Does Russia Really Own 20% of the U.S.’s Uranium Reserves?
Yes. Well, sort of — and they have for some time now. It’s relatively old news, but a recent New York Times report and an upcoming book from the Hoover Institute’s Peter Schweizer have refocused attention on a 2008 blockbuster uranium deal involving Russia, the United States, and Canadian company Uranium One. Pushing connections and presidential candidacies aside — the Clintons’ complicity is still very much speculation at this point — let’s return to the deal and take a look at the U.S. nuclear industry and, globally, the rise of Rosatom.
The saga begins in 2009 when, after roughly a year of negotiations, Russian state nuclear corporation Rosatom, acting though its subsidiary and Mining Division platform ARMZ, purchased a nearly 20% stake in Toronto-based Uranium One. The following year, ARMZ increased its stake to more than 51%, a deal that required Kazakh and Canadian regulatory approvals in addition to clearance by the U.S. Committee on Foreign Investment. In 2013, ARMZ paid roughly $2.8 billion for the remaining 48% and full control of Uranium One. Finally, in that same year, Rosatom assumed direct ownership of the company, reorganizing it under Uranium One Holding (U1H) and delisting it from the Toronto stock exchange.
Among U1H’s assets are a handful of U.S. projects and exploration tracts. The most advanced among them are Jab and Antelope, Moore Ranch, and Willow Creek — all of which are in Wyoming, developed under the auspices of Uranium One USA and Uranium One Americas. The Willow Creek project is their only currently active operation.
So, to further answer the lead question: Russia, via Rosatom and U1H, owns roughly 20% of U.S. uranium production capacity. The share of U.S. reserves is much less clear as economic constraints significantly muddy the picture. Looking at actual production, U1H, via Willow Creek, produced an estimated 210 tons of uranium, or 11% of the 1,887.5 tons extracted in the U.S. in 2014.
Still, it’s somewhat disingenuous to say this uranium is now Russia’s, to do with what it pleases, or to suggest that any amount of the uranium will end up in Iran. The current licenses — held by the U.S.-based subsidiaries and approved by the U.S. Nuclear Regulatory Commission — do not allow exports from any U1H U.S. facility.
The truth is, the U.S. uranium industry as its currently built isn’t all that American. In fact, it’s mostly Canadian. Qualms over perceived threats to national security are misplaced, though not entirely dismissible. The deal further illustrates an already pronounced trend of the decline of U.S. nuclear capabilities and influence at all stages of the nuclear fuel cycle.
Post-Fukushima — and post-shale gas revolution — U.S. nuclear employment has fallen more than 34%, and exploration and development drilling is down over 80%. Relatively low-grade uranium and low global prices stunt the value of U.S. mines in the short- to medium-term. Further out, stricter regulation and a heavier reliance on the private sector limit the industry’s potential abroad relative to its competitors.
Perhaps more importantly, the deal speaks to Rosatom’s aggressive new growth. Already the world’s most comprehensive nuclear services vendor, Rosatom is now one of the top three producers of uranium by volume worldwide.
For the most part, the prize was Kazakhstan and not the United States, which is a symbolic victory at best. U1H’s Kazakh production now accounts for approximately 56% of Rosatom’s total production, both domestic and abroad. At 4,269 tons it’s also more than 20$ of Kazakhstan’s total uranium production.
Rosatom’s downstream movements are just as well-defined. The company’s overseas order portfolio was up 9% to $73 billion in 2013, after 23% growth in 2012. Long a fixture in developing markets, Rosatom is turning its capable sights to the western world.
Originally written for OilPrice.com, a website that focuses on news and analysis on the topics of alternative energy, geopolitics, and oil and gas. OilPrice.com is written for an educated audience that includes investors, fund managers, resource bankers, traders, and energy market professionals around the world.