NetworkNewsWire
Editorial Coverage: Reliance on foreign and malign sources for
critical materials is a national security risk.
The United States is by far the largest consumer of uranium in
the world, yet the country imports nearly all of its uranium from
state-owned and subsidized foreign sources, squeezing domestic
suppliers and putting the U.S. supply chain in jeopardy. Uranium is
designated by the U.S. government as vital to the nation's security
and economic prosperity, and the Department of Interior warned, “This dependency of the United States on
foreign sources creates a strategic vulnerability for both its
economy and military to adverse foreign government action, natural
disaster, and other events that can disrupt supply of these key
minerals.” Energy Fuels Inc. (NYSE American: UUUU) (TSX:
EFR) (UUUU
Profile), the United States’ largest domestic producer
of uranium, has led recent efforts to warn the U.S. government
about the security threats to uranium supply chain disruption and
the vital importance of having a sustainable domestic uranium
sector. If the U.S. fails to act, 20% of the nation’s electricity —
and 55% of its clean, carbon-free electricity — may become hostage
to malign foreign sources of uranium, and recent events show that
any supply chain disruption, benign or intentional, can have
devastating impact. Business takes supply chain security seriously,
and government should too. Major logistics corporations such as
XPO Logistics (NYSE: XPO) are solely devoted to
providing supply chain solutions to the most successful business
entities in the world. Similar attention to the nation’s supply of
uranium must be addressed to ensure the continuity of the United
States’ clean power supply. Reliable, low-cost sources for uranium
production exist in the United States, as well as from free-market
allies. Canada-based Cameco (NYSE: CCJ) (TSX: CCO)
is one of the largest global providers of the uranium fuel needed
to produce clean energy. UK-based Rio Tinto PLC (NYSE:
RIO) produces uranium in addition to a myriad of other
mineral resources, and Australian BHP Group (NYSE:
BHP) provides needed minerals across the globe. The United
States and its allies have the resources and know-how to produce
uranium, and it’s time to end dangerous market dominance by Russian
and Chinese state-owned and subsidized enterprises.
To view an infographic of this editorial, click here.
Market Potential
The current global health crisis has revealed the nation’s soft
underbelly of vulnerability to foreign sources of critical
materials. America’s reliance on crucial medicines and supplies
from adversarial nations such as China has sounded a clarion call
for U.S. policy makers to think and plan smarter. The current
crisis has also revealed that the U.S. has a dangerous reliance on
certain foreign sources of critical minerals and energy. Most
people know about the country’s extreme reliance on China for rare
earth elements (REEs), which are found in products as varied as
cell phones, wind turbines and military systems that defend
America. Not as many people know that the country is now nearly 100% reliant on imports of uranium for its
nuclear power plants. If nothing changes, over 50% of this uranium
may come from state-owned entities in Russia and China in the
coming years.
U.S. nuclear power plants currently generate
55% of the nation’s carbon‐free electricity and produce nearly 20%
of the nation’s overall electricity needs. In fact, nuclear power
is the only currently available and affordable low-carbon power
source that meets baseload electricity demands, simultaneously
reducing air pollution and mitigating climate change. As global
electricity demand continues to soar, nuclear power has been shown
in multiple scientific studies to be the cleanest
and most economical way to produce reliable electricity. According
to the World Nuclear
Association (WNA), there are 441 operable reactors globally,
with another 54 units under construction and 439 in various stages
of planning; in addition, the WNA has identified a potentially
massive supply/demand gap through 2040 of 1 billion pounds. Any
increase in global electricity demand could easily spur significant
new nuclear power development. These are just a few of the triggers
that may drive increased demand for uranium, yet the United States
is becoming increasingly dependent on adversarial sources for this
critical mineral.
Leading the Charge
No other company has been more proactive or outspoken about uranium supply chain risks than
Energy Fuels Inc. (NYSE American: UUUU) (TSX:
EFR). Based in Lakewood, Colorado, Energy Fuels is the
country’s largest producer of uranium and the leading conventional
producer of vanadium, both of which are designated as critical
minerals by the U.S. government. Energy Fuels’ uranium production
portfolio stands apart in the U.S., boasting more uranium
production facilities, more production capacity and more in-ground
resources than any other uranium producer in the United States. In
fact, the company’s assets have produced over one-third of all U.S.
uranium over the past 15 years, making Energy Fuels uniquely
positioned to quickly increase production to meet new demand.
Energy Fuels has seen success in its efforts to get the U.S.
government to recognize the strategic importance of the domestic
uranium mining industry. President Trump’s recently announced
FY-2021 executive budget request includes $150 million per year for
the next 10 years to create a strategic U.S. uranium reserve. This
is expected to provide considerable support to established U.S.
uranium producers such as Energy Fuels, and significantly enhances
the security and independence of the nation’s electric supply. This
$1.5 billion strategic initiative comes on the
heels of a July 2019 Presidential Memorandum that ordered the
creation of the U.S. Nuclear Fuel Working Group to "examine the
current state of domestic nuclear fuel production to reinvigorate
the entire nuclear fuel supply chain, consistent with United States
national security and nonproliferation goals." The working group
has not released its findings, but it is believed that government
actions are now underway to protect vital U.S. uranium
infrastructure, spur domestic production and preserve the country’s
energy independence.
Unmatched U.S. Assets
As the country’s leading diversified uranium miner, Energy Fuels
is uniquely positioned to capitalize on these initiatives. Energy
Fuels utilizes both conventional and in-situ recovery (ISR)
technology to produce uranium from three strategic facilities:
- The highly strategic White Mesa Mill in Utah is the only
conventional uranium mill in the U.S. and is centered around the
largest and highest-grade conventional uranium mines and projects
in the country. The White Mesa Mill has a licensed capacity to
produce over 8 million pounds of U3O8 per year and provides
immediate scalability as uranium demand increases. The White Mesa
Mill also has other diverse business opportunities, including
vanadium production (Energy Fuels was the leading U.S. producer of
vanadium in 2019), which is essential in production of high-grade
steel and holds promise in high-capacity batteries and critical
rare earth elements (REE’s), as well as alternate feed materials
recycling.
- Nichols Ranch Plant (ISR) is in the productive Powder River
Basin district of Wyoming and has a total licensed capacity of 2
million pounds of U3O8 per year. Nichols Ranch has produced 1.2
million pounds of U3O8 since commissioning in 2014, and it has
significant future expansion potential from 34 fully licensed
wellfields containing significant in-ground uranium resources.
- Located on over 200,000 acres of private land in Texas, the
fully licensed and constructed Alta Mesa Plant (ISR) has a total
operating capacity of 1.5 million pounds of uranium per year and
produced nearly 5 million pounds of U3O8 between 2005 and 2013.
This low-cost production facility is currently on standby,
maintained in a state of readiness to respond to expected increases
in demand.
Energy Fuels has the production facilities and resources to
potentially be a major beneficiary of strategic government
initiatives, increasing global demand and increasing global prices.
The company possesses both expertise and assets that can be
immediately scaled to capitalize on the impending opportunity. As
of Dec. 31, 2019, the company had a war chest of $17.7 million in
cash and marketable securities, plus $22.8 million of immediately
marketable inventory, including 515,000 pounds of uranium and
1,600,000 pounds of vanadium. In 2020, Energy Fuels added an
additional $19.1 million of cash to its treasury.
While Energy Fuels stands to benefit from the government’s shift
toward domestic uranium production, the company also
recently announced its intent to evaluate the production of REE’s
at its White Mesa Mill. If the program is successful,
the mill will be utilized to receive and process multiple varieties
of REE ores—a task which, historically, could only be completed
with the help of Chinese companies. The U.S. government has
designated REE’s as critical in the nation’s national defense
strategy and—similar to its focus on domestic uranium
production—intends to empower private American companies to develop
REE production capabilities through the allocation of funds. Energy
Fuels’ announcement is well-timed, placing it in an advantageous
position to assist the company in lessening its dependence on
Chinese companies for the processing of REE’s. The company believes
REE production, alongside its leadership in uranium production,
will fortify its already strong industry
position.
The company has scheduled a conference call for Wed., April 15
at 4:15 EST to discuss its recent REE announcement. To join the
webcast, please dial 1-888-664-6392 (toll free in the U.S. and
Canada) or 416-764-8659. A link to a recorded version of the
proceedings will be available shortly after the webcast by calling
1-888-390-0541 (toll free in the U.S. and Canada) or 416-764-8677
and entering the code 201052#. This recording will be available
until April 21, 2020.
Bright Future
Nearly all the uranium that fuels the United States’ nuclear
power plants is imported, placing 20% of the nation’s power output
in jeopardy. Historically, these imports mainly came from
free-market allies such as Canada and Australia. However, in the
coming years, uranium imports are expected to mainly come from
Russian and Chinese sources whose state-owned companies flood the
global market, drive free-market companies out of business and
threaten national security. The good news is that with new
government initiatives in motion, America’s strategic uranium
supply chain will be protected and free from foreign influence.
These initiatives have the potential to spur a resurgence in
uranium markets and an abundance of new opportunity for companies
such as Energy Fuels. However, the global uranium equity market is
concentrated and relatively small. There are a few uranium
explorers and developers, but they require many years of licensing
and hundreds of millions of dollars to get into production. There
are only limited opportunities to directly participate in proven
producers. Energy Fuels is one of those proven uranium producers,
with assets and capabilities that are truly unmatched in the
country today.
Supply Chain and Natural Resource Companies
XPO Logistics (NYSE: XPO) is a top-ten global
logistics provider of cutting-edge supply chain solutions to the
most successful companies in the world. The company operates as a
highly integrated network of people, technology and physical assets
in 30 countries, with 1,504 locations and approximately 100,000
employees. XPO uses its network to help more than 50,000 customers
manage their goods most efficiently throughout their supply
chains.
Canadian-based Cameco (NYSE: CCJ) (TSX: CCO) is
one of the largest global providers of the uranium fuel needed to
energize a clean-air world. The company’s competitive position is
based on a controlling ownership of the world’s largest high-grade
reserves and low-cost operations. Utilities around the world rely
on nuclear fuel products to generate power in safe, reliable,
carbon-free nuclear reactors.
Founded in 1873 and headquartered in London, UK, Rio
Tinto PLC (NYSE: RIO) engages in the exploration, mining
and processing of mineral resources. It operates through multiple
business segments: iron ore, aluminum, copper and diamonds, energy
and minerals, and other operations. The energy and minerals segment
includes businesses with products such as uranium, borates, salt
and titanium dioxide feedstock together with coal operations.
With global headquarters in Melbourne,
Australia, BHP Group (NYSE: BHP)
is a world-leading resources company. The company extracts and
processes minerals, oil and gas, and has more than 72,000 employees
and contractors, primarily in Australia and the Americas. Company
products are sold worldwide, with sales and marketing led through
Singapore and Houston, Texas.
For more information on Energy Fuels, visit Energy Fuels
Inc. (NYSE American: UUUU) (TSX: EFR)
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