 
deposits and its excess enrichment capacity will allow it to further 
enter the nuclear fuels market and undermine U.S. and other market 
producers.
---------------------------------------------------------------------------

    \152\ Hui Zhang, ``China's Uranium Enrichment Capacity: Rapid 
Expansion to Meet Commercial Needs'', (Cambridge: Harvard Kennedy 
School, 2015), 32.
    \153\ Ibid., 34.
---------------------------------------------------------------------------

3. Increasing Global Excess Uranium Production Will Further Weaken the 
Internal Economy as U.S. Uranium Producers Will Face Increasing Import 
Competition
    Continued high levels of production by state-owned enterprises in 
Russia, Kazakhstan, Uzbekistan, and China will place further financial 
pressure on U.S. uranium producers. U.S. uranium concentrate 
production, which declined by 94 percent between 2014 and 2018, will be 
non-existent in the near future as subsidized foreign production 
continues.
    Foreign market producers are not immune from the effects of state-
owned producers either. As described in Chapter VI, Canadian and 
Australian producers have had to idle production at their own mines due 
to poor market conditions. Furthermore, to fulfill contracts with U.S. 
utilities, Canadian, Australian, and French producers have procured 
material from state-owned suppliers.

VIII. Conclusion

A. Determination

    Based on these findings, the Secretary of Commerce has concluded 
that the present quantities and circumstance of uranium imports are 
``weakening our internal economy'' and ``threaten to

[[Page 41599]]

impair the national security'' as defined in Section 232. An 
economically viable and secure supply of U.S.-sourced uranium is 
required for national defense needs. International obligations, 
including agreements with foreign partners under Section 123 of the 
Atomic Energy Act of 1954, govern the use of most imported uranium and 
generally restrict it to peaceful, non-explosive uses. As a result, 
uranium used for military purposes must generally be domestically 
produced from mining through the fuel fabrication process. Furthermore, 
the predictable maintenance and support of U.S. critical 
infrastructure, especially the electric power grid, depends on a 
diverse supply of uranium, which includes U.S.-sourced uranium products 
and services.
    The Secretary further recognizes that the U.S. uranium industry's 
financial and production posture has significantly deteriorated since 
the Department's 1989 Report. That investigation noted that U.S. 
nuclear power utilities imported 51.1 percent of their uranium 
requirements in 1987. By 2018, imports had increased to 93.3 percent of 
those utilities' annual requirements. Based on comprehensive 2019 
industry data provided by U.S. uranium producers and U.S. nuclear 
electric power utilities to the Department in response to a mandatory 
survey, U.S. utilities' usage of U.S. mined uranium has dropped to 
nearly zero. [TEXT REDACTED] Based on the current and projected state 
of the U.S. uranium industry, the Department has concluded that the 
U.S. uranium industry is unable to satisfy existing or future national 
security needs or respond to a national security emergency requiring a 
significant increase in domestic uranium production.
    Absent immediate action, closures of the few remaining U.S. uranium 
mining, milling, and conversion facilities are anticipated within the 
next few years. Further decreases in U.S. uranium production and 
capacity, including domestic fuel fabrication, will cause even higher 
levels of U.S. dependence on imports, especially from Russia, 
Kazakhstan, Uzbekistan, and China. Increased imports from SOEs in those 
countries, and in particular Russia and China, which the 2017 National 
Security Strategy noted present a direct challenge to U.S. influence, 
are detrimental to the national security.\154\ The high risk of loss of 
the remaining U.S. domestic uranium industry, if the present excessive 
level of imports continue, threatens to impair the national security as 
defined by Section 232.
---------------------------------------------------------------------------

    \154\ U.S. White House Office. National Security Strategy of the 
United States of America. (Washington, DC: 2017), 2 https://www.whitehouse.gov/wp-content/uploads/2017/12/NSS-Final-12-18-2017-0905-2.pdf.
---------------------------------------------------------------------------

    The Secretary has determined that to remove the threat of 
impairment to national security, it is necessary to reduce imports of 
uranium to a level that enables U.S. uranium producers to return to an 
economically competitive and financially viable position. This will 
allow the industry to sustain production capacity, hire and maintain a 
skilled workforce, make needed capital expenditures, and perform 
necessary research and development activities. A modest reduction of 
uranium imports will allow for the revival of U.S. uranium mining and 
milling, the restart of the sole U.S. uranium converter, and a 
reduction in import challenges to fuel fabricators, while also 
recognizing the market and pricing challenges confronting the U.S. 
nuclear power utilities.
Recommendation
    Due to the threat to the national security, as defined in Section 
232, from excessive uranium imports, the Secretary recommends that the 
President take immediate action by adjusting the level of these imports 
through implementation of an import waiver to achieve a phased-in 
reduction of uranium imports. The reduction in imports of uranium 
should be sufficient to enable U.S. producers to recapture and sustain 
a market share of U.S. uranium consumption that will allow for 
financial viability, and enable the maintenance of a skilled workforce 
and the production capacity and uranium output needed for national 
defense and critical infrastructure requirements. The reduction imposed 
should be sufficient to enable U.S. producers to eventually supply 25 
percent of U.S. utilities' uranium needs based on 2018 U.S. U308 
concentrate annual consumption requirements.
    Based on the survey responses, the Department has determined that 
U.S. uranium producers require an amount equivalent to 25 percent of 
U.S. nuclear power utilities' 2018 annual U308 concentrate consumption 
to ensure financial viability. Based on the Department's analysis, if 
U.S.-mined uranium supplied 25 percent of U.S. nuclear power utilities' 
annual U308 concentrate consumption, U.S. uranium prices will increase 
to approximately $55 per pound (see Figure 71). The current spot price 
is low due to distortions from SOEs.

[[Page 41600]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.054

    The $55 per pound price will increase mine capacity to the point 
where U.S. uranium mines can supply approximately 6 million pounds of 
uranium concentrate per year, which is approximately 25 percent of U.S. 
nuclear power utilities' consumption for U308 concentrate in any given 
year.
    The Secretary recommends that the import reduction be phased in 
over a five-year period. This will allow U.S. uranium mines, mills, and 
converters to reopen or expand closed or idled facilities; hire, train 
and maintain a skilled workforce; and make necessary investments in new 
capacity. This phased-in approach will also allow U.S. nuclear power 
utilities time to adjust and diversify their fuel procurement contracts 
to reintroduce U.S. uranium into their supply chains.
    The Secretary recommends that either a targeted or global quota be 
used to adjust the level of imports and that such quota should be in 
effect for a duration sufficient to allow the necessary time needed to 
stabilize and revitalize the U.S. uranium industry. According to survey 
responses, the average time to restart an idle uranium production 
facility is two to five years, and several additional years are needed 
to add new capacity. Market certainty, which can be provided by long-
term contracts with U.S. nuclear power utilities, is needed to build 
cash flow, pay down debt, and raise capital for site modernization; 
workforce recruitment; and to conduct environmental and regulatory 
reviews.
Option 1--Targeted Zero Quota
    This targeted zero quota option would prohibit imports of uranium 
from Kazakhstan, Uzbekistan, and China (the ``SOE countries'') to 
enable U.S. uranium producers to supply approximately 25 percent of 
U.S. nuclear power utility consumption. A U.S. nuclear power utility or 
other domestic user would be eligible for a waiver that allows the 
import of uranium from the SOE countries, with any import of uranium 
from Russia subject to the Russian Suspension Agreement, after such 
utility or user files appropriate documentation with the Department. In 
the case of a U.S. nuclear power utility, the documentation must show 
that such utility has a contract or contracts to purchase for their 
consumption on an annual basis not less than the percentage of U.S. 
produced uranium U308 concentrate shown in the phase-in table below.

               Percent of Annual U308 Concentrate Consumption Required To Be Sourced From the U.S.
----------------------------------------------------------------------------------------------------------------
                                                                                                        2024 and
                               Year                                  2020     2021     2022     2023     beyond
----------------------------------------------------------------------------------------------------------------
Percent of Annual U308 Concentrate Consumption Required to be            5       10       15       20         25
 Sourced from the U.S............................................
----------------------------------------------------------------------------------------------------------------

    Phased-in incrementally over five years, this option will help 
facilitate the reopening and expansion of U.S. uranium mining, milling, 
and conversion facilities, and will ensure that U.S. uranium producers 
can make investments required for future financial viability without 
causing unintentional harm to other market economy uranium producers. 
This option avoids undue financial harm to U.S. nuclear power utilities 
by affording them sufficient time to adjust their fuel procurement 
strategies.
    The zero quota on uranium imports from SOE countries would not 
apply to uranium imports from SOE countries for use by U.S. milling, 
conversion,

[[Page 41601]]

enrichment, and fuel fabrication services' that produce uranium 
products for export from the United States. A U.S. milling, conversion, 
enrichment, or fuel fabricator seeking to import uranium from an SOE 
country for use to produce uranium products for export would need to 
file appropriate documentation with the Department to obtain a waiver 
for the import of such uranium for export.
    The Secretary believes that this option to impose a zero quota for 
imports of uranium from SOE countries, while continuing to allow 
unrestricted importation of uranium from Canada, Australia, and EURATOM 
member countries based on their security and economic relationships 
with the United States, should address the threatened impairment of 
U.S. national security. This would be accomplished by promoting the 
economic revival of the U.S. uranium industry, so long as there is not 
significant transshipment or reprocessing of SOE country uranium 
through these unrestricted countries. The Department will monitor these 
unrestricted imports to ensure there is not significant transshipment, 
reprocessing, or book transfers from SOE countries to unrestricted 
countries in an attempt to circumvent and undermine the U.S. uranium 
producers' ability to provide 25 percent of U.S. annual U308 
concentrate consumption. Many companies in unrestricted countries 
supply uranium sourced from SOE countries. Consequently, up to one-
third of the materials delivered to U.S. nuclear power utilities, at 
this time, are not sourced directly from the country of import.
    Imports of uranium from Russia under a waiver would also be 
subjected to the Russian Suspension Agreement. This option assumes that 
such agreement will continue to be in effect over the relevant time 
period and would apply to any Russian uranium imports by U.S. nuclear 
power utilities, thus holding Russian uranium imports to their current 
level of approximately 20 percent of U.S. enrichment demand. In the 
event that the Russian Suspension Agreement is not extended and 
terminates, then the Secretary recommends that a quota on uranium 
imports under a waiver of Russian Uranium Products (as defined in the 
Russian Suspension Agreement) of up to 15 percent of U.S. enrichment 
demand be imposed. If adopted this quota would be administered by the 
Department in the same manner as the Russian Suspension Agreement is 
presently administered.
    The adjustment of imports proposed under this option would be in 
addition to any applicable antidumping or countervailing duties 
collections.
    To complement the proposed trade action, the Secretary recommends 
that the Federal Energy Regulatory Commission (FERC) act promptly to 
ensure that regulated wholesale power market regulations adequately 
compensate nuclear and other fuel-secure generation resources. 
Specifically, FERC should determine whether current market rules, which 
discriminate against secure nuclear fuel generation resources in favor 
of intermittent resources, such as natural gas, solar, and wind, result 
in unjust, unreasonable, and unduly discriminatory rates that distort 
energy markets, harm consumers, and undermine electric reliability. If 
so, FERC should consider taking appropriate action to ensure that rates 
are just and reasonable.
    The Department of Commerce, in consultation with other appropriate 
departments and agencies, will monitor the status of the U.S. uranium 
industry and the effectiveness of this remedy and will make 
recommendations to the President regarding whether it should be 
modified, extended, or terminated.
Option 2--Global Zero Quota
    This option would establish a zero quota on imports of uranium from 
all countries until specific conditions are met to enable U.S. 
producers to supply 25 percent of U.S. nuclear power utilities' annual 
consumption of uranium U308 concentrate. A U.S. nuclear power utility 
or other domestic user would be eligible for a waiver to import uranium 
from any country after submitting appropriate documentation to the 
Department. In the case of a U.S. nuclear power utility, the 
documentation must show that such utility has a contract or contracts 
to purchase for their consumption on an annual basis not less than the 
percentage of U.S. produced uranium U308 concentrate shown in the 
phase-in table below.

               Percent of Annual U308 Concentrate Consumption Required To Be Sourced from the U.S.
----------------------------------------------------------------------------------------------------------------
                                                                                                        2024 and
                               Year                                  2020     2021     2022     2023     beyond
----------------------------------------------------------------------------------------------------------------
Percent of Annual U308 Concentrate Consumption Required to be            5       10       15       20         25
 Sourced from the U.S............................................
----------------------------------------------------------------------------------------------------------------

    Phased-in incrementally over five years, this option will help 
facilitate the reopening and expansion of U.S. uranium mining, milling, 
and conversion facilities, and will ensure that U.S. uranium producers 
can make investments required for future financial viability. This 
option avoids undue financial harm to U.S. nuclear power utilities by 
affording them sufficient time to adjust their fuel procurement 
strategies.
    The zero quota on uranium imports would not apply to uranium 
imports for use by U.S. milling, conversion, enrichment, and fuel 
fabrication services' that produce uranium products for export from the 
United States. A U.S. milling, conversion, enrichment, or fuel 
fabricator seeking to import uranium for use to produce uranium 
products for export would need to file appropriate documentation with 
the Department to obtain a waiver for the import of uranium for export.
    The Department will provide adequate time for U.S. industry to 
receive a waiver prior to a zero quota being implemented globally. 
Based on information received during the investigation, the Department 
believes that this option will not cause undue burdens.
    The Secretary believes that this option to impose a zero quota for 
imports of uranium will address the threatened impairment of U.S. 
national security by promoting the economic revival of the U.S. uranium 
industry. This option also prevents the possibility of transshipment of 
SOE overproduction through third countries and avoids undue harm to 
U.S. enrichment and fuel fabrication export operations. These domestic 
export operations rely on an ability to access working uranium stock 
regardless of the specific mining origin of a given uranium-based 
material.
    Tennessee Valley Authority (TVA) purchases of Canadian 
UO<INF>3</INF> natural uranium diluent in its execution of the National 
Nuclear Security Administration's current highly-enriched uranium (HEU) 
down-blending campaign would be excluded from the zero quota on imports 
of uranium. In addition, any transfer pursuant to a

[[Page 41602]]

Mutual Defense Agreement that references special nuclear material would 
be excluded from the zero quota on imports of uranium.
    Imports of uranium from Russia under a waiver would also be 
governed by the Russian Suspension Agreement. This option assumes that 
such agreement will continue to be in effect over the relevant time 
period and would apply to any Russian uranium imports by U.S. nuclear 
power utilities, thus holding Russian uranium imports to their current 
level of approximately 20 percent of U.S. enrichment demand. In the 
event that the Russian Suspension Agreement is not extended and 
terminates, then the Secretary recommends that a quota on uranium 
imports under a waiver of Russian Uranium Products (as defined in the 
Russian Suspension Agreement) of up to 15 percent of U.S. enrichment 
demand be imposed. If adopted this quota would be administered by the 
Department in the same manner as the Russian Suspension Agreement is 
presently administered.
    The adjustment of imports proposed under this option would be in 
addition to any applicable antidumping or countervailing duties 
collections.
    To complement the proposed trade action, the Secretary recommends 
that the Federal Energy Regulatory Commission (FERC) act promptly to 
ensure that regulated wholesale power market regulations adequately 
compensate nuclear and other fuel-secure generation resources. 
Specifically, FERC should determine whether current market rules, which 
discriminate against secure nuclear fuel generation resources in favor 
of intermittent resources, such as natural gas, solar, and wind, result 
in unjust, unreasonable, and unduly discriminatory rates that distort 
energy markets, harm consumers, and undermine electric reliability. If 
so, FERC should consider taking appropriate action to ensure that rates 
are just and reasonable.
    The Department of Commerce, in consultation with other appropriate 
departments and agencies, will monitor the status of the U.S. uranium 
industry and the effectiveness of this remedy to determine if it should 
be modified, extended, or terminated.
Option 3--Alternative Action
    Should the President determine that the threatened impairment of 
national security does not warrant immediate adjustment of uranium 
imports at this time but that alternative action should be taken to 
improve the condition of the U.S. uranium industry to enable the U.S. 
industry to supply 25 percent of U.S nuclear power utilities annual 
consumption of uranium U308 concentrate, the President could direct the 
Department of Defense (DOD) and the Department of Energy (DOE) to 
report to the President within 90 days on options for increasing the 
economic viability of the domestic uranium mining industry. The report 
should include, but not be limited to, recommendations for: (1) The 
elimination of regulatory constraints on domestic producers; (2) 
incentives for increasing investment; and (3) ways to work with 
likeminded allies to address unfair trade practices by SOE countries, 
including through trade remedy actions and the negotiation of new rules 
and best practices. The President could also direct the United States 
Trade Representative to enter into negotiations with the SOE countries 
to address the causes of excess uranium imports that threaten the 
national security.
    To complement the proposed alternative action, the Secretary 
recommends that the Federal Energy Regulatory Commission (FERC) act 
promptly to ensure that regulated wholesale power market regulations 
adequately compensate nuclear and other fuel-secure generation 
resources. Specifically, FERC should determine whether current market 
rules, which discriminate against secure nuclear fuel generation 
resources in favor of intermittent resources, such as natural gas, 
solar, and wind, result in unjust, unreasonable, and unduly 
discriminatory rates that distort energy markets, harm consumers, and 
undermine electric reliability. If so, FERC should consider taking 
appropriate action to ensure that rates are just and reasonable.
    The Department of Commerce, in consultation with other appropriate 
departments and agencies, will monitor the status of the U.S. uranium 
industry and the effectiveness of this remedy and recommend to the 
President if any additional measures are needed. Alternatively, the 
Secretary may initiate another investigation under Section 232.

B. Economic Impact of 25 Percent U.S.-Origin Requirement

    The Department analyzed the economic impact of a 25 percent U.S.-
origin uranium concentrate requirement on the U.S. uranium mining 
industry as well as U.S. nuclear power utilities. The Department's 
analysis and modeling indicates that U.S. uranium mining and milling 
will substantially benefit from the 25 percent U.S.-origin uranium 
concentrate requirement and will return to an economically competitive 
and financially viable industry. U.S. nuclear power utilities will 
experience only marginal increases in fuel costs and slight decreases 
in revenue due to usage of U.S.-origin uranium concentrate for 25 
percent of their fuel supply.
    The Department's analysis indicates if Option 1 or 2 is 
implemented, U.S. uranium producers between 2020 and 2024 will see a 
substantial increase in their production compared to the projected 2019 
level of 331,000 pounds U3O8 equivalent (see Figure 72).

[[Page 41603]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.055

    Over the five-year implementation, U.S. uranium concentrate 
producers, including mines and mills, will see prices rise to a level 
that will support sustained production of approximately 6 million 
pounds U3O8 equivalent per year, or 25 percent of U.S. concentrate 
requirements based on 2018 data.
    [TEXT REDACTED] By acquiring more U.S.-origin uranium concentrate, 
U.S. utilities will need to have at least some of that material 
converted domestically. [TEXT REDACTED]
BILLING CODE 3510-33-P

[[Page 41604]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.056

    [TEXT REDACTED] Preserving ConverDyn's conversion capacity is 
imperative to preserving the U.S.'s entire nuclear fuel cycle 
capabilities, particularly as DOE looks to build a new enrichment 
facility in the coming decades.
    U.S. utilities will experience only marginal effects from the 25 
percent U.S.-origin requirement. Due to reactor retirements, overall 
uranium requirements are expected to decrease by approximately 6.9 
percent over the next five years (see Figure 74).
[GRAPHIC] [TIFF OMITTED] TN02AU21.057

BILLING CODE 3510-33-C
    Based on this projected level of consumption, the Department's 
modelling indicates that a 25 percent U.S.-origin requirement will 
increase aggregate utility fuel costs by $120.1 million, or 13.72 
percent, between 2020

[[Page 41605]]

and 2024. This is based on aggregated utility fuel costs of nearly $900 
million in 2018 (see Figure 75).
[GRAPHIC] [TIFF OMITTED] TN02AU21.058

    On a per-reactor basis, the 25 percent U.S.-origin requirement will 
increase fuel costs by approximately $1.3 million, or 13.76 percent, 
between 2020 and 2024. This calculation is based on overall fuel 
reactor costs of nearly $9.2 million per reactor in 2018 (see Figure 
76).

[[Page 41606]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.059

    On a per-megawatt hour (MWh) basis, the Department's data shows 
that U.S. nuclear electric utilities have experienced declining average 
net revenues since 2014. Between 2014 and 2016, average net revenues 
per MWh dropped from $23.60 to $15.00, a 36.4 percent decline. However, 
average net revenues have recovered since 2016. U.S. nuclear electric 
utilities reported an average per-MWh net revenue of $15.00 in 2018 
(see Figure 77).

[[Page 41607]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.060

    A similar trend can be observed on a per kilowatt-hour (KWh) basis. 
U.S. utility per-KWh revenues fell from $0.024 in 2014 to just $0.009 
in 2016 before increasing to $0.015 in 2018 (see Figure 78):

[[Page 41608]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.061

    The Department's analysis also projected the U.S.-origin 
requirement through 2024. The Department's analysis concludes that U.S. 
utility operating costs per MWh will increase to $34.45 in 2024, a 
small 1.29 percent increase over the projected 2020 cost of $34.01. 
U.S. utility average net revenues per MWh will drop slightly to $14.50, 
a marginal 3.4 percent decline compared to projected 2020 net revenues 
of $15.01 (see Figure 79).

[[Page 41609]]

[GRAPHIC] [TIFF OMITTED] TN02AU21.062

C. Public Policy Proposals

    The Secretary finds that the effect of imported uranium on the 
national security can only be addressed through targeted Section 232 
remedies. The Secretary has noted that the U.S. uranium industry and 
nuclear power generators face other non-trade challenges that hinder 
their ability to remain financially solvent and economically 
competitive.
    These challenges, as discussed in Chapters VI and VII, include the 
premature shutdown of U.S. reactors, competition from natural gas-fired 
generators, and subsidized renewable energy sources. In addition, the 
nuclear power industry is hindered by electricity market rules that do 
not consider nuclear energy's unique operational attributes. To address 
these issues, the Secretary advances the following public policy 
proposals for discussion which complement the Section 232 remedies 
identified in this investigation.\155\
---------------------------------------------------------------------------

    \155\ Section V of the January 1989 Section 232 investigation 
into crude oil and refined petroleum imports contained several non-
trade policy recommendations to be executed by Congress or other 
Federal departments. These recommendations included implementation 
of an oil and gas leasing plan, opening the Arctic National Wildlife 
Refuge to oil exploration, oil and gas licensing reform, and 
technical tax changes. U.S. Department of Commerce, Bureau of Export 
Administration; ``The Effect of Crude Oil and Refined Petroleum 
Product Imports On The National Security''; January 1989.
---------------------------------------------------------------------------

(1) Expansion of the American Assured Fuel Supply (AFS)
    The Department of Energy maintains a reserve of enriched uranium 
for nuclear power generators known as the American Assured Fuel Supply 
(AFS), which is an emergency source of fuel for both U.S. and foreign 
nuclear power plants.\156\ The AFS currently includes 230 metric tons 
of LEU, only enough material to reload six average nuclear reactors 
once (the U.S. has 98 reactors).\157\ DOE should increase the AFS's 
inventory to 500 metric tons of LEU, enough to fuel 13 reactors in the 
U.S. and allied countries. This could supplement the [TEXT REDACTED] 
average inventory U.S. nuclear power utilities already maintain (see 
Figure 66). The LEU procured for the AFS should come from newly mined, 
converted, and enriched U.S.-origin uranium.
---------------------------------------------------------------------------

    \156\ In 2005, the Department of Energy (DOE) announced that it 
would set aside 17.4 metric tons of highly-enriched uranium (HEU) 
for conversion to low-enriched uranium (LEU) that could be released 
to nuclear power generators in times of national emergency.
    \157\ Notice of Availability: American Assured Fuel Supply. The 
Federal Register/FIND. Vol. 76. Washington: Federal Information & 
News Dispatch, Inc., 2011. http://search.proquest.com/docview/884208970/.
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(2) Adoption of a Domestic Uranium Purchase Tax Credit
    Congress should institute a tax credit for domestic uranium 
purchases for a five-year period. Under this proposal, U.S. nuclear 
power generators would receive a fixed dollar amount-per pound tax 
credit for purchasing uranium mined in the United States. The credit 
would be claimable in the tax year in which the nuclear power generator 
takes delivery of the material.
(3) Continue the Moratorium on DOE Stockpile Sales
    Under the Atomic Energy Act of 1954, the DOE possesses authority to 
sell or transfer its stockpiles to other parties.\158\ DOE has used 
this authority to pay for cleanup efforts at the Portsmouth Gaseous 
Diffusion Facility. While DOE's

[[Page 41610]]

determination process evaluates whether DOE transfers are having a 
material effect on the industry, respondents to the Department's 2019 
uranium survey have reported that DOE's uranium transfer program has 
negatively impacted uranium producers' business. Congress should block 
further transfers of DOE stockpile material.
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    \158\ U.S. Government Accountability Office. Highlights of GAO-
17-472T, a testimony before the Committee on Environment and Public 
Works, U.S. Senate, 5. (Washington, DC: Mar. 8, 2017). https://www.gao.gov/assets/690/683764.pdf.
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(4) State Adoption of Zero Emissions Credits
    Implement zero emissions credits (ZEC) to compensate nuclear power 
generators for the value of the zero-emissions electricity that they 
produce. ZECs will help nuclear generators fairly compete against 
renewable sources such as solar and wind, which are subsidized through 
the federal production tax credit (PTC) and similar state subsidies. 
ZECs, if adopted by more states, may halt some current U.S. reactor 
retirements and solidify utility demand for U.S.-produced uranium.
(5) Mandate That Federal Departments and Agencies Use Nuclear Power
    The Federal government can support U.S. nuclear power generation by 
requiring Federal departments and agencies to purchase an average of 20 
percent of their power from nuclear power plants for a period of five 
years at a fixed price. This would provide predictable demand for 
nuclear power generators.
(6) Expand the Responsibilities of the Nuclear Materials Management and 
Safeguard Systems (NMMSS)
    The 123 Agreements do not require tracking and reporting of 
``mining origin'' data for nuclear material subject to peaceful use 
provisions. Furthermore, the domestic U.S. operators are not required 
to report origin data to NMMSS for imports, exports, and other nuclear 
material inventory changes.
    NMMSS, as the national U.S. system of nuclear material accounting, 
can add the capability to track mining origin data. However, this 
outcome required changes impacting NRC regulations, 123 Agreements, and 
industry practices.
    The Secretary recommends that the NRC and NNSA work with the 
Departments of Commerce, Defense, Energy, Homeland Security, and 
Justice to examine potential options and mechanisms to enable the 
reporting of origin data to NMMSS, and to coordinate with NMMSS to 
identify actions necessary for changes to the system.

Matthew S. Borman,
Deputy Assistant Secretary for Export Administration.
[FR Doc. 2021-16113 Filed 7-30-21; 8:45 am]
BILLING CODE 3510-33-P