Another day…Another commodity ban. In Mid-April 2024, the London Metal Exchange (LME) banned delivery of new Russian metals such as nickel, aluminium and copper. The US is also banning Russian imports of all three metals. This is due to the ongoing war with Ukraine.

And now, the US has decided to increase sanctions on Russia. This time…it’s Uranium.

What does the commodity ban mean for Uranium?

Recently, the US senate approved the Prohibiting Russian Uranium Imports Act. Under this bill, the imports of low-enriched uranium (LEU) produced in Russia or by a Russian entity, are banned. The bill also prohibits the import of LEU “that has been swapped for the banned uranium or otherwise obtained in a manner designed to circumvent the ban’s restrictions.” The bill will come into effect 90 days after the date of the enactment of the bill and is set to terminate in 2040.

However, it does come with a caveat…

The US Department of Energy (DOE) may waive the ban if…

• No alternative viable source of LEU is available to sustain the operations of a nuclear reactor or a US nuclear energy company.
• Imports of uranium are in the national interest.
The reality is these waivers may not even matter if Russia retaliates with a unilateral uranium export ban to the US. And I’m confident Russia will respond with a tit-for-tat ban of their own.

So, what does it mean for the US uranium market?

Uranium was all the rage in 2023. And for good reason. The uranium price more than doubled hitting prices not seen since 2011.
This year, however, the uranium price is yet to replicate its stunning 2023 run. For the most part, uranium has traded steadily between $80-$90 levels. This isn’t surprising. After all, there’s usually a breather during bull markets or commodity super cycles. But this could change, thanks to the new commodity ban. And the next big run up for uranium prices may kick off soon.

Russia is the US’s leading supplier of enriched uranium. According to the DOE, Russia provides around 25% of enriched uranium used to fuel the US’s fleet of more than 90 commercial reactors. It’s not a big deal in the short-term. Because nuclear reactors are typically refuelled every 18 to 24 months, and fuel purchases are negotiated long in advance.

However, if the US doesn’t rejuvenate its uranium production, the ban can become a major risk. So, the country is making strategic moves to secure uranium… In 2020, US Congress allocated $75 million to set up a “Strategic Uranium Reserve”, while simultaneously awarding contracts to two producers for uranium supplies.

Then, earlier this year, the US Senate allocated a $2.7 billion cash injection to rebuild the country’s domestic uranium industry.
There are several listed uranium producers re-opening mines in Texas, Wyoming, Arizona and Utah that were idled following a market crash caused by the 2011 Fukushima nuclear accident.

In addition, there are a handful of exploration companies searching for new deposits of uranium.

Consider the world will need up to 130,000 metric tons of uranium per year by 2040, according to the International Atomic Energy Agency (IAEA). That means uranium production will have to DOUBLE.

To sum up, the nuclear and uranium renaissance is still in its early days. And that means, there’s still time for investors to profit. If you want to know how and where, make sure you read the special Energy report published by South African investor.

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